George Allen / EducateMHC Blog Mobile Home & Land Lease Community Advocate & Expert

October 3, 2024

‘Upside Down in a Mobile Home Park’

Filed under: Uncategorized — George Allen @ 11:08 am

Blog Posting # 813; Copyright 4 October 2024. EducateMHC

Know this! HUD-Code manufactured housing (‘MH’) is federally-regulated, performance-based, affordable-attainable, factory-built housing (a.k.a. another type of offsite construction). And land lease communities (a.k.a. manufactured home communities & ‘mobile home parks’), comprise the commercial real estate (‘CRS’) component of MH! EducateMHC is the online advocate, official historian, trade term & trend tracker, as well as information resource for both business models, and to a lesser extent the recreational vehicle (‘RV’) industry. Access EducateMHC via (317) 881-3815; email: gfa7156@aol.com, and via www.educatemhc.com, to purchase Community Management in the Manufactured Housing Industry and SWAN SONG – a history of land lease communities & official record of annual MH Productions totals since 1955. And my autobiography, From SmittyAlpha6 to MHMaven, describes personal combat adventures in Vietnam as a USMC lieutenant, a 45 year entrepreneur business career in MH & community ownership, as well as freelance consultant and author of many nonfiction texts.

George Allen is the sole emeritus member of the Manufactured Housing Institute (‘MHI’), a founding board member of MHI”s National Communities Council (‘NCC’) division, an RV/MH Hall of Fame enshrinee, and MHInsider magazine’s ‘Allen Legacy’ columnist & editor at large. He’s a Vietnam combat veteran, retired lieutenant colonel of U.S. Marines, author/editor of 30 books and chapbooks on MH, communities, business management prayer & figures of speech.

‘Upside Down in a Mobile Home Park’

By

George Allen

The title ‘Upside Down…’ caught my eye as I browsed among art films in a local video store. Rented the film, took it home, and here’s what we viewed.

The movie’s setting is unclear. It could easily have been in New England, the Southeast, or the Pacific Northwest, though I’ve seen similar manufactured home communities in the rural Midwest. No question however, this was an upscale land lease community installing new multisection manufactured homes onsite at the turn of the century.

Central characters were a young couple, George & Carolyn, buying their first home. Both employed, no children or pets, and two older cars. And there was H. ‘Itch’ Balle, the retail sales center salesman/manager. Film begins with George reading a classified ad:

‘L(.)(.)K

New Homes for Sale in Sherwood Forest Estates’

What catches his eye, besides the nearby location, is the $4,000 move-in incentive offer! George phones; he and Carolyn visit; really like what they see, and buy! Their new home, already sited, but not yet landscaped, is an $80,000 multisection HUD-Code manufactured home. (Remember, this is back around year 2000).

Everything seemed to be going their way! Originally expecting to have to come up with $4,500.00 down payment, they only paid $500.00! How so? The $4,000.00 ‘move-in incentive’ was graciously applied ty the retailer/developer, to improve their homesite with shrubs, porch, and carport. Then that amount was added to the balance they’d be financing.

Even financing arrangements were a steal! Mr. Balle arranged for them to avoid paying ‘10% over 30 years’ term (That’d mean $733.13/month payments.*1), and got them a variable rate loan of only ‘9% over 30 years’ with maximum possible increase of 2% (or two points) after one year. Their first year rate was only $672.18/month*2 on their new home mortgage!

And the Good News did not stop there! At the point in the movie when George & Carolyn suggest they might ‘shop around’ before committing to buy at Sherwood Forest, ‘Itch’ announced the entire first year’s rent of $285/month would be waived if they signed the sales contract that very day!

Now, that was a ‘no brainer’ decision if ever there was one. They’d already saved $4,000.00 on the housing down payment (Somehow they thought they’d be paying off less than $83,500.00 though…); were saving $60.95/month on the loan payment or $731.40 per year; and now, a ‘signing bonus’ (Just like a pro athlete!), they were saving yet another $3,420.00 in rent during the first year of being a resident at Sherwood Forest Estates. This was all too good to be true! No question, they signed!

Then the movie fast-forwarded a year and a month into the future. The euphoric sales center scene of 13 months ago is now a distant bittersweet memory. During the past year, Carolyn had become pregnant and was no longer working. And with the extra money from the ‘house deal’ – more than $4,000.00 in down payment and mortgage savings, waived rent, and no security deposit (forgot to mention that little gem earlier), they’d bought an expensive new Ford SUB on payments.

It was bill-paying day and George & Carolyn were out of money. Their variable rate mortgage payment had just jumped from $672.18/month to almost $800.00/month*3 – not including property taxes and homeowner insurance commitments. And a previously unknown notice had just arrived, a monthly site rent bill of not $285.00/month, but $300.00/month, due to an annual rent increase. Where in the world were they going to come up with at least an extra $400.00/month, on just one salary, to pay rent, mortgage, payments on the new car, with a baby on the way?

As the movie ended, this couple was, in effect, completely upside down in their financial commitments and responsibilities – with no way out, but to walk away from their new dream home. The epilogue, through a voice-over by a moderator listed the winners and losers in this housing transaction mishap.

’Winners. Commissioned salespersons selling new homes. Lenders providing high interest chattel mortgages. Developers intent on filling new communities within a year, then flipping to the highest bidder. Homeowner/site lessee during the first year of residency.

Losers. The HUD-Code manufactured housing industry’s image and reputation! Lenders risking repossession and losing money, but able to resell and originate new loans. Salespersons setting homebuyers up for failure will likely suffer consequences somewhere, somehow, along the line. And developers earn a reputation for profiteering.

As I contemplated an appropriate moral, lesson learned, or summary, for ‘Upside Down in a Mobile Home Park’ several came to mind: a little Latin, a slang expression, a Biblical admonition, and a quote from the late Gub Mix’s popular column, ‘From My Soapbox’.

  • Caveat emptor…”Let the buyer beware!”
  • ‘A sucker is born every minute’
  • The Golden Rule: ‘Do unto others as you would have them do unto you.’ Matthew 7:12. Some would add this Gold Rule: “He who has the gold rules!”
  • “…manufactured housing industry devotes an extraordinary amount of its’ resources to sell homes to people who really aren’t qualified home buyers. Why? Because they allow us to sell the ‘old mobile home way’…it’s easier than attempting to sell to qualified buyers who require a lot more effort. Manufactured housing may be the only industry in America that ignores the customer’s desires in their marketing practices. Unfortunately for us, potential buyers are much more savvy these days and appear to be abandoning us in droves.” June 2000

Hmm. Perhaps that’s why, 15 years after enduring our industry’s worst production year ever (i.e. 2009 = 48,789 new MHs), we continue to find it difficult to consistently reach and exceed the aforementioned industry standard of 100,000 new HUD-Code manufactured homes produced per year.

End Notes.

  1. $80,000 (-) $500 DP + $4,000 add back = $83,500 (or 83.5) X 8.78 loan factor = $733.13/month
  • $83,500 (or 83.5) X 8.05 loan factor = $672.18/month
  • $83,500 (or 83.5) X 9.52 loan factor = $794.92/month

Know what? If, as an industry, we’re not careful to produce a quality home at an affordable-attainable price, ‘others out there’ might well drive our national market share lower. Here’re two examples:

Amazon.com now markets an entire line of attractive foldable homes on line, beginning at $19,000.00 apiece. Check it out.

And Volferda Capsule Houses are emerging in several markets. Not my desire or interest, but surely designs and features attractive to others, particularly young homebuyers.

If you’d like to share your thoughts on this panoply of housing matters, reach me via gfa7156@aol.com

George Allen

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