Blog # 234 Copyright 2013 24 February 2013
Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’
What Land Lease Lifestyle Community Owners Really Want!
The most insensitive thing land lease lifestyle community asset class’ elected leaders can do, is decide ‘on their own’ what their peers need and want – without soliciting their input, regarding contemporary issues and trends; and most important, what’s required to help them run their unique income – producing properties well!
What follows here, are responses from two separate, recent surveys of more than 600 owners/operators of land lease lifestyle communities and property portfolios. The sources? 24th annual ALLEN REPORT research, and POWER Networking Luncheon at the Louisville MHShow during January 2013.
I.
A detailed summary of the 14 MHIndustry & LLLCommunity issues identified by property owners/operators, during the research phase (Fall of 2012) of preparing the 24th annual ALLEN REPORT®, will be published as a signature Series Resource Document®, in the March 2013 issue of the Allen Letter professional journal. In the meantime, here’re the four major categories of issues, covering said 14 different topics:
• For a least the fifth year in a row, land lease lifestyle community owners and operators identified the ‘lack of new and resale home finance programs’ (Specifically, the inability of would be homebuyers to access chattel capital, due to low credit scores, bruised credit, etc.), as well as continued lack of access to government – insured finance programs, on – site, as perennial bugaboos.
• Hand in glove with the first ‘industry issue’, is the continually growing number of home finance regulatory measures and agencies (e.g. S.A.F.E. Act, Dodd – Frank legislation, CFPB, and more) requiring compliance by those selling/financing homes. And how many LLLCommunity owners/operators now embrace creative alternative means of financing and moving new move – ins into their property(ies)
• Not surprisingly, there’s the ongoing challenge to grow and maintain physical and economic occupancy within land lease lifestyle communities, as the third most prevalent issue among the owners/operators involved in this business model.
• And finally, a three way tie among 1) inability to find good quality, near new homes, to move on – site and sell or rent; 2) rising cost of new manufactured homes, including cost of site additions; and 3) government interference in business via rent controls, and other landlord-tenant measures.
Did you notice, while reading the above list, that while all issues’ are germane to the land lease lifestyle community realty asset class, they’re especially critical to the small to mid – sized owners/operators (i.e. one property owners and portfolio ‘players’ with maybe a half dozen or so smaller to mid – sized LLLCommunities). These being the folk who lack ‘economy of scale’ resources, mainly dollars, to deal with said issues internally, unlike the largest of the portfolio owners/operators, who’re routinely doing just that.
In any event, and with the above six MHIndustry & LLLCommunity ‘issues’ in mind, here’re practical recommendations as to how national leaders at 1) MHI’s National Communities Council (‘NCC’) division, and the 2) Manufactured Home Community Owners of America (‘MHCO’), can Best Serve land lease lifestyle community owner/operators nationwide:
• Once and for all, identify ALL existing, viable home finance programs in effect throughout the U.S. today, from identifying independent third party chattel capital firms (e.g. Commonly referred to as the ‘Big Four + 1’, maybe soon to be the ‘Big Five + 1’ *1); then, the various forms of ‘self – finance’ (e.g. formation of ‘captive finance’ entities), including the lease – option, even the popular contemporary practice of renting manufactured homes on – site; and more! There’s already one such chart in circulation, titled ‘Seller Finance Solutions’ – distributed as a lagniappe, in the January 2013 issue of the Allen Letter professional journal, along with the 24th annual ALLEN REPORT®. Did you get a copy of both documents? If not, the chart is available ‘for the asking’, by phoning the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. One thing that hasn’t happened yet, is the formation of a Task Force, comprised of LLLCommunity owners/operators to explore the exciting possibility (reality?) of using private investors via P2P (Peer to Peer) and B2P (Business to Peer), a.k.a. ‘crowd funding’, to finance LLLCommunity owners/operators’ acquisition of new manufactured homes for placement on – site in their properties. For LLLCommunity owners/operators not yet familiar with, or using this option, know Spencer Roane, MHM®, has been using this approach successfully, for more than a decade, and brought it to our asset class two years ago. Reach him via spencer@roane.com
• Home finance regulatory measures and agencies. Here, an easy to read, periodically updated compendium of appropriate information, is sorely needed. PMN Publishing prepared and distributed the Manufactured Housing $$$ Primer in 2010, and copies are still available for $19.95 apiece, via the MHIndustry HOTLINE. *1 And while an excellent ‘introduction to the subject’ of MHIndustry chattel finance, it does NOT cover the ubiquitous regulatory climate since 2010. That key and timely topic offers a unique Research & Resource opportunity for MHI’s NCC division; something that should and could be researched, then distributed – for a price, to all small to mid – sized owners of LLLCommunities, those not big enough to home – grown our own $ and compliance programs! Anyone out there listening? Let’s hope so!
• ‘How to improve and maintain physical and economic occupancy in a LLLCommunity during these trying economic times?!’ Now there’s a lively combination ripe for Joe Adams’ online marketing advice, George Allen’s Mystery Shopping Lessons Learned ‘on the phone’ and ‘during on – site personal interviews’, along with Michael Powers’ ‘How to Collect 100% of Your Site Rent 100% of the Time!’ Gee; do you think we’ll see that timely and heady ‘combo’ at the MHCongress this Spring? I doubt it, but we should! Hmm. Maybe at the 22nd annual International Networking Roundtable this Fall, in…
• And how ‘bout that potpourri third combination of slightly lesser issues ‘on the minds of LLLCommunity owners/operators’? Finding good quality, near new homes ‘for sale’ in one’s local housing market? Like finding pins in a haystack these days, but search the local ‘penny saver’ advertising tabloids! Rising cost of new manufactured homes? Maybe ‘break the comfortable mold’ and get familiar with other home manufacturers, especially their Community Series Homes or CSH models! And government interference in business matters, (e.g. rent control and failure to maintain lawsuits? That can be a toughie. Easier to confront before government gets involved, with local LLLCommunity owners joining together and visiting property owners charging exorbitant homesite rents.
Then there’s the plethora of topics requested/recommended by the 70 land lease lifestyle community owners/operators who participated in the historic POWER Networking Luncheon during the Louisville MHShow during January 3023. Anyone responsible for putting together educational programs for LLLCommunity owners/operators should be paying close attention right now:
• How to Effectively Upgrade Older LLLCommunities & Homes?’ Talk to Don Westphal, and order MHI’s book on the subject – if it’s still in print.
• What are ALL the New & Resale Home Finance Alternative Available Today? Hmm. This reads similar to the ‘need’ described earlier in this blog posting, challenging MHI’s NCC division ‘closed planning meeting’ of executive offers to Research and Resource such a document or chart to all LLLCommunity owners.
• Operations – related topics, like curb appeal, rules enforcement, rent collection, resident relations, etc.. All these, and more, are covered in Landlease Community Management, the frequently updated 1988 property management text basis of the Manufactured Housing Manager® or MHM® training and certification program. Both available from PMN Publishing via the MHIndustry HOTLINE….*1
• How to Buy a New Manufactured Home to resell On – site in my Property? It’s difficult to believe there are NO contemporary guidelines or books on this topic. I’ve challenged several HUD – Code home manufacturers to do so, but so far, ‘no takers’. Wonder why?
• How to Better Market my LLLCommunity Online & via Social Media? Know who needs to write this? Someone who ‘lives and works’ as an Occupancy Specialist for one or another of the large property portfolio owners/operators!
• On – site Home Sales 101 Class for LLLCommunity Managers! Same comment here as in the previous bullet point. Is there an Occupancy Specialist listening? If so, let me know of your interest and we’ll help you pen, print, and distribute such a tome!
• Preparing for Disaster! Is There a Model Guide Available? (Yes) Actually there are several, MHI published one ‘years ago’ (Still available?) Ask them.). And the Institute of Real Estate Management® also keeps one available on their publications list. Phone 9312) 329-6000 and request a copy of the publications list.
• How to Work with a Local MHRetailer to Put Homes into my Property? This used to be referred to, tongue in cheek, as ‘The Care & Feeding of MHRetailers!’ Still included in the aforementioned Landlease Community Management text; just not taught all that much during the past decade or so. Maybe start again?
• How to Value Manufactured Homes on – site in my Property? Here we’re caught betwixt and between. NADA methodology continues to be easiest to use, and is most prevalent, thanks to federal agency preference. However, manufactured housing, per se, will never truly be considered ‘conventional housing’ until valuation is routinely via market comparables, not book value.
• How to Calculate Affordable Price Points on New 7 Resale Manufactured Homes? Finally, after 60+ years, this ‘No longer a Mystery, but now a Methodology’, is in place and used throughout the U.S. If unfamiliar with it, phone the MHIndustry HOTLINE and request a FREE copy of the ‘Ah Ha! * Uh Oh! Worksheet’. *1
Don’t know ‘bout you, but that’s a downright interesting and challenging list of educational topics coming from land lease lifestyle community owners ‘with skin in the game’, and desirous of better positioning themselves to maximize the profitability of their unique, income – producing properties. So, is anyone else out there listening? I sure am. As I begin planning now, for the 22nd annual International Networking Roundtable, I’ll attempt to incorporate as many of the aforementioned topics into that, by coincidence, 22 topic programs.
Are there additional topics you’d like to see covered in September, at the next Networking Roundtable event? If so, let me know by mail: GFA c/o Box # 47024, Indianapolis, IN. 46247., or via email: gfa7156@aolc.om
Can’t wait eight months for helpful information like this? Then consider attending the 2nd annual SECO (Southeast Community Owners) Super Symposium in Atlanta, GA. later this Spring, or early Summer. For information, contact Spencer@roane.com I certainly plan to be present.
For that matter, it’s also a good idea to let Jenny Hodge, executive VP of MHI’s NCC division, know if these and other topics should be covered at one or another of her group’s functions during the months ahead: (703) 558-0666.
End Note.
1. For an up to date, inside look, at all 20 national, super regional, and regional independent chattel (personal property) lenders and their contact information, read the soon to be released 15th annual National Registry of Real Estate & Chattel Lenders/Brokers. It’ll be a lagniappe in the March 2013 issue of the Allen Letter professional journal. This latest update contains more ‘lenders’ of both stripes, than any of the previous 14 editions. FREE to newsletter subscribers, simply phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 to do so. And guess what? A copy of the 24th annual ALLEN REPORT® will be mailed to you as well!
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George Allen, CPM & MHM
Box # 47024, Indpls, IN. 46247
(317) 346-7156