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

February 25, 2012

Here’s What Your Peers Have to Say about MHMatters Today!

Filed under: Uncategorized — George Allen @ 6:18 am

Here’s What Your Peers Have to Say About MHMatters Today!

Collage of Observations and Opinions from Various Segments of the HUD Code Manufactured Housing Industry & Landlease Community Asset Class


An MHIndustry business owner reacting to Richard Cordray’s (Director of the Consumer Financial Protection Bureau or CFPB) ‘Happy New Year’ request to consumers to ‘Tell us your (horror) story’ about the costs and risks of borrowing on credit. CM writes: “I’d like to send him (Cordray) some pictures of the trashed homes we’ve taken back, and see if he might also be interested in protecting some of us lenders from the fine Americans who ruin a perfectly clean and attractive place to live.” Lesson to be learned? There are indeed, always two sides to the story!


Remember the uproar, mostly from landlease community owners/operators, when a tenant activist slammed our asset class during unchallenged testimony before the Congressional Hearing on 1 February? Well, here’s one attorney’s reaction to the sorry matter: “As a lawyer representing 100s of LLCommunity owners during the past three decades, this misinformation and distorted view not only cripples political and PR efforts, but from a legal perspective, influences judges and juries to assign liability to property owners, and sock them with undeserved damage awards. Rather than assigning blame for ‘being asleep at the switch’, let’s get MHI to afford us an opportunity to supplement the record, if possible, and develop other outlets, to get our message across. Much of that ‘testimony’ was demonstratively false…and ‘spun’ in completely misleading fashion.” RC

Thinking back to the recent blog: ‘Four Ways to Restore Affordability’ to Manufactured Housing & Landlease Communities, here’s a ‘fifth way’ that’ll ‘knock your socks off’, figuratively speaking of course – for now. From an insurance executive ‘with his hands in the LLCommunity business’: “Here’s a 5th way to restore affordability! What Chinese manufacturing interests have done to the U.S. steel industry, that nation is about to do to the manufactured housing industry. Supposedly, the Chinese, within the next 12 months, will introduce 16X80 ‘metal on metal’ homes here, for about $12,000.00 apiece. Don’t know anything about the roof composition, but the interior will not feature plastic sinks and faucets, and all water lines will come equipped with cut offs. At that price, homes become very affordable.” JZ


And this from a blooger fan: “George, your determination and persistence reminds me of a quote I heard attributed to the author Jack London: ‘You can’t wait for inspiration. You have to go out after it with a club!’ And this related observation from a retired MHIndustry executive: “Your ‘aggressions’ are well – crafted and much needed. The industry will continue to shrink and suffer until the parties get together to make it better! Silence, lack of cooperation, and non – participation are the enemy. Perhaps this next generation lacks the hunger and interest in our loyal customers that we had? NB


And we do have deep thinkers out there amongst the masses: “…the key to recovery for our industry is accountability. From manufacturing to the MHRetailer, then finally to the consumer. This alone will make (chattel) financing more readily available, because the secondary market for the ‘paper’ will open accordingly. No matter how nice the home, no matter how nice the LLCommunity, if we don’t find a way to make our ‘paper’ more marketable on the secondary market, financing will remain the key sticking point for homebuyers. Currently one company dominates the chattel finance sector because they can afford to do so. I cannot be in Arlington, VA., on the 27th (i.e. MHI’s Legislative Conference), but if there is a meeting in Chicago this Spring, I would like very much to attend!” JC

So, are you one of those who think the overall housing market is opening up and improving measurably? Well read the following and think again. An email communiqué from Portland Cement Association. Title? ‘Despite Improvement to Economy, Foreclosures Continue to Drag Down Housing Starts’ & ‘Processing delays create large ‘shadow’ inventory of foreclosures.’ OK, here goes: “Home foreclosures decreased dramatically in 2011, but industry experts are cautioning that this is not a reflection of improvements in the housing market, but a result of legal, process and ‘robo – signing’ issues. For example: ‘the 1.9 million foreclosures reported in 2011 is understated by more than one million, due to the processing delays…that are pushing foreclosures into 2012 and maybe even 2013. This is resulting in excess housing inventories and continues to drag down housing starts.’ And the PR goes on, but you surely get the idea.


Watch next week’s blog posting for a report on what happened and didn’t happen at MHI’s Legislative Conference in Washington, DC., 26 – 28 February 2012.

George Allen, CPM®Emeritus, MHM®Master, Consultant to the Factory – built Housing Industry & The Landlease Community Real Estate Asset Class. (317) 346-7156

February 19, 2012

Will MHInitiative’s ‘How to Save Our Industry?!’ be on MHI Agenda 26-28 Feb 2012?

Filed under: Uncategorized — George Allen @ 5:57 am

Lest we forget….

‘Will MHInitiative®’s ‘How to Save Our Industry?!’ Challenge to the Manufactured Housing Institute, be Aired at its’ Legislative Conference in Arlington, VA., on 26 – 28 February 2012?’ GFA

Recalling recent manufactured housing & landlease community history….

The MHInitiative® movement (nee National State of the Asset Class caucuses or NSAC caucuses) began 2/27/2008 at the Fountainview Estates landlease community in Tampa, FL., when 100 property owners/operators convened, from across the U.S. to spend a day discussing their collective business experience in the face of a rapidly declining market for HUD Code manufactured homes. Result? Five Action Areas that continue to guide the realty asset class’ business model this day.

The following year, a mix of 100 HUD Code home manufacturers and landlease community owners/operators met at the RV/MH Heritage Foundation’s Hall of Fame, Museum and Library facility in Elkhart, IN. This time around, the joint goal was to ascertain what LLCommunity owners sought in new home design and price, to make it attractive and enticing to order new homes from the factory, something rarely done in years preceding; and, from the owners/operators point of view, answer the question, ‘What can and will you do to earn our business?’ Result? A new home design concept now known as the Community Series Home or CSH; and, appointment of nearly three dozen Business Development Managers, by these manufacturers, to specialize in marketing their housing product to LLCommunity owners/operators throughout the U.S.

Then followed two years with no MHInitiative® caucus. Why? First, it took time for the industry and asset class to digest and, partially implement the aforesaid advances, e.g. Five Action Areas, CSH homes, and BDMs. And frankly, it was hoped our national elected and salaried leaders would imitate this successful national forum, at its’ annual Manufactured Housing Congress in Las Vegas, or during one or more national meetings hosted by the Manufactured Housing Institute (‘MHI’). Well, neither venue was utilized for that purpose.

So, during the 20th annual International Networking Roundtable in San Antonio, TX., this past Fall, the notion of a MHInitiative® caucus was discussed. Focus of such an event? To discuss, brainstorm, and effect a plan regarding ‘How to Save Our Industry?!’ And in recognition of successes already achieved on two previous 2/27 dates, the third MHInitiative® caucus was tentatively scheduled for 2/27/2012. When preliminary ‘notices of intent’ were distributed to MHIndustry & LLCommunity businessmen and women, 150+/- committed to participate! However, it was learned this would also be the date MHI planned to host its’ annual Legislative Conference in Arlington, VA.

But that was OK. While the previous three MHI national meetings attracted barely 100 participants apiece, it was felt this might be an even better, intra industry segment forum at which to finally discuss, collectively brainstorm, and jointly effect a comprehensive plan regarding ‘How to Save Our Industry?!’ And there’s precedent of sorts, for such an MHI meeting, recalling a past working session in New Orleans, Louisianan, when (I believe) Barry McCabe was chairman. So, the third MHInitiative® caucus was postponed for the time being; to see what, if anything, materializes from the MHI meeting on 2/27/2012, actually 2/26 – 28. And, that’s where we are today, 2/19/2012, one week away from what could be a pivotal day in HUD Code manufactured housing history.

How and why pivotal? At least three salient reasons. First; the five month top salaried leadership position hiatus has apparently come to an end, with the hiring of Richard A. Jennison, as president and CEO of MHI..*1 Second; what proactive steps have been, and will yet be taken, by MHI in general, and its’ National Communities Council (‘NCC’) division in particular, to mitigate image and reputation damage to landlease communities nationwide, effected by a tenant activist’s testimony, on 2/1/2012, at the Congressional Hearing re the ‘Manufactured Housing Improvement Act of 2000’? And thirdly, having just learned the industry experienced, in 2011, its’ third year in a row of only 50,000+/- new homes shipped (Down from 372,843 in 1998) – in the minds of some, if not many, direct, dues – paying members of the institute; what will MHI definitively do to address, ‘How to Save Our Industry?!’ If not at this meeting, when and where, if ever?

Frankly, the answers to the last two questions will serve as proverbial ‘handwriting on the wall’ indicators, relative to where and how our industry and asset class accesses the road to ‘survival & recovery’ as a viable source of new, affordable housing; or we continue on the now decade – long path of decline to worse….Possible alternatives?

For starters, when and where to convene the postponed MHInitiative® caucus. Already some are suggesting Chicago later this Spring or early Summer. It’s easy to travel to, is home to more landlease community portfolio owners/operators than any other city in the world, and is within easy driving distance from Elkhart, IN., the birthplace of manufactured housing! To ensure your name is on the list of 150 already committed to attend, or seriously desire to add your name to it, send contact information via, or phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633.4764.

And, as you likely know, there’ve been repeated calls of late, from other reaches of the industry, to realign and reorganize advocacy efforts in our nation’s capitol. Specifically, to see the HUD Cod home manufacturing/distribution (i.e. ‘company stores’) segments of the manufactured housing industry (i.e. Home manufacturers large and small!) finally unite, to move forward on their own. This leaves ‘everyone else’ to hopefully reconstitute, or if need be, form a new advocacy body, that’s either inclusive of ‘all other segments’ of the manufactured housing industry, including landlease community owners/operators; OR, see that real estate investment segment finally ‘come into its’ own’, and like the National Apartment Association and other similar advocacy bodies, focus on advancing the interests of member income – producing property types.

An important disclaimer! Other assertions to the contrary, I have NO desire or interest in heading or leading an existing or new national trade or asset class advocacy body! My oft stated goal is to at least semi – retire during the year or two ahead, to pursue other interests. My hope is this will occur via a new, national, not for profit, quasi – academic center for manufactured housing studies and affordable housing. If this does not materialize however, I have no intention of leaving my landlease community peers and colleagues in the lurch, by ‘pulling the plug’ on 30+ years of research and service on their behalf, via GFA Management, Inc., dba PMN Publishing. And if necessary, we’ll cross that bridge together, when we get to it. GFA

Now, harkening back to the title of this week’s blog posting, ‘Lest We Forget…’; where do YOU stand on these timely and key industry and organization – related issues? As is oft said, ‘Inquiring minds would like to know’, and this weekly blog posting, now reaching out to nearly 600 MHIndustry & LLCommunity businessmen and women, as well as elected and salaried leaders, is offering YOU this opportunity to share your thoughts, opinions, frustrations, and the like….Better yet, be in Arlington, VA., on 2/27 to participate in either ‘making history’ regarding our mutual business interests; or leave there understanding, once and for all, why we’re in the decade – long state of business malaise we’re in; and, unfortunately, will likely remain so, for some time to come. To register, phone (703) 558-0666.

End Note.

1. In part, quoted from MHI’s Press Release: Jennison comes to MHI from Omni Solutions Group (a.k.a. Omni SG), founded in 1995, and headquartered in Montgomery Village, MD. For the past couple years, he was partner and Senior Vice President for Marketing and Business Development, overseeing and managing the firm’s substantial not – for – profit ‘tech support & IT services’ business practice. For nearly eight years before joining Omni Solutions Group, Jennison was president and CEO of the Brick Industry Association (‘BIA’).


George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 4624 (317) 346-7156

February 15, 2012

Immediate Response to ‘Four Ways to Restore Affordability’ to Mfd. Hsng. & LLCommunities!

Filed under: Uncategorized — George Allen @ 4:10 am

Immediate Affirmation of ‘Four Ways to Restore Affordability’ to

Manufactured Housing & Landlease communities!


I hadn’t even turned off my PC, after sending this week’s BEBA (Blast Email Blog Alert) to 500+ recipients, when positive responses started arriving, & have kept coming – even today, three days later, as I post this special mid – week blog. Talk about striking a responsive nerve!


So, what’s the excitement about? If you’re reading this blog posting for the first time, my advice to you is to STOP RIGHT HERE, and scroll back through the previous two weeks of blog postings at this website (, to bring yourself up to date regarding the first practical plan designed to SAVE OUR (manufactured housing) INDUSTRY! And this isn’t ‘just my opinion’ either; it’s overt enthusiasm shared by businessmen and women across the U.S. today! The only question is, Are YOU paying attention, MHARR & MHI? (These are manufactured housing’s two national advocacy bodies, domiciled in our nation’s capitol.)

Moving forward and by way of brief review, the gist of this week’s blog posting, Sunday, 12 February, involved four major segments of the HUD Code manufactured housing industry taking simple but major steps to Restore (housing) Affordability to the industry and its’ landlease community real estate asset class.

1. 80 percent of all new HUD Code manufactured homes are built and shipped by two firms, both direct, dues – paying members of MHI. They’re challenged to switch emphasis from ‘big box = big bucks’ multisection and humongous singlesection homes, to Community Series Homes (i.e. CSH = smaller multisection & singlesection homes with durability – enhancing features), to fill an estimated 250,000 vacant rental homesites across the U.S. Also, price these homes ‘affordably’, and ‘keep score’ by counting new homes ‘sold’, not just the ones they’ve shipped – finally breaking 60 years of ‘trailer sales’ tradition!

2. Independent ‘street’ MHRetailers and ‘company stores’ number fewer than half that were in business ten years ago. They’re challenged, once and for all, to shed their 60 year business model of ‘hawking units like car dealers’, and begin marketing and selling new homes as Realtors® do. However, without an adequate supply of accessible chattel (personal property) capital for originating new and resale home loans, little will change, and business survival will be questionable.

3. Independent, third party chattel lenders face a tricky conundrum. They’re challenged to ensure mortgagor customers aren’t buying more home than they can afford; and, at the same time, to revamp loan origination and underwriting, restoring ‘household/utility expenses, but not telecom services’ back into the traditional 30% Housing Expense Factor (‘HEF’). Admittedly, not an easy break with a lending practice that’s been ‘going on’ for awhile – but it needs to be done, the sooner the better.

4. Landlease community owners large and small. These folk have a tri – part Restore Affordability challenge: 1) ensure rental homesite rent is ‘in sync’ within local housing markets; 2) when engaging in self – finance of on – site home sales transactions, make the same change to the 30% HEF as just described; and, 3) keep homebuyer/site lessee’s combined home payment (e.g. PITI & household/utility expenses) and site rent amount lower than they’d pay for an equivalent – sized site – built home in the same local housing market.

OK, there you have the four part plan in brief. Now, what have our online peers been saying about these challenges to Restore manufactured housing Affordability’, these past three days?

“The beauty of your affordability model, is easy to apply; and frankly, simplicity is a good way to avoid ‘paralysis by analysis’. The one piece I keep coming back to though, in terms of manufactured housing affordability, is the difference in annual gross incomes among prospective homebuyers, and prices of inventoried homes in different parts of the same local housing market. Is there a way to match groups of homebuyers with similar AGIs, with appropriately priced housing inventory(ies)? (lightly edited. GFA) Answer? ‘Not to my knowledge or experience, outside multi – retail sales centers owned by a sole proprietor.’ Anyone ‘out there’ have a different take on this query?

“I applaud your continuing efforts to defragment this industry, but seriously doubt ELS, Inc., and Clayton Homes have the ability to change their business models, and promote inter – segment cooperation. Nevertheless, keep the bully pulpit going.” cp

“Good thoughts George. Your excellent suggestions involve some major industry changes. For example, if HUD Code manufacturers do build more CSH homes, they would/should promote them, instead of the ‘big boxes’. That additional promotional exposure would certainly help the rest of the industry! Also, the manufacturers need to define the dividing line between their ‘big boxes’ and modulars. My ‘take’ is that manufactured housing will eventually (maybe now) divide into two segments: the CSH and lower end ‘big box’; and those homebuyers, wanting a factory – built home in the $50,000 plus price range will ‘go modular’.” (lightly edited. GFA)

“Another ‘interaction (inter segment) example’, is that even MHRetailers who make the business model changes you suggest, can’t really sell anything without chattel financing – creating somewhat of a chicken and egg scenario.” So true.

“Yet another (inter segment) reality, is that chattel lenders need to look beyond debt ratio underwriting, and recognize (Actually, ‘remember’) the historic advantage of financing new homes in landlease communities, enlisting on – site management’s assistance with collections, often lowering the frequency and cost severity of ‘repos’. Furthermore, when repossessions do occur, they don’t have to be moved; rather, remodeled in place, and on – site personnel enlisted to assist with reselling. And the community owner might even buy the repo unit. Goal here? Recreate a complementary, symbiotic working relationship between lender and LLCommunity owner/operators.” (lightly edited. GFA)

“Come on George, tell us who the corporate decision – makers are; who needs to get on board this ‘Four Ways to Restore Affordability to Manufactured Housing’ plan to Save Our Industry! The two HUD Code home manufacturers and ‘four plus one’ chattel lender executives are easy to ID. Have any of the seven responded to this blog yet? I’d like to know just that! And as you imply, MHRetailers are probably a lost cause, without a major influx of chattel finance. But the LLCommunity folk. Now there’s a mystery. Who’re you talking about here? Looking at the six biggest portfolio owners listed in the 23rd annual ALLEN REPORT, none of them are openly or directly involved in the machinations of manufactured housing, let alone landlease community affairs. How do we get them to care their properties too, will be ‘going down the tubes’, if they aren’t already, as they price rents out of some, if not all, their markets? I mean, you can only ‘give away’ new homes (i.e. ‘Selling at minimum or no retail margin or profit.’ GFA), in the face of high rents, for just so long. So, who do we look to, to ‘take the lead’ in Restoring Affordability to our property type? And hey, do you know most of these guys don’t even have all their properties paying dues as members of their respective state associations? Come on, tell us more!” (edited. GFA) At this writing, home manufacturers and chattel lenders have been absent from this discussion.

Pretty impressive response, wouldn’t you say? But know what? All this momentum will quickly slow and stop, if we don’t keep the pressure on our elected and salaried industry and asset class leaders. Remember, many of them will be convening in Arlington, VA., @ 26 – 28 February 2012, for MHI’s annual Legislative Conference. Will YOU be present to make your feelings known regarding issues (e.g. S.A.F.E. Act, Dodd – Frank bill, ‘MHIA@2000’, and more…) affecting manufactured housing and landlease communities today? For information regarding this upcoming national meeting, phone (703) 558-0666 and talk to Lisa Brechtel.

In the meantime, know this coming Sunday’s regular weekly blog posting is tentatively titled: ‘LEST WE FORGET…’ and subtitled, ‘Will MHInitiative®’s ‘How to Save Our Industry?!’ Challenge to the Manufactured Housing Institute, also be aired at the Legislative Conference in Arlington, VA., on 26 – 28 February 2012?’ There might well be more riding on this meeting than the event organizers realize….


George Allen, CPM®Emeritus, MHM® Master
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156

February 12, 2012

Simple, Practical Plan to Restore Affordability to Manufactured Housing & Landlease Community Living!

Filed under: Uncategorized — George Allen @ 5:21 am

Finally, a Simple, Practical & Timely Plan to Restore Affordability to Manufactured Housing and Landlease Community Living!

Important Notice. For background information on this potentially industry – saving topic, reread the past two weeks of blog postings, archived at this website (, before heeding this week’s message:

‘Let’s Replace the GOLD RULE with the GOLDEN RULE in 2012’
‘Restore Affordability to Manufactured Housing, Lending, & within Landlease Communities, to Sell More New Homes during year 2012’


Paraphrasing some contemporary American heroes, who courageously and with finality, on 9/11/2001, proclaimed: ‘Let’s Roll!’; are WE, as a dying industry and struggling realty asset class, as corporately courageous to avert own finality, by committing to ‘Let’s Recover!’? IF SO, the following, across industry segments Restore Affordability solutions, for manufactured housing and landlease (nee manufactured home) communities, comprise our best path to restoring housing market share! While simple and practical in concept, there’s no question but that it’ll be difficult to break bad habits, even tradition in some cases, as these industry segment steps require:

1. According to the Manufactured Housing Institute (‘MHI’), 80 percent of all new HUD Code manufactured homes are built and shipped by two factory – built housing firms, both of whom are major, dues – paying manufacturing division members of the institute.*1 By year end 2012, and by dint of their obvious national market domination, they could and should agree, to cease building Developer Series Homes (i.e. the ‘big box = big bucks’ multisection, full – featured models) unless already sold, or designed and ordered in advance of production, as well as ensure said homes are affordably – priced. At the same time, build more Community Series Homes (i.e. smaller multisection and singlesection homes with durability – enhancing features) to be aggressively marketed to landlease (nee manufactured home) communities throughout the U.S., helping fill the estimated 250,000+/- vacant rental homesites contained therein. Who to lead this industry – saving effort? Well, there’s….

2. Independent ‘street’ MHRetailers, even ‘company stores’, are no longer the dominant ‘players’ of years past, as their collective number, according to MHI, is down, nationally, from 11,500 to only 4,000 sales centers.*2 MHRetailers could and should take this 60 year new home shipment slump as ‘an opportunity and motivation’ to revamp their business model away from hawking units like automobile dealers, and commence marketing and selling new homes like Realtors®! Until MHRetailers do this – and now is indeed ‘the time to do so’ – how can we, as an industry, complain that HUD hasn’t fully implemented the Manufactured Housing Improvement Act of 2000 (a.k.a. ‘MHIA@2000’), legislation designed and passed more than a decade ago, to wean us from our vehicular heritage and into the overall housing industry? Who to lead this industry – saving effort? Well, there’s….

3. Independent, third party chattel (personal property) lenders have the conundrum of effecting, at the same time, the easiest and most difficult restore affordability tasks of all. In principle, revamp the nature of loan originations and underwriting, ensuring new and resale homebuyers aren’t mortgaging more home than they can truly afford, at the time of the sales transaction. In practice, this means returning to the original composition of the traditional 30 percent Housing Expense Factor (Where 30% HEF = 30% of homebuyer’s annual gross income or AGI is earmarked for ‘household expenses’*3), this being inclusive of mortgage principal and interest payment amounts, along with escrowed taxes and insurance, and household/utility expenses not including telecom services. While easy enough to describe, it’ll be difficult for lenders to restore an estimated 25 percent of the contemporary 30% HEF factor, for household/utility expenses; effectively ending the reality of homeowners paying these necessary bills ‘above and beyond’ the 30% heretofore used just for PITI. In effect, this past (still present) practice created a shadow HEF factor much higher than the 30 percent ‘affordability’ guideline. Who to lead this industry – saving effort? Well, there’s….

4. Landlease community owners large and small; whether property portfolios or single property owners like me. There’re three restore affordability tasks here. One has to do with ensuring the rental homesite rent is indeed ‘in sync’ with other forms of multifamily rental housing in the same market.*4 Another has to do with reallocating the traditional 30 percent Housing Expense Factor, in the manner described in the previous paragraph. And a third has to do with how the prospective homebuyer’s combined monthly mortgage (i.e. to be comprised of PITI & household/utility expenses) and homesite rental amount, compares with site – built housing in the same local housing market.*5 Once these benchmarks and changes – as necessary, are in effect; we’ll, as an asset class, be well on our way to restoring affordability to landlease communities nationwide. Who to led this industry – saving effort? Well, there’s….

So, there you almost have it. A simple, practical, timely plan to Restore Affordability to manufactured housing and landlease community living in six steps, spread among four segments of the HUD Code manufactured housing industry. What’s missing at this point? Three things: an open and serious discussion of the plan and its’ requisite steps; commitment among all applicable segments of the industry, to make said changes;
and finally, the elected, selected, and salaried leadership necessary, to pull it off. Are YOU one of those leaders ‘waiting in the wings’, for the clarion call to ‘Let’s Recover!’?

This week I didn’t name names at the end of the four numbered paragraphs, but will tell you this: Among HUD Code home manufacturers, there’re three, maybe four individuals who could and should restore affordability to their segment. Among MHRetailers, there are no champions, that I know of, to lead this effort. It’ll have to be a business culture change, even a paradigm shift, brought about by recognition that the manufactured housing industry is in ‘survival mode’ right now, and if this plan doesn’t work, it’s likely nothing else will either – short of a massive dumping of chattel capital into our type housing. Among lenders? Anyone who deals with chattel finance knows who these ‘four plus one’ leaders are. And on the landlease community side? In my opinion, it’s gotta start at the very top, with the largest of our property portfolio owners/operators, setting the restore affordability pace for the rest of us, hoping for a trickle down effect among the 50,000 landlease communities nationwide.

Are YOU on board? As always, anxious and open to hearing your opinions and ‘take’ on this simple, practical and timely plan to restore affordability to manufactured housing and the landlease community real estate asset class. Reach me via, the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, or (317) 346-7156 & GFA c/o Box # 47024, Indianapolis, IN. 46247.

End Notes.

1. Per Congressional Hearing transcript @ 2/1/2012 re: Manufactured Housing Improvement Act of 2000.

2. Ibid

3. HOUSING AFFORDOGRAPHY, ‘Study of Affordable Housing Formulae & Measures of Housing Affordability’, PMN Publishing, Indianapolis, 2008.

4. How to know whether LLCommunity rental homesite rate is truly ‘in sync’ with other forms of mulitifamily rental housing in the same local housing market? Perform two separate Market Surveys. First, survey conventional apartments in the same local housing market, researching just 3BR2B units. Calculate their average monthly rent, e.g. $9000.00/month, then divide by 3 (divide by 2.5 if subject LLCommunity is located inside an interstate beltway around an SMSA city) to estimate what average rental homesite rate might/should be; in this case, around $300.00/month. Second Market Survey is of similar (i.e. size, condition) landlease communities in the local housing market, including the subject LLCommunity. Then ask oneself: ‘How do these rental homesite rates individually, and in toto, compare with the subject property per se, as well as the result of the 3:1 Rule just cited? Two other Rules of Thumb include: The Schwep Rule = total monthly payment (loan & site rent together) must be 15 – 20% less than monthly rent rate for a conventional apartment in the same local housing market to sell manufactured homes onto rental homesites. Also, the Schraeder/Smith Rule = total monthly payment (loan & site rent together) must be at least $50.00 less than monthly rent rate for a conventional apartment in the same local housing market to sell manufactured homes onto rental homesites.

5. Here’re a few well known Rules of Thumb for ensuring one’s manufactured housing transactions, real and anticipated, fare well, when compared to site – built housing in the same local housing market:

• AGI or Area Median Income (‘AMI’) X 3 = affordable land and home deal $ max
• AGI or AMI X 4 = ‘risky’ land/home deal $ (Where to get AMI?
• Income – to – Home Value Ratio or IHVR, a Realtor® Rule of Thumb; where ‘median home value’, for any given market, is divided by prevailing AMI (for that local housing market), to calculate the IHVR factor, e.g. $172,134 national median home value in 2010, divided by $51,229 national AMI during same year, = national IHVR of 3.36. Note how this IHVR of 3.36 falls comfortably in between the first two Rules of Thumb cited here in end note # 5, or factors 3 & 4. So, on a national level, multiply one’s AGI by 3.36 to estimate max affordable land and home deal $. *** George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156

February 5, 2012

Restore Affordability to Manufactured Housing, Lending, & within LLCommunities to Sell More Homes in 2012

Filed under: Uncategorized — George Allen @ 5:26 am

Restore Affordability to Manufactured Housing, Lending, and
within Landlease (nee manufactured home) Communities
to Sell More Homes in 2012

‘Thank You, Thank You, Thank You!’

That’s how one of the letters, responding to last week’s blog posting: ‘Let’s Replace the GOLD RULE with the GOLDEN RULE in 2012!’ began. Here’s the rest of the message:

“For the first time in my long career in manufactured housing, I’ve finally read where someone (you) has put it all together, describing ‘really why’ our industry is in the slump dump it’s in today. ‘Let’s replace the Gold Rule with the Golden Rule in 2012’ just about says it all, in a polite but straightforward fashion. Thank You, Thank You, Thank You! But much more needs to be said….

Allow me to embellish. You were overly kind to the decreasing number of firms who build HUD Code manufactured homes. It’s they, and no one else, who’ve long articulated the pernicious goal, as you rightly state, of ‘BIGGER BOXES = BIGGER BUCKS’ for them! Specifically, they’ve routinely designed and build bigger, more homelike structures, according to their whim, but rarely reflecting what prospective homebuyers, in local housing markets, need or want. Proof of this? As an industry, we keep score, by counting new homes shipped, not new homes sold. And that bassakwards perspective persists to this day! Attend any regional MHShow and inventory the exhibited homes. The vast majority continues to be Developer Series Homes (i.e. large multisection and full – featured), designed for land – and – home package installation (Who’s buying ‘em? No one.); yet still ‘far too few’ Community Series Homes (i.e. smaller multisection, and modest singlesection, homes with durability – enhancing features) suitable for siting in landlease (nee manufactured home) communities! And look at the unit pricing? Still far too expensive to even come close to qualifying as truly affordable homes. Bottom line? HUD Code home manufacturers are, for the most part, bloating us out of business with their too large, too high – priced homes! Solution? Restore affordability, by designing, building and shipping one or more lines of smaller basic manufactured homes that sell for reasonable prices!

Then there’re the independent third party chattel (personal property) lenders. We won’t talk about the rampant chattel loan origination and underwriting abuses that routinely occurred during the peak of our industry’s last renascence, circa 1996 – 2000. No; simply look at the factoid you pointed out in last week’s blog posting: How, somewhere along the line, lenders made it easy for naïve prospective homebuyers, to ‘buy more house’ than they could and can realistically afford. How so? By supplanting 25+/-% of the widely – recognized 30% Housing Expense Factor or HEF, heretofore earmarked for paying just ‘household/utility expenses, not including telecom costs’; but now, with a fatter PITI (inclusive only of principal, interest, taxes, insurance) house payment. Bottom line? Homebuyers now oft in homes they can’t really afford, as they make monthly ‘household/utility expenses, not including telecom costs’ every month, throughout the term of their home mortgage, in addition to a PITI payment comprises the entire 30% HEF! Solution? Restore affordability by putting ‘household/utility expenses, not including telecom costs’ back into the original 30% HEF! It’s truly as simple as that!

Why haven’t I mentioned independent, ‘street’ MHRetailers (to use your term)? They’ve, for the most part, already run themselves ‘out of business’, by gulping the ‘land – and – home package’ – tainted elixir of the late 1990s, believing they could beat site – builders at their own game. Didn’t happen! Isn’t Happening! Unlikely to happen! To be sure, ‘only the strong few (have) survived’. In many cases, these being independent ‘street’ MHRetailers who own/operate landlease communities. The others? Some compete with on – site home sales in landlease communities, others are relearning how to sell new and resale manufactured homes into these income – producing properties. Bottom line? Irreparable damage has been effected throughout this segment of the manufactured housing industry. Solution? Restore affordability by selling more Community Series Homes, or CSH models, into landlease communities nationwide. After all, you did tell us there’s something like 250,000+/- vacant rental homesites out there, right?

Landlease community folk? Just answer these two questions. 1) Are ‘household/utility expenses, not including telecom costs’ included in the monthly house payment a homebuyer pays, as part of the 30% HEF; OR, is that estimated 25+/-% of said 30% HEF supplanted, enabling homebuyer to purchase ‘more home’ than they can truly afford? – while still having to pay extra each month for those non – PITI expenses? And, 2) are rental homesite rents truly ‘in sync’ with other multifamily rental properties in the same local housing market? Do you even know how to tell?*1 Bottom line. If your answer to both questions is ‘No’, then there’s little to no ‘value proposition’ for prospective and present day homeowner/site lessee residents in your landlease community! Solution? Restore affordability, by returning to an all – inclusive 30% HEF when calculating home mortgage loan payments; and, ensure your rental homesite rent is indeed ‘in sync’ with the local housing market.

As I wrote earlier George, ‘Thank You, Thank You, Thank You’, for making this perennial, pernicious matter, pervasive throughout the contemporary manufactured housing industry, public! Hopefully, as more and more brave and responsible businessmen and women, with ‘real skin in the manufactured housing game’, as business owners, become aware of these anti – housing affordability measures and consequences, they’ll embrace what you described in last week’s blog post as “…a timely, reputation – enhancing, industry – saving CHALLENGE”; in quick time, correcting these matters, to finally right the sinking manufactured housing cruise ship!” Your ‘friend in the MHBusiness’, MH Ronin, a pseudonym adopted by request.

(Preceding was edited for clarity & effect. GFA)

End Note.

1. To learn ‘How to Know’ a landlease community’s monthly rental homesite rate is truly ‘in sync’ with other forms of multihousing rental properties in the same local housing market; and, How to Use the Schraeder/Smith Rule and Schwep’s Rule of Thumb, to ensure a prospective homeowner’s combined mortgage and site rent payment is truly ‘in sync’ with fee simple realty mortgage payments, on similar – sized homes in the same local housing market, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 and request descriptions of the popular formulae. As one wag recently put it to some manufactured housing sales pros, attending a marketing seminar: “The time has indeed come, to ‘STOP flying by the seat of your pants!’” So, get these helpful formulae and start selling truly affordable housing ‘by the numbers’. GFA


George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46246. (317) 346-7156

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