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

September 25, 2020

Macro, Micro, & More…

Filed under: Uncategorized — George Allen @ 11:25 am

Blog Posting # 605 @ 25 Sept 2020; Copyright 2020:

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’ comprise the real estate component of manufactured housing!”

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email:, & visit

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: This week’s blog posting is a ‘twofer’! Receive and read one right here. The other one, blog # 604, must be requested via email message to So, what’s going on? I penned a tripartite story titled, the ‘Very Bad Boys of Manufactured Housing’. In it I identify a gangster, serial killer, and mass murderer – all who, at one time or another, made their living in land lease community business environs. Not wanting to offend anyone, by wholesale distribution of this blog, I decided to make it available on a ‘per request basis’. It really is ‘quite a tale’. Hence, if you’d like to receive and read blog # 604, let me know via and I’ll respond, with article attached thereto. GFA

Macro, Micro, & More…

Have you noticed, more and more commentary, from the secular and business press, writes how healthy the housing market it these days – despite the coronavirus pandemic. Well, here’re a couple gems I gleaned from ‘Cash In on a Housing Revolution’, by James Glassman, in the current issue of the Kiplinger Personal Finance magazine.

‘COVID-19 will change the home-buying landscape for the better, in part by creating more homebodies. During the epidemic (sic), homes became the center of nearly all family activity – recreation, entertainment, dining, education and work. Equity in a family home is the number-one asset for households, accounting for about one-third of net worth, collectively.” P.28

And this….

‘Exodus to the country. According to the National Association of Realtors, buyers want to move farther out so they won’t be so close to neighbors who might be infected, now or in the future. The mayhem that followed police violence this spring has also led to some disenchantment with urban living, but the nation’s three largest metropolitan areas – New York, Los Angeles and Chicago – were already losing population.” P.28

Bringing this matter ‘closer to home’; specifically, the manufactured housing business, here’s what John Ace Underwood, founder of SellingEDGE, observes and opines to independent (street) MHRetailers:

So long as people have jobs and the demand is as high, rising home prices typically are no reason to panic, as they affect all retailers equally. However, when you couple rising home prices with seriously prolonged build times, now you have a problem. Those who aren’t paying attention to profit margins on EVERY deal and believe they can make up for lower profits by increased sales volume will find themselves in financial purgatory before they now what hit them.” Email correspondence.

Know what? Most, if not all what consultant Underwood pens here is correct and telling. However, when adding land lease communities to the mix, with their increased volume of on-site new HUD-Code home shipments (i.e. up from 24% in 2009 to 40% in 2015), being sold and seller-financed or lease-optioned, there’re two matters to consider:

• Rising home prices and prolonged build (manufacturing) times have waved-off some owners/operators from buying new homes until prices and lead times stabilize. One more reason monthly MH shipment totals are plateaued and now dropping.

• While profit margins are certainly important, many if not most land lease community owners/operators who sell and seller-finance on-site, routinely accept smaller margins, if any, to get new homebuyer/site lessees in place and paying rent – counting on the annuity nature of said payments, over the long haul, of say, 20 years or more.

Now, more than ever before, HUD-Code housing manufacturers should sit down and talk with land lease community owners/operators about the present and future of manufactured housing and the real estate asset class, where target markets are concerned – less geographically oriented, but using purchasing indicators like Area Median Income (‘AMI’). Bottom line? Will we continue trying to crack the ‘big box = big bucks’ housing sale code (Keeping in mind only six CrossMod™ home were purchased and mortgaged – by one of two GSEs – during all of 2019); OR, redouble our commitment to truly affordable housing? Strange to me, how more and more new stick-built homes are going up, while our monthly (and annual) manufactured housing shipment volume, once again, declines. Why aren’t we discussing and strategizing about this?

As I’ve said before, I’d be pleased to volunteer as planner and host of the aforementioned ‘sit down’, this year or early next, at the RV/MH Hall of Fame in Elkhart, IN. If seriously interested, email me via; or if you just want to talk about the matter, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

And this in conclusion. How’s the old Eldridge Cleaver bromide go? “If you’re not part of the solution, you’re darn sure part of the problem!”


MHIndustry ‘watchdog’ MHARR Sounds the Alarm!

‘Fannie Mae & Freddie Mac Have Learned Nothing From Their Subprime Debacle’

So reads the title of the Manufactured Housing Association for Regulatory Reform’s (‘MHARR’) communique for September 2020. Too many salient, thought-provoking, convicting passages contained therein to repeat here. Bottom line for me? While many of Mark Weiss’ comments disturb (trouble) me, I find myself wondering: ‘Why isn’t anyone else in the manufactured housing industry’ plowing the same regulatory ground? He’s either accurate or he’s not. If the former; well, we only have ourselves to blame if we don’t heed his warnings. If the latter, then someone should step forth and set the record straight.

If you’d like to read these four single-spaced typeset pages, email Mark via (202) 783-4087.


Is Your Firm Eligible for Inclusion in the 32nd annual ALLEN REPORT?

The deadline (10 September) has come and gone, but if you respond to this reminder SOON, we can still include your land lease community portfolio firm in the 32nd annual ALLEN REPORT, planned for distribution during January 2021.

Eligibility? If you own and or fee manage 500+ rental homesites or a minimum of five land lease communities (any size), you’re eligible!

What to do? Email me at and request the 32nd annual ALLEN REPORT questionnaire. Will get it to you right away!

George Allen, CPM, MHM EducateMHC

September 18, 2020

Wall Street Analyst Muses about Land Lease Communities as Investments

Filed under: Uncategorized — George Allen @ 10:15 am

Blog Posting # 603 @ 18 Sept 2020; Copyright 2020:

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’ comprise the real estate component of manufactured housing!’

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email:, & visit

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION. Two interesting parts to this week’s blog; one quoting a Wall Street analyst, the other, an abbreviated outline I use when sharing the Official State of the Manufactured Housing Industry, with various audiences. ANNOUNCEMENT. If not already a subscriber to The Allen Confidential! newsletter, you might want to do so ASAP. Why? Because the lead feature in the October issue is titled: PAST ‘PLAYERS’, Where are they today? Have spent the last month or so identifying and tracking down 50 or so individuals that were once widely recognized names in the MH & LLCommunity business models. Some very interesting findings. Active ‘players’ are not profiled; and those who’ve died, as you may or may not know, are identified in a Memorial column, each month, in the TAC! newsletter. To subscribe: visit


Wall Street Analyst Muses about Land Lease Communities as Investments

Two reports, prepared by non-MHIndustry or land lease community ‘players’, appeared on the business news scene recently. I’ll review one of them here: ‘You are About to Change our Mind on Manufactured Housing’, by Brad Thomas. Perhaps next week we’ll take a look at ‘The Basics of Investing in Manufactured Home Communities: History, Evolution and Opportunities’, produced by LoopNet.

Thomas, from the very beginning, struggles, using inappropriate manufactured housing terminology. His description of choice for our unique, income-producing property type? Manufactured Housing Parks, when he should be penning land lease communities!

One of the writer’s first observations is how this realty asset class is: “…unique, controversial, and (a) vastly underappreciated segment of commercial real estate’. P.1

Now, this is interesting. Thomas cites $27.7 billion (market cap) for this realty sector. He calculated that figure by adding together the market caps (i.e. market cap values for REITs ELS, Inc. @ $12 billion; Sun Communities @ $15 billion). Unclear whether he included UMH Properties @ $619 million, or not. So, as you can see, this is a very narrow window of examination, covering just two, maybe three, publicly-traded portfolios of land lease communities. How does this $27.7 billion compare to other REIT segments? Industrial, office, self-storage and retail are pegged at $125.7; $78.8; $60.7; and $101.2 respectively. FYI. EducateMHC prepares and circulates, to PRIME subscribers of The Allen Confidential! monthly newsletter, a combined ‘Official MH Shipment & Stock Market Report’, describing the performance of all eight public MH & land lease community-related firms. To subscribe, visit

Nice to know. Among all REITs (real estate investment trusts), “…manufactured housing parks were the top-performing real estate sector in 2019.” P.5.

“Owners of manufactured homes…stay in their homes longer than traditional homes.” (15 years vs. 13 years) p.7. Another factoid worth hanging onto.

But here’s a claim I challenge: “…there were only 10 new manufactured housing parks established in the U.S. in all of 2019.” P.9. Writer provides no documentation of this claim. I’d be comfortable with a number twice that amount, based on what I’m hearing these days.

“Manufactured home parks are designed for those living off around $30,000 per year.” Note: National average AMI or Area Median Income, of late, has been in the $50,,000-60,000 range. Do you know how to use AMI to estimate housing price points for any local housing market? If not, request a copy of the ‘Ah Ha! & Uh Oh! Worksheet’ via

Now, this is interesting. “Manufactured home park depreciation schedules typically average 15 years, compared to apartments of 27.5 years, and commercial properties (e.g. office and industrial) of 39 years.” This means, “The higher depreciation rate equates to higher after-tax cash flows to investors, based on identical income generation.”p.18. Bet most of you didn’t know that.

“Existing REITs in this sector, Equity LifeStyle Properties, Inc., Sun Communities, Inc., and UMH Properties (UMH), buy essentially all their properties from individuals or families at around net asset value. Once in the REIT, however, they are immediately valued at a -20% premium. This creates immense value for shareholders.” P.18


Land Lease Communities Today…

Most of the time, when I’m asked to present the Official State of the Manufactured Housing Industry, I cover two major sectors: manufactured housing per se, and land lease communities at large. What follows here is an abbreviated summary of just the latter half.

According to the 31st annual ALLEN REPORT, for year 2019, not much changed from the previous year. Access to chattel capital, for on-site seller financing of home-only loans, continues to be the dominant, albeit frustrating challenge for most community owners/operators nationwide. One continuing result, an emerging trend, is the return to renting out of new homes on-site…just as we did during the late 1970s and early 1980s.

Statistics from the ALLEN REPORT indicate 93 percent national physical occupancy, among portfolio firms, during 2019; and, 41 percent operating expense ratio or OER. A new ‘measure’ came on the scene during 2019, the National Average Multifamily Rental Rate (for conventional garden style apartment communities). For example, during the measurement period, that figure was $849.00/month rent. Compare this amount to $800/month for a manufactured home in a land lease community where site rent is $300/month and PITI is $500/month. Taken together, the $800 monthly figure, compared to $849/month, suggests a $49/month incentive to live in a land lease community. However, if utility expenses, for said home in a land lease community, are included in the monthly payment, that ‘incentive’ disappears, unless site rent is reduced or lesser (more affordable) home is financed.

The new tripartite advocacy, resource, and communication presence for land lease communities nationwide?

• Manufactured Housing Institute or MHI. National legislation, representation, regulation, and issues affecting MH, and realty asset class at large.

• National Communities Council (NCC) division of MHI. National projects, property management & installation training via MHEI, and networking opportunities relative to community owners/operators nationwide

• EducateMHC. Primary resources (e.g. ALLEN REPORT & 12 additional Resource Documents updated monthly), communication (via this weekly blog & The Allen Confidential! newsletter), and services (e.g. Manufactured Housing Manager or MHM training & certification, & confidential assessments of property operations performance.

And yes, there are emerging – and existant, trends to watch as time passes.

• Continued consolidation of Mom & Pop-owned land lease communities into private and publicly-owned property portfolios, too often resulting in less coorporate support for state manufactured housing associations.

• Increased presence of resident-owned communities or ROCs.

• More new HUD-Code homes shipped directly into land lease communities for sale, e.g. 25 percent in 2009 & 40 percent during 2015 and beyond.

• Success or failure of properties acquired by outside investors (hedge funds) paying exorbitant amounts, then increasing site rents to much higher levels.

• New HUD-Code homes ‘sold on-site’, often with minimal profit margins, to ‘make the deal’, relying almost wholly on the annuity nature of site rent into the future.

Two perennial issues affecting all manufactured housing and land lease communities:

• Continued absence of two secondary markets: resale of manufactured home and valuation thereof, via continued use of ‘book value’; and, selling off of seasoned ‘contract sale’ paper on MHs, to replenish chattel capital for the purchase of new homes on-site in land lease communities.

• And now, a new (?) challenge for the industry and realty asset class! Economic Impact Analysis or EIA. While a complicated process – researching and publishing accurate economic impact of various industries, and realty asset classes, on local, state, and national levels, it’s how we best justify our existence, even need for less regulation, if appropriate. The (?) mark? EIAs have appeared, over the decades, in various states, e.g. Indiana in late 1980s, and recently in Wisconsin. Should be done in every state and, by MHI, MHARR, and or MHCOA, on the national level! Let’s see if it happens.

We’ll conclude this part of the blog by making an observation about ‘doing business’ during the coronavirus pandemic. Virtually every land lease community owner/operator I’ve talked to during the past six months has expressed mild surprise about how well homeowner/site lessees have honored their rental commitments. Yes, some have incentivized the process with earl pay discounts, etc. But, by and large, it appears residents appreciate having their own home (to self-quarantine within) and do not want to risk losing it during these stressful times!

George Allen, CPM, MHM

September 11, 2020


Filed under: Uncategorized — George Allen @ 8:20 am

Blog Posting # 602 @ 11 Sept 2020; Copyright 2020:

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’ comprise the real estate component of manufactured housing!’

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: , & visit:

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!


Signs are everywhere! But have you ever stopped to think how they affect and influence your personal and business life? I did so recently, and came away with these musings.

My first experience with the effectiveness of creative sign-making occurred decades ago, as I drove behind a Klosterman Bakery delivery truck. Below the company name was this message: ‘I just left a great restaurant!’ To myself, I thought: “Hmm. Wouldn’t I prefer to ‘follow’ him to discover a great restaurant?” Well, I penned a letter to the CEO of Klosterman’s, making that recommendation. And guess what? A few months later, as I pulled behind another of the firm’s delivery trucks, I read this message: ‘Follow me to a great restaurant!’ Never heard from the firm, thanking me for my suggestion. Just figured a junior marketing exec used my suggestion, and got promoted for doing so. Oh well.

Then there’s the first practical signage lesson learned in (then) manufactured home community management. It was 1978, and during my first week on the job with Turtle Creek Management, managing four rough ‘trailer parks’ in IN & KY., I asked to visit the ‘best run community in the U.S.’- as an example to aspire to. Well, they sent me to Wymberly in Georgia, then owned by Craig White. First thing I noticed as I drove on-site was an attractive 2 tall X3’ wide plywood sign mounted on 2X4s, a foot off the ground, with flowers planted underneath. Message? WELCOME HOME. And on the reverse or exit side, DRIVE CAREFULLY. That sign idea was an inspiration to me, then a professional property management trademark, when I went out on my own a couple years later.

Fast forward 30 or more years. That’s when I drove on-site, visiting a MI. property managed by now retired Lynwood Wellhausen. When I commented on how slow everyone seemed to be driving, he took me off-site to see the signs I missed when entering the property. Each one, with white letters painted on a bright red background, asked: ‘How Would You Feel If You Injured a Child While Speeding in This Community?’ And a few years later, a variation to this theme, became available via the internet. 2’wide & 3’ tall, again white letters on a red background, with this message: DRIVE LIKE YOUR KIDS LIVE HERE!, followed by this sourcing address: www.DriveLike Your Kids Live

Now here’s a cute sign story. In southern Indiana – can’t recall the specific town, there’s a small billboard on the outskirts, near a hotel, which proclaims: ‘A Lovely Place to Stay’. Nothing more, nothing less. Well, when I first saw it, I jotted down the message, pondered it, then decided it’d be a fitting subtitle, so to speak, on property entrance signs gracing superior land lease communities. The new message? ‘A Lovely Housing Discovery!’ Know what? Chrissy Jackson, ACM, and a few others have borrowed that idea over the years, and such signs now exist at several land lease communities around the U.S.

No one, in my opinion, has done a better job with offsite and on-site signage than Florida Communities of several decades ago. What’d they do? Began with full-size highway billboards enroute to all their properties, each one featuring the late entertainer George Gobel, rowing a boat on a lake, headed for one of the firm’s properties in the distance. Then, once on-site, it was obvious entry signs were repainted every six months, and ‘beautified’ with fresh flower plantings every couple months. Seriously. And at the Information Center, a sign announcing: ‘Reserved For Future Resident!’ Then, driving thru the property, see ‘kick down’ signs featuring a Smiley Face caricature – frowning. Message? ‘Sorry, I’ve Been Taken!’, informing one this rental homesite was already leased, awaiting a new home.

A couple other contemporary sign trends. More and more we’re seeing dual signs on-site; one in English, the other in Spanish; oft times providing instructions on how to pay one’s rent electronically – along with other messages. And, for those land lease community owners/operators who host Home of the Month contests every spring and fall, consider having an A-frame structure supported sign (i.e. 3’X4’ plywood on 4”X 4” frame for portability), proclaiming: HOME OF THE MONTH! Paint this in bright colors, including corporate logo, and move it from rental homesite to homesite each month, identifying ‘winners’.

Bootleg signs. Property near an interstate highway? If so, consider mounting aluminum plate signs, painted in same PMS colors as official highway signs, containing only the name of the property – with an arrowhead at either end, showing exiting vehicles which way to drive. Done well, they oft remain in place for years. In this case, imitation is more than just flattery, it’s a practical help to prospective homebuyers/site lessees enroute to your land lease community!

Land lease community leasing/sales (a.k.a. Information Center) offices are notorious for offbeat humorous messages posted therein. Here’re several examples purloined from community offices during Mystery Shopping visits:

• ‘Writers of Bad Checks will be Beaten, Stomped, and Stabbed. Survivors will be Prosecuted!’

• ‘Business Hours: We’re Open most days about 9 or 10. Occasionally as early as 7, But some days as late as 12 or 1. We’re Closed about 5:30 or 6. Occasionally about 4 or 5, But sometimes as late as 11 or 12.’

• Nodis. ‘Trespasers will be persekutedd by 2 mungrel honds that don’t like STRANGERS n’ a 2 barrel shotgun loded fer troble. DAM if I aint gittin Tired of This HELL Raisin on My place!!’

And probably one of the most frequently seen ‘signs’ has long been, plastic license plates containing the name and phone number of the land lease community, along with this message: Neighborhood Watch! And while vinyl bumper stickers are more temporary than permanent signs, here’s one that was popular back in the k1980s: ‘I (heart) MY MANUFACTURED HOME!’

Now here’s a personal sign story. Back when George Allen, son of the famous late NFL football coach with the same name, was running for U.S. Senate in Virginia, friends of mine would appropriate one of his yard signs, 2’tall & 3’wide, that said: ‘George Allen for SENATE’. Then they’d stop by our home at night and mount the political sign in our front yard. Always good for a few curious telephone calls next day and the next.

So, do you have a favorite ‘sign story’ you’d be willing to share with us? If so, let me know via

George Allen, CPM, MHM

September 4, 2020


Filed under: Uncategorized — George Allen @ 11:48 am

Blog Posting # 601 @ 4 Sept 2020; Copyright 2020.

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’ comprise the real estate component of manufactured housing!

EducateMHC is the online national advocate, asset class historian, data researcher, education resource, & communication media for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email:, & visit:

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!


‘One of the Most Risky Business Transactions in the Manufactured Housing Industry’

Buying & Selling Land Lease Communities

Acquiring a land lease community (formerly, manufactured home community) as a real estate investment? You familiar with the numerous touchstones to examine, document, and plan during the pre-closing due diligence period? Thinking here of ‘good & bad’ relative to property location & street layout; number, size & functionality (i.e. whether functionally obsolete or not) of rental homesites; and the type & condition of property’s infrastructure, where utilities (above & below ground) & streets are concerned. And the list goes on, including careful due diligence examination of property’s ‘financials’, where accounts receivable & payable are concerned, along with staffing considerations past, present & future.

For many years, as a long time land lease community owner/operator and freelance consultant, I offered Mystery Shopping and ‘pre-due diligence inspection services’ to novice, or first time buyers. Unsure anyone active in the real estate asset class does this, other than EducateMHC, now that I’ve withdrawn from active professional property management.*1 So, for the most part in this blog, I’ll share touchstones and techniques which highlighted pre-due diligence services over several decades.

Marketing and selling one’s land lease community, as a real estate investment, is as tricky as the acquisition drill; but here, in my opinion, potential pitfalls have more to do with real estate contract terms than almost anything else. While these comments apply primarily to sellers, most also have an application to buyers as well. Examples:

• Whether to use a real estate broker or not – and if so, who or which firm? Given the popularity of land lease communities, as investment vehicles these days, one might consider using the services of a local, or near local, real estate specialist attorney, to protect one’s interests! How to market the property? Tap into inquiries received during the past six or so months. And, once the word is out, the property is on the market, you’ll receive plenty of additional inquiries. Bottom line? Whoever leads, or is part of your marketing team, must be protecting your pecuniary interests from start to finish! Now, if you know (well) a regional or national broker who specializes in marketing land lease communities, this might be a wise choice to consider.

• Pricing one’s property, with and without park-owned homes in place. These days, a land lease community-savvy real estate appraiser is probably your best bet – not necessarily the broker who maybe ‘promises you an exceptionally high offer’, to get your attention and listing. Valuing homes on-site (again, park-owned homes) is an especially touchy subject. For example, will their value be based on income- producing potential or replacement value (e.g. NADA blue book or programming)? Sellers generally prefer the former; buyers – to keep values low – generally prefer the latter.

• Do property listing and sales contracts protect your interests or those of the listing broker (brokers) and or buyer? How to tell? Several ways, but one of most ‘telling’ is the existence and nature of ‘escape clauses’ contained therein; i.e. Can you get out of the ‘deal’ easily, or have to forfeit any deposit you may have accepted to take your property off the market? And for how long are you locked into the listing contract? 30, 60, 90, 120 days or longer? Generally, ‘the shorter the better’ unless the property has issues.

• Cash or contract sale? An old Rule of Thumb: ‘You can control the price or the terms of the deal, but not both!’ Meaning: Cash sale = less $ at ‘closing’ (i.e. via bank loan) with no risk of having to take the property back in foreclosure. However, more $ at ‘closing’ with contract sale, but be vigilant on terms ensuring they protect the seller in the event of loan default. Seriously. Happens more than most folk realize. For a list of 20 lenders and brokers who specialize in land lease community loan origination, refer to the EducateMHC Resource Document: ‘National Registry of ALL Lenders’.*1

• If a contract sale, and buyer has other land lease communities within 100 miles of the subject property, visit them to observe how well or poorly the buyer manages them. Best indicator of what to expect for the property you’re selling.

• A final bit of advice for now. Be aware of, and beware, buyers who immediately accept your offering price or value. While maybe legitimate, know there have long been buyers who use this ploy: Agree to pay higher than justified sale price, then wait out the due diligence period, with little or no property and accounting inspections and demands. Then, within a week or so of ‘closing’ make demands on seller to lower the sale price and or correct deferred maintenance, and worse, capital expenditure shortfalls ignored to that point. All too often this work!. Why? Sellers often plan their post-sale lifestyle changes, have told friends and family of the pending transaction, and otherwise – mentally ‘walked away from the property’, not wanting to start the process again.

Some of the touchstones I, as a pre-due diligence consultant, considered during the review of documentation provided by property owners and or real estate brokers, to our clients who were potential buyers:

• Ensure buyer knows what he/she wants to buy and has the ability and capital to effect a land lease community transaction. Examples: OK with 50% (turnaround challenge) or must have 100% physical – and economical occupancy? Prefer public or private utilities on-site, e.g. water, sewer. Low or high site density, e.g. five or 15 homes per acre? Accept functionally obsolete rental homesites (too small for siting of contemporary manufactured homes) or not? And how far/close to buyer’s home or office must the property be?

• Research and visit local housing market to get ‘feel’ for the property proper, employment opportunities in the area (unless a retiree mecca), quality of education, and presence of shopping, hospitals and other services. Good place to start is local Chamber of Commerce and their handouts.

• Visit to learn the Area Median Income (‘AMI’) for this local housing market (property specific). This will assist in learning what housing price points, from ‘risky’ & ‘affordable’ perspectives, ‘work’ in this location. To that end, you’ll need a copy of the ‘Ah Ha! & Uh Oh! Worksheet’ to work through those numbers.*1

• Consider making Good/Bad Unchangeables & Good/Bad Changeables lists for the subject property. Max number of good Unchangeables (e.g. location, density, utilities) is Good. However, bad Unchangeables are ‘warning’ signs. If aligned with buyer’s goals (e.g. turnaround challenge is OK), max number of bad Changeables (lack of rules enforcement, poor collections, lousy resident relations, etc.) is a Good indicator; otherwise, buyer may want as many good Changeables as possible. Hint: Almost all ‘Changeables’, good and bad, are property management-related, so begin there.

• Take time to perform a SWAT Analysis. On an 8 ½ X 11 inch piece of paper make a vertical line from top to bottom, and midway down the page, a horizontal line from side to side. Then, top left corner, label as STRENGTHS (now). Top Right corner, label as WEAKNESSES (now). Bottom left quadrant label as OPPORTUNITIES (now & future), and bottom right quadrant label as THREATS (now & future). That way, as you review local newspapers, talk with the property owner and other resources, learn and categorize the Strengths, Weaknesses, Opportunities, and Threats, relative to this property. And plan accordingly.

• Ascertain whether present rental homesite rate is in sync, or not, with other types of multifamily rental properties in the same local housing market. Two steps: First, ascertain local monthly rent rate for conventional garden style apartment communities in the same area, especially 3BR2B units….comparable in size to manufactured housing. Take that average (e.g. $900/month) and divide by ‘3’. Answer = $300/month for land lease community target site rent for transaction property. Is offered property above or below that amount? First acid test. Step two; compare subject property rent with other land lease communities in the area, to see if there’s room for ‘lift’ after ‘closing’, or is rent already above market, restricting buyer’s options post ‘closing’?

• At some point during this sequence of touchstones, perform a ‘Cash Flow Analysis’ of the property’s operations, using the ‘MHIndustry Standard Chart of Accounts’ for Land Lease Communities, along with the Operating Expense Ratios (‘OERs’) contained therein. Use a Cash Flow Analysis form that allows you to list the ‘present performance $’ side by side with ‘future performance $’ based on changes anticipated for the property post closing.*1 Know that the national average OER for land lease communities continues to be 40+/-%, according to the 31st annual ALLEN REPORT.

OK, the transaction appears to be headed for consummation or ‘closing’. What now? Prepare a Management Action Plan (‘MAP’) based on one’s visits to the property, Cash Flow Analysis, SWAT analysis, and lists of Unchangeables and Changeables. Even Mystery Shop the property, by phone and in person, to evaluate the present day staff’s job performance. When preparing the MAP, be sure to include a completed Takeover Checklist, and Property Information Sheet (e.g. vendors, phone numbers and more). All these helpful materials, and more, are included in the nearly 200 page textbook: Community Management in the Manufactured Housing Industry, available from EducateMHC.*1

Two concluding tips. When first entering a new local housing market, when evaluating a land lease community, attempt to locate an independent (street) MHRetailer. Playing the role of a would be homebuyer, ask for names of best and worst properties in the area. If subject property is not mentioned, ask about it. Also ask for a list of all communities in the area. Next. When driving on-site for the first time (in an older vehicle, and dressed casually) stop and ask a resident what the site rent amount is, how it’s paid (on-site, mailed or electronically), and what he/she likes and dislikes about living there. Answer to the second question will usually unearth issues that will likely play into negotiations to purchase the property.

End Note. 1. To contact EducateMHC, visit or Erin Smith, MHM, via (317) 738-3434

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