Blog Posting # 806; Copyright 16 August 2024. EducateMHC
Know this! HUD-Code manufactured housing (‘MH’) is federally-regulated, performance-based, affordable-attainable factory-built housing (a.k.a. one type of offsite construction). And land lease communities (a.k.a. manufactured home communities & ‘mobile home parks’) comprise the commercial real estate (‘CRE’) 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 production 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 prolific nonfiction author and freelance consultant.
George Allen is the sole emeritus member of the Manufactured Housing Institute (‘MH’), 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 and editor at large. He’s a Vietnam combat veteran and retired lieutenant colonel of U.S. Marines, and author/editor of 30 books & chapbooks on MH, communities, business management, prayer & figures of speech.
Seven Land Lease Community Historic Perspectives
Eight land lease community historic perspectives were initially identified and published during year 2020, as part of an introduction to the Manufactured Housing Manager (‘MHM’) professional property management certification program administered by EducateMHC. That number has been reduced to seven perspectives by combining two previously separate views.
What makes these seven unique historic perspectives worthy of revisiting here, is how each has changed, even during the short span of five or so years. Read, ponder and apply these pithy perspectives to your land lease communities and operation thereof.
Evolving terminology. From the ‘mobile home park’ of the 1970s to manufactured home community of 1980s & 90s, to land lease community since the turn of the century. Why the most recent evolution? Because today we count at least a half dozen different shelter types as increasingly commonplace throughout this income-producing property type: new and resale HUD-Code homes of various configurations, Park Model RVs, larger recreational vehicles used as homes, stick-built homes looking like MHs (only in FL after hurricanes), accessory dwelling units (‘ADUs’) like Tiny Homes, even modular homes. For that matter, terminology wise, think of how lots, pads, spaces and stalls as increasingly referred to as rental homesites; and, tenants thought more of as residents or homeowners/site lessees.
Improved rent collection, from ‘then to now’. During 1970s, monthly rent due date was often the anniversary date of one’s move onto the property and rental homesite, and said rent was collected in cash on-site. No more. Today, everyone has the same anniversary date, and site rent is paid via check, credit card, debit card, and other electronic means – rarely cash. This means no more money laundering, as was the case ‘back then’ in Chicago suburbs.*1
Published operating performance standards. Prior to the real estate investment trust (‘REIT’) wavelet of 1994, ‘seat of one’s pants’ performance measures were commonplace. Then Wall Street analysts insisted on documentation and standardization of emerging operating expense ratios (‘OERs’), resident and home turnover, and ‘cap rate’ (i.e. income capitalization) measures for community portfolios ‘going public’. This task was accomplished via national research conducted by the industry trade magazine, at the time, Manufactured Home Merchandiser. Results? An Industry Standard Chart of Operating Accounts based on Institute of Real Estate Management (‘IREM’) Experience Exchange annual surveys, and an industry Standard Operating Expense Ratio of 40+/-%, compared to conventional, garden-style apartments at 55%.Why the significant difference? Apartments’ higher turnover and costly ‘make ready’ and greater marketing expenses. *2
National advocacy. Prior to 1993, was effected at the Manufactured Housing Institute (‘MHI’) via a committee of volunteers. Then, during the next three years, the National Communities Council (now a division of MHI) emerged with much enthusiasm and fanfare; not so much today. Manufactured Housing Association for Regulatory Reform continues, since 1985, to be our industry’s Washington Watchdog, in regards to pending legislation and regulatory affairs.
Print & online resources. These range from nearly none during the 1970s to now books, trade publications, standardized forms, even professional property management (‘PM’) training and certification programs (Circa 1980 and on into the 21st Century). Two case bound texts, on land lease community development and commercial investment were published by J. Wiley & Sons during the early 1990s and are today classics. Trade magazines and newsletters have ‘come & gone’ over the decades, with MHInsider prevailing today. Standardized PM forms continue to be available in Community Management in the Manufactured Housing Industry, available from www.educatemhc.com Unfortunately, PM training and certification continue to take a backseat in this real estate asset class. Manufactured Housing Educational Institute (‘MHEI’) offers an online Accredited Community manager (‘ACM’) program, and IREM lists slightly more than 100 of its’ Certified Property Manger members as claiming affinity for land lease community management. But that’s all!
Consolidation of HUD-Code housing manufacturers into a few large firms; and heretofore standalone land lease communities into one of more than 500+/- property portfolio firms. Specifically, there were 25 HUD-Code housing manufacturers in 1977; today mainly the Big 3-C firms (i.e. Clayton Homes, Inc., Skyline Champion Corporation, & Cavco Industries), garnering 75+% of national market share. And while only 25 known community portfolio firms in 1987, this number has blossomed to 500+/- such firms today. Attrition, for various reasons, has depleted the ranks of independent (street) MHRetailers and independent chattel capital firms (i.e. home-only lenders) nationwide.
Industry-changing paradigm shift, between year 2000 and now. Some call it a New Era, where new HUD-Code home distribution is spread equally among independent (street) MHRetailers, ‘company stores’, and on-site selling and seller-financing of new homes within land lease communities. In the latter instance, where only 15-20% of new HUD-Code homes were shipped directly into communities at the turn of the Century, that percentage has increased to 40+ percent. How so? First there was the introduction of the Community Series Home (‘CSH’) for placement in communities, then community-focused sales training and seminars where need be, e.g. since 2016, IMHA/RVIC’s annual ‘two days of plant tours & home sales seminars in Elkhart, IN; also the annual SECO event in Atlanta (for 12 years), and now the growing MH2X movement (i.e. goal to increase annual MH production twofold by year end 2025).*3
And there are other perspectives along the way. One in particular has to do with the growing, in size and influence, RV/MH Heritage Foundation in Elkhart, IN. Founded in 1972, the RV/MH Hall of Fame museum, library, and exhibit halls – following a period of financial struggle – have blossomed during the past decade. Today, besides the library and spacious meeting facilities, the facility boasts two large, world class collections of historic manufactured homes and recreational vehicles, open to public view. And to date, nearly 500 industry pioneers and notables have been inducted into the RV/MH Hall of Fame as enshrinees!
End Notes.
- Read DOUBLE DEAL, by Michael Corbill, 2003. Mobster Joey Testa at Sterling Estates, IL.
- Read SWAN SONG, History of Land Lease Communities. Available via educatemhc.com
- For a FREE package containing the 5X7” plastic wallet card containing ‘Four Steps’ & ‘Six Right Ps of Marketing’ new homes within communities, and the ‘Ah Ha! & Uh Oh! Formulae Worksheet for calculating housing price points, based on AIM & AGI, request it via gfa7156@aol.com Be sure to include your preferred postal mailing address in the request.
George Allen