Best of Times & Worst of Times

May 16th, 2019

Blog # 533 @ 14 May 2019; Copyright 2019; www.educatemhc.com

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

This blog posting is sole national advocate, official ombudsman, historian, research reporter, education resource & online communication media for North American land lease communities

To input this blog, &/or affiliate with EducateMHC, formerly Community Owners (7 Part) Business Alliance, or COBA7, use Official MHIndustry HOHTLINE: (877) MFD-HSNG or 633-4764

Motto: ‘U Support US & WE Serve U!’ Online media goal? Inform, opine, transform & improve manufactured housing & land lease community lifestyle! Visit www.eduatemhc.com

INTRODUCTION: They to run in pairs, questions businessmen & women in manufactured housing & land lease communities ask from time to time. Today, the most frequent ones are:

• What’s with private equity firms overpaying for land lease communities, then greatly jacking rental homesite rates? Will there be a day of reckoning when they realize homeowners/site lessees will no longer put up with greed devaluing of their manufactured homes, and simply ‘walk away’?

• OK, I really like being fully informed about the, in this dual case, ‘industry & realty asset class’ in and with which I – and our firm, are invested and involved. What should I be reading each week, month, and quarter, to stay fully informed?

I

Best of Times & Worst of Times.

Land Lease Communities (a.k.a. manufactured home communities) in the Spotlight of Investor Interest, Homeowner/site lessee Concern, & Landlord/Tenant Legislation

From coast to coast; starting in the Pacific Northwest, via upper Midwest, and through to New York state, land lease community matters are the focus of much attention these days. How so? Here’s a sampling of contemporary attention-getters:

• It’s a historically extravagant Sellers’ Market among institutional investment grade land lease communities nationwide – with no immediate end in sight!

• When overvalued land lease communities ‘sell’, expect inordinate rental homesite rate increases to soon follow! Likewise, no immediate end in sight to this practice either.

• Unintended consequences, or not, of mostly out-of-state acquisitions of these unique, income-producing properties, plus the continuing and elusive search for chattel capital pursuant to on-site sale of new HUD-Code manufactured housing, have precipitated an uptick in regulatory legislation and the enforcement thereof….

During 40 years as an owner/operator of land lease communities, I’ve not seen a more exaggerated Sellers’ Market than the one playing-out today. Gone, for now anyway, are the days when an ‘average’ (i.e. 10 percent income capitalization rate) 100% occupied land lease community sold for say $14,000 per rental homesite (e.g. New Rule of 72: 200 sites X $200/month rent X 72 = $2,880,000 divided by 200 sites = $14,400/site).*1 Today, expect the same investment property to sell for multiples of the $14,400 per rental homesite! For example: 3 X $14,400 = 43,200/site X 200 sites = $8,640,000.00. Yes, that’s where we are today.

Why? Here’re ’10 Good Reasons to Own a Land Lease Community’. These are quoted from page # 151 of SWAN SONG, the first published history of the realty asset class, & official record of MH shipments from 1955 to the present day.*2

1. Relative scarcity! Due to land use regulations, i.e. NIMBY, LULU, BANANA*3
2. Low annual (home & tenant) turnover @ 5 & 10% respectively!
3. Stable, competitive site rent! (When in 3:1 sync in local housing market.*4
4. Lower operating expense ratio (OER @ 40+/-%) than apartment communities
5. Economy of scale! (100+ sites = institutional investment grade properties)
6. Affordable home ownership & equity, when monthly PITI & site rent align
7. Recession proof! No other more economically-priced housing in U.S. today!
8. More opportunities to ‘add value’ via home sales, rental units, parts & services
9. More versatility! Up to seven types of shelter now sited therein.*5
10. Opportunity to serve society by providing truly affordable housing!

Then, all too often these days, comes the inordinate rental homesite rate increase, especially when the just-acquired land lease community has been charging a ‘below market’ rate before the ‘closing’ of the transaction.

And because the new, often out-of-state, and frequently private equity investor has overvalued said land lease community to motivate seller to sell, a significantly increased income stream, to pay for operating expenses and new debt service, has to come from ‘somewhere’; that somewhere being from homeowners/site lessees already in place. Sometimes the buyer pressures the seller to raise site rents before ‘closing’ occurs, and sometimes the seller refuses, leaving the task for the buyer. In any event, the management and tenant environment changes. Not only that, if on-site salaried management has been in place for a decade or longer, expect an immediate significant $ savings to be made in administrative labor cost, as they are replaced.

It seems attempts to regulate rent rate adjustments and loan financing among land lease communities is all the rage these days, as social activist organizations seek remedies to what they view as injustices foisted on land lease community homeowner/site lessees.

With all that said, what’s the most frequent question I’m asked these days?

When will the next Great Shakeout occur throughout the land lease community realty asset class? I don’t know, but a review of past ‘shakeouts’ provides hints as to a reasonable answer:

• Mid-1970s. Remember 1973, when 579,940+/- new ‘mobile homes’ were shipped nationwide?*6 Well, for good reason(s), the industry became federally regulated via HUD-Code enacted in 1974 and implemented in 1976. Results? Shipments plunged to 221,091+/- new manufactured homes by year 1980! Another immediate consequence? Tens of thousands of new ‘mobile home parks’ were developed during that time frame; but the source of new homes was effectively halved. So, thousands of newly developed, partially-filled mobile home parks went into foreclosure, not fully recovering until the late 1980s and early 1990s, during resolution of the…

• Savings & Loan Crisis of 1980s. Between 1989 & 1995, the Resolution Trust Corporation (‘RTC’) a federal government entity, sold the realty assets of 747 thrifts – including many many mobile home parks cum manufactured home communities. These ‘pennies on the dollar’ acquisitions – often by limited partnerships, followed by a major federal tax law change in 1986, effectively prepared the way for a…

• Mini REIT Wave of 1994, that continues to this day, via ELS, Inc., Sun Communities, Inc., & UMH Properties, Inc. REIT holdings have grown substantially, from 88,450 rental homesites during 1994, to 300,566 sites by year end 2018!*7

• Turn of the Century Shakeout & Paradigm Shift. Began with a short renascence of 372,943 new HUD-Code homes shipped during 1998, followed by industry’s loss of easy access to chattel capital – for on-site loans on new HUD-Code homes installed in land lease communities, plummeting to only 49,789+/- homes shipped during 2009. Results? 300,000+/- repossessed manufactured homes, loss of 10,000+/- independent (street) MHRetailers, & realization that land lease communities, to survive and thrive, must buy new homes (i.e. Community Series Homes & other models) directly from factories, sell, and often seller-finance them on-site.*8 This paradigm shift continues to this day.

So, with all that said, what might we expect to occur going forward into years 2019 & 2020?

Right now, your GUESS is as good as mine. Already I hear sounds (reports) of structural weakness and strain as some hired guns (high salaried, but not PM credentialed executives) struggle with the basics and nuances of new HUD-Code housing installation, marketing & sales, as well as recource-secure seller-financing. So watch and listen carefully going forward!

End Notes.

1. For those unfamiliar with the New Rule of 72; the $2,880,000 capitalized income valuation is the same as one computes using the ‘long hand method’ as follows: 200 sites X $200/month site rent X 12 months X .6 (reciprocal of 40% Allen Model OER for land lease communities), divided by .1 (i.e. 10% cap rate) = $2,880,000.

2. SWAN SONG available for purchase via www.educatemhc.com

3. 3:1 Rule: 3BR2B apartment rent = $900/month? Then LLCommunity = $300+/-month

4. ‘Not in my back yard!’ & ‘Locally Unwanted Land Use!’ & ‘Build Absolutely Nothing Anywhere Near Anyone!’

5. Pre-1976 ‘mobile homes’, post-1976 manufactured homes, modular homes, ‘park model RVs’, RVs for a season, stick-built homes fabricated on site to imitate manufactured homes, & of late, Tiny Houses.

6. ‘+/-‘ notation after most annual MH shipment volume totals. Once again the necessity of having to explain something that should not occur. HUD’s contractor, the Institute for Building Technology & Safety (‘IBTS’) publishes monthly shipment volumes of HUD-Code manufactured homes nationwide. These figures are reported, as published by IBTS, by HUD, MHARR, NAMHCO, & EducateMHC. Only MHI deletes the number of DESTINATION PENDING units one month and adds them back the following month, ‘changing’ the monthly total reported by HUD’s contractor.

7. 30th annual ALLEN REPORT, a.k.a. ‘Who’s Who Among Land Lease Community Portfolio Owners/operators Located Throughout North America!’ Available only via www.educatemhc.com

8. Community Series Home (design) agreed upon by HUD-Code manufacturers and land lease community owners/operators on 28 February 2009 during a MHInitiative ‘think tank’ gathering at the RV/MH Hall of Fame in Elkhart, IN. CSH models are generally singlesection, or modest-sized multisection in configuration, have pitched/shingled roof systems, a front end porch, and durability-enhancing features intended to speed and control costs of ‘make ready’ between homeowners and or unit renters.

II.

Eight Key Steps to being Fully Informed!

No big mystery here. If you’re into manufactured housing & land lease communities as an executive, manager, investor, the first four of the following eight bullet point highlighted trade publications are nothing short of being MUST READS. The fifth bullet point identifies the sole, relatively high-priced media focused on strategic and timely information needs of the top execs throughout the industry and realty asset class. And bullet points # 6, 7, & 8 are the proverbial ‘icing on the cake’ periodic Press Releases and news alerts distributed digitally by the Manufactured Housing Institute (‘MHI’), Manufactured Housing Association for Regulatory Reform (‘MHARR’), and National Association of Manufactured Housing Community Owners (‘NAMHCO’)

WEEKLY

• FREE blog posting (the one you’re reading NOW) for anyone in manufactured housing & land lease community ownership/operations. Simply access www.educatemhc.com and request to be put on the distribution list. It’s that simple and accessible to YOU.

MONTHLY

• Allen Letter. A digital publication, distributed continually since 1989, is the oldest trade media serving, primarily, land lease community owners/operators throughout the U.S. & Canada. HUD-Code housing manufacturers subscribe to stay abreast of what’s happening within the fastest growing market for their unique, factory-built housing product. Cost? Only $135.95/year for 12 monthly issues. To subscribe, visit www.educatemhc.com

QUARTERLY

• MHInsider. While the newest national MHIndustry trade publication, already into its’ second year, it has already eclipsed the coverage and presence of the magazine and tabloid it replaced: Manufactured Home Merchandiser and The Journal. Themed to showcase whatever regional or national trade show event is occurring during said quarter, the magazine also contains features by a plethora of writers, along with an Allen Legacy column in each issue. To subscribe, visit www.mhvillage.com

• Manufactured Housing Review. This online e-zine has set a new and higher standard for news coverage online than what existed beforehand! Buttressed by a stable of industry writers, covering specialty topics, the publication has made itself a ‘must read’ experience. To subscribe, visit www.manufacturedhousingreview.com

SPECIALTY PUBLICATION

• The Allen CONFIDENTIAL! Digital business newsletter has been serving the manufactured housing industry for more than a decade, in large part tracing the unfolding of the ongoing paradigm shift reshaping manufactured housing distribution since the turn of the century. It’s most well-known for the ‘advance news’ it shares confidentially with subscribers, facilitating strategic business decisions that otherwise would have been made with less guidance. To subscribe, visit www.educatemhc.com Cost? $544.95/year for 12 monthly issues

OTHER NEWS RESOURCES.

• MHI. Visit www.mhi.org

• MHARR. Visit www.mhar.org

• NAMHCO. Visit

So, are YOU presently ‘fully informed’, or about to become fully informed, as you take steps to read this blog weekly, the Allen Letter monthly, MHInsider and Manufactured Housing Review quarterly, and Press Releases and news alerts from MHI, MHARR, & NAMHCO? And don’t forget the Allen CONFIDENTIAL! This is the ‘sleeper’ of the eight resources designed to position you successfully as you make key business decisions.

III.

Still Making Up My Mind…

To identify or not, elected leaders (board members) of MHI, MHARR, & NAMHCO.

Recently, Mark Weiss, president of MHARR, in a treatise titled: ‘Lead, Follow…or Get Out of the Way’, told how his board has decided to ‘take the bull by the horns’ to launch a new post-production national advocacy entity to represent interests of these segments of the manufactured housing industry. At the time, I suggested MHARR’s ‘not identifying’ board members by name, was a major flaw in the plan. After-all, who’d you rather follow? The leader(s) you know or ones you don’t know? Well, I’m ‘working’ on the matter, relative to all three bodies: MHI, MHARR, & NAMHCO. So keep reading this blog to ‘stay informed’. Also…

If you’d like to do your own ‘leadership research’, visit www.guidestar.org to review, for a price, the #990 tax forms, to learn the names of association board of director members.

Your Responses to Blog Posting # 531’s…

May 7th, 2019

7 May 2019; www.educatemhc.com

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

This blog posting is sole national advocate, official ombudsman, historian, research reporter, education resource & online communication media for North American land lease communities

To input this blog, &/or affiliate with EducateMHC, formerly Community Owners (7 Part) Business Alliance, or COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

Motto: ‘U Support US & WE Serve U!’ Online media goal? Inform, opine, transform & improve manufactured housing & land lease community lifestyle! Visit www.educatemhc.com

I.

Your Responses to Blog Posting # 531’s

Rejoinder to MHARR’s ‘Lead, Follow…or Get Out of the Way’

I hardly hit the SEND button, getting blog # 531 on its’ way, before we started receiving responses continuing well into the following week. And the comments have been interesting, thought-provoking, confirming. Here’re three response categories we’ll cover here: blog # 532

• Blog # 531 missed the ‘elephant in the room’! The next change, and potential trend setter, for the manufactured housing industry! Know what it is? Read on…

• Thanks to an industry colleague, I now know who MHARR board members were at year end 2017. Have asked MHARR to confirm contemporary accuracy of list; but to date, no response. Not surprised. Remember; these are the ‘take the bull by the horn’ leaders few people know. I recognized barely half the names on the list I received.

• Actionable Items. One blog reader didn’t feel I went far enough encouraging attendees at MHI’s MHCongress in New Orleans, to force discussion of key, timely industry issues during that venue. Then at MHI’s Washington, DC fly-in on 3 June; and again, at an MHAlive Think Tank gathering on 5 August at the RV/MH Hall of Fame in Elkhart, IN.

So, let’s begin anew, and in more detail.

The ‘elephant in the room’ = “…imminent departure of Dick Jennison” – MHI’s top salaried executive. Why ‘so described’? Because this is our (meaning ‘thee & me’, if an MHI member) first opportunity in nearly a decade, to persuade-pressure-petition the institute’s board members in general, the selection committee in particular – for the first time ever – to hire a STRATEGIC THINKER for us to follow, leading our industry back to prosperity! Have you read or heard anyone else encouraging such thinking & action on this matter? Neither have I! This industry observer has endured no fewer than six, in my opinion, milquetoast leaders since 1978! NOW we have an opportunity for positive, forthright change! Let’s prepare for it! Let’s experience it! We deserve the BEST available! OR, will we squander the opportunity – again?

More on the elephant. One commentator, relative to this MHJI succession matter, suggests each job applicant ‘…write a paper describing their view of the industry’s future. Let the finalists’ papers, without attribution, be widely circulated, with comments directed back to the selection committee’ – before they make a final decision. Agreed! And said papers could easily be published in MHInsider magazine, Manufactured Housing Review, and the Allen Letter.

MHARR board members. Still researching this, striving to ‘fill in the blanks’, putting corporate identities next to names of 16 board members and Mark Weiss. In my opinion, if MHARR truly believes in a need for improved national advocacy among post-production segments of the manufactured housing industry, they should step forward and clearly identify themselves as leaders of said effort, rather than be publicly identified in some other fashion. Agree?

Actionable Items. Well, MHARR to its’ credit has fired off a worthy ‘first volley’ to this end, given their ‘Call on HUD Secretary to End Discriminatory & Exclusionary Zoning of HUD-regulated Manufactured Homes’ (4/30/2019 Press Release). Hey, correct me if I’m wrong, but wouldn’t’ that headline have been more effective if the word ‘against’ had been used instead of ‘of’ in front of ‘HUD-regulated…’? After all, ‘discriminatory & exclusionary zoning’ are typical, widespread ‘local regulatory barriers to all forms of affordable housing’. And the time has come to set them aside. to increase the supply of affordable housing where needed = everywhere!

There are certainly other actionable items germane to getting the HUD-Coded manufactured housing industry back on its’ 100,000 units/year shipment pace. What steps are YOU taking to this end? The inquiring weekly blog postings at www.educatemhc.com would like to know! Also via gfa7156@aol.com

II.

Affordable Housing Battles

Everyone’s heard of the discriminatory & exclusionary zoning abbreviation NIMBY (‘Not In My Back Yard!’), but how ‘bout LULU & BANANA? The former = ‘Locally Unwanted Land Use’), the latter = ‘Build Absolutely Nothing Anywhere Near Anyone!’

Well, guess what, there’s a new anti-discriminatory & exclusionary zoning abbreviation ‘in town’, so to speak. It’s YIMBY, and the letters stand for ‘YES, In My Back Yard!’ it’s OK to build affordable housing! It’s the enlightened mantra land use planners and zoning regulation reformers use to “clear away the regulatory barriers and let developers build more housing”, figuring “the laws of supply and demand will take over…and (housing) prices will go down.” But all is not well with YIMBY these days. According to Land Lines magazine, “zoning changes…only accelerate gentrification and displacement – disproportionately harming low-income families and communities of color.” Where does that leave YIMBY? Guess we’ll just have to watch and see.

Then there’s the contemporary notion, “When it comes to the income of those who deserve a government handout, how high is too high?” Thinking about public safety employees (firemen & police officers) and those in the medical support fields (nurses & technicians) here. Critics of this refocus on affordable housing for the middle (working) class, claim it risks redirecting scarce $ resources away from citizens with little to no income….” And with this, come claims of ‘political showmanship’, where a section of the local population who votes at higher rates, is maybe viewed more sympathetically – and supportively, than those living in poverty or are homeless. Comments in this paragraph edited from the Washington Post.

Do you see how affordable housing is demanding more and more attention these days? Well, if you want to learn more, and become involved in helping resolve this perennial national crisis (i.e. shortage of affordable housing), plan to be present the morning of 9 September, 2019, at The Alexander Hotel in Indianapolis, IN. This is the occasion of the 28th annual Networking Roundtable, planned and hosted by EducateMHC. U.S. Senator Todd Young will be keynote presenter that morning. He heads a nine senator task force on affordable housing, and being from Indiana, is in the midst of a vibrant Midwest manufactured housing industry. For more information, visit www.educatemhc.com or phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

***

‘LEAD, FOLLOW…OR GET OUT OF THE WAY’

April 30th, 2019

Blog # 531
INTRODUCTION: You’ll want to read this blog posting before you travel to New Orleans for MHI’s annual MHCongress. For that matter, read it even if you’re not making the journey. Why? Because one person, Mark Weiss, of the Manufactured Housing Association for Regulatory Reform (‘MHARR’) has stepped forward, and in ‘the emperor has no clothes on’ fashion, at least tries to call out the HUD-Code manufactured housing industry for its’ perennial lethargy, and leaderlessness, since the turn of the 21st century! I say ‘tried’ to do so, because the document I’m about to reference is shy on details (i.e. names & statistics) and awash with flaws. Read on…

I.

“LEAD, FOLLOW…OR GET OUT OF THE WAY”

That, my friends, is the title of the four page document distributed, on 24 April 2019, by the Manufactured Housing Association for Regulatory Reform, to manufactured housing and post-production sector businessmen and women nationwide.

My rejoinder (answer) here, is not to comment line-by-line, but make appropriate general remarks, and be specific where need be. Here goes….

Mark’s opening paragraph is a passable description of production & shipment turmoil experienced by HUD-Code manufactured housing, and land lease communities, during the past two+ decades, years 1998-2019. But in it Mark offers no explanation for the 21 year plummet from 372,943+/- new home shipments during 1998, down to 49,789+/- units by year end 2009.*1 Frankly, everyone active in the manufactured housing business since the turn of the century well knows that has to do with our loss of easy access to personal property finance (chattel capital) needed to fund loans on housing transactions within (then) manufactured home communities nationwide!

He does go on, however to accurately describe the slow ‘modest year-over-year gains (in shipments) between years 2009 and 2018, the latter realizing 96,555 new HUD-Code homes shipped. And how, just within the past six or so months, the industry has fallen off the anticipated pace to ship 100,000 new homes during years 2018 and 2019. And that becomes the springboard for moving into the second phase of Mark’s four page document; specifically:

1) “Identify the problem(s) lying at the heart of this market descent”

2) “Take concrete steps to address…those problems, once identified.”

So far so good. But here it gets a little confusing. On one hand, Mark cites the ‘myriad of problems affecting the industry & its’ consumers’ – mostly from outside the (housing) production sector (some of whom MHARR represent), but ‘not necessarily the post-production sector’. Huh? How can it be both ways? Simple. He mentions Department of Energy’s energy conservation standards maybe to be foisted on the manufactured housing industry, questions what administration will be in power by 2020, and describes HUD’s continuing sole- sourcing of monitoring contracts. Then Mark launches into a claim that objective analysis (By whom?) highlights market-limiting factors for the post-production segment of the industry – all due to ‘lack of coherent, focused, and aggressive leadership’, and absence of independent national representation of said post-production sector.

At this point Mark does something interesting. He equates this lack of national leadership across the board with what occurred, in and around 1985, when MHARR split off from MHI (nine years after implementation of the HUD-Code) to better represent the smaller, regional HUD-Code housing manufacturers. So far an interesting tale, if nothing else.

But here’s where we begin to run into trouble, of sorts.

Here Mark introduces MHARR’s Board of Directors as leaders to ‘take the bull by the horns’ in the interest of improved industry representation – and national advocacy. Yet, not a single individual is named! Why? Ask MHARR; but they simply don’t make their membership rolls public, whereas MHI does. Point? Don’t know ‘bout you, but as a post-production sector businessman, there’s a far better chance of me following the leader I know than the one I don’t! How ‘bout you? This, in my opinion, is major flaw # 1 of this argument.

Next, Mark identifies what he (MHARR?) views as three critical issues:

1) Zoning exclusion and/or discrimination re single-home placements, & development or expansion of land lease communities (Mark pens ‘manufactured home communities’)

2) Challenge other types of local placement restrictions or limitations on manufactured homes and land lease communities.

3) Publicly expose failure of GSEs & GNMA to fully & properly implement existing law (this is not identified in the paper), forcing homebuyers into higher-cost purchase loans.

This is OK as far as it goes, but once again, anyone in the manufactured housing business since the turn of the century well knows there’re nearly a dozen perennial (some say ‘evergreen’) issues that hold this industry back. For the complete list, scroll back through the blog archives to blog postings # 511 & 527.*2 Hence, in my opinion, this is flaw # 2 of this presentation.

Relative to point # 3 above re GSE’s failure to perform re DTS – after more than a decade, Mark suggests this lack of progress has erected a ‘brick wall’ for post-production that “harms smaller industry businesses and HUD-Code consumers, while benefitting only the industry’s largest businesses.” Frankly, this statement deserves further explanation. While I think I know ‘what & who’ he describes, do you know ‘who & why’? Hence, major flaw # 3.

In a paragraph where ‘restricted zoning’ and ‘high interest rates’ are further described and abhorred, there’s, in my opinion, a Red Herring. MHARR evidently does not like MHI’s efforts designing and marketing a New Type (MHARR calls it ‘new class’) of manufactured home, claiming it is not affordable or within the mainstream of manufactured housing. Who sez? No facts or reasoning is provided to substantiate either of these two claims. Flaw # 4.

Near the end of this document, MHARR engages in some chest thumping, comparing what it views as leadership initiatives to lead on many key industry issues. Won’t go into them here, but most are indeed valid examples. But here again, flaw # 1 moves front and center. Just WHO is leading MHARR these days? Founding and longtime executive Danny Ghorbani is now two years retired – or is he? Mark is good at what he does – writing treatises like this, from time to time. But if my life depended on it, I could not name a single charismatic, capable, successful, motivated leader within that association who has enough of a handle on the post-production segment of the industry to do all that’s suggested in this document!

So, where do we go from here? Nowhere! That is, unless something very different happens than what did not occur at the following venues so far this year:

Lousiville MHShow. All this, a non-issue

Tunica MHShow. A poorly publicized & attended organization effort at end of the official show

MHCongress. Unless someone is motivated by this blog posting response to MHARR’s call to action, nothing will happen there either.

So, the challenge to ‘LEAD, FOLLOW…OR GET OUT OF THE WAY’ will, once again, fall as they say, on deaf ears!

That is, unless action is taken at the MHCongress, calling for unified action by MHI, MHARR, & now, NAMHCO, during former’s fly-in meeting in Washington, DC. on 10 June 2019! And then, if asked, I’d be pleased to host a day long MHAlive! Think Tank follow-up gathering, of the same principals, on 5 August 2019, at the RV/MH Hall of Fame in Elkhart, IN.*3

Bottom line? Mark has started this ball a-rolling. Let’s watch and see if our salaried and elected leaders finally ‘take the bull by the horns’, as MHARR’s board suggests, and moves our industry and realty asset class forward together and forthrightly!

Continue to read here each week. I’ll keep you informed. GFA

End Notes.
1. (+/-) designation accounts for the ambiguity in reporting monthly HUD-Code housing shipments by the Institute for Building Technology & Safety (‘IBTS’), HUD, MHARR, & EducateMHC, as opposed to different unit totals reported only by the Manufactured Housing Institute (‘MHI’). Not until year 2013 were we able to shed the ambiguity, with Official Annual Shipment Volumes now published in SWAN SONG, the history of land lease communities from 1970 to the present day. Available via www.educatemhc.com

2. In brief: responsibility for proper, safe & secure installation of new HUD-Code homes; HUD’s ongoing resistance to promoting manufactured housing as affordable housing; existing MH stock aging faster than replacement stock being fabricated; no relief for on-site homeowners/site lessees when it comes to realty-secured vs. chattel loans; continued up-selling of new homes valued in excess of what homebuyers can afford; lack of effort to improve industry and asset class public image; and lack of two secondary markets; finally, dearth of professional property management at all levels of operation in land lease communities nationwide.

3. This location has become historically significant for a couple reasons. On 28 February 2009, more than 100 HUD-Code housing manufacturers and community owners/operators met for the day – to decide how to save their industry. Result? Agreement on design for a Community Series Homes (named by Don Westphal later that year), that would see the percentage of new homes going into communities, jump from 24% in 2009, to more than 40% by year end 2015. And now, annually, the IMHA/RVIC hosts Two Days of Plant Tours & Home Sales Seminars teaching community owners/operators how to buy, sell & seller-finance new homes on-site! Next session? 17 & 18 Junes 2019. To register, phone (317) 247-6258.

Senator Todd Young to Address 28th Networking Roundtable on 9 September 2019

April 26th, 2019

Blog # 530 @ 22 April 2019; www.educatemhc.com
Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is sole national advocate, official ombudsman, historian, research reporter, education resource & online communication media for North American land lease communities

To input this blog, &/or affiliate with EducateMHC, formerly Community Owners (7 Part) Business Alliance, or COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

Motto: ‘U Support US & WE Serve U!’ Online media goal? Inform, opine, transform & improve manufactured housing & land lease community performance! Visit www.eduatemhc.com

INTRODUCTION. HUD Secretary, Dr. Ben Carson, appearing at MHI’s annual MHCongress in New Orleans next week; and now, Senator Todd Young, keynoting the 28th annual Networking Roundtable in Indianapolis (8-10 September 2019), clearly demonstrate ‘manufactured housing & land lease communities’ increasingly important role in addressing this nation’s worsening ‘affordable housing crisis’. You owe it to yourself to attend one or both these major events!

And to this end, like it or not, the time has come to ‘describe & address’ the ‘freedom & bondage’ scenario now often playing out among institutional investment grade land lease communities being acquired – according to sources – by large private equity firms willing to overpay for the opportunity to invest in a markedly scarce commercial real estate investment type.

If a copy of SWAN SONG is not in your office, and handy as a reference regarding ‘all things land lease community’, it should be! Here are a dozen excellent reasons for you to order your copy!

I.

U.S. Senator to Keynote 28th Networking Roundtable

‘Affordable Housing Focus to Highlight Important Role of HUD-Code Manufactured Housing & Land Lease Community Lifestyle!’

U.S. Senator Todd Young (R-IN) leads a nine senator ‘Task Force on the Impact of the Affordable Housing Crisis Act’, and will be addressing this timely topic at the 28th annual national gathering of HUD-Code housing manufacturers and land lease community owners/operators. The event occurs at The Alexander Hotel in Indianapolis, IN., 8 -10 September 2019.

In addition to Senator Young’s address, there will be seminars and panels teaching HOW TO 1)’buy, sell, & seller-finance new HUD-Code homes on-site in land lease communities’; 2) grow occupancy and promote the unique lifestyle via cultivating good resident relations; and3) – for the first time at any national manufactured housing venue – preview premier videos, filmed within communities across the U.S. by IMPACT MHC, and winning entries in the Noble Home Video contest sponsored by ROC USA!

If you own and operate one or more land lease communities in the U.S. and Canada, you owe it to yourself to be present at this stellar event in early September. For information and to register, visit www.educatemhc.com

II.

End of an Era

Means Freedom for Some, Bondage for Others….

When elderly developer patriarchs and matriarchs of large, stable institutional investment grade land lease communities (i.e. 100+ rental homesites in size @ 95 percent occupancy) relinquish control of these unique income-producing properties, usually upon their demise, several momentous events oft occur in consecutive, sometimes simultaneous, order.

First, their heirs – usually family members who’ve worked nowhere else, than at the subject property, their entire working lives, soon (often within a year) put the community (sometimes, communities) on the commercial real estate market at a premium price, reflecting the scarcity of the business model and significant potential for enhanced profitability.

When the land lease community sells, several dynamics begin. The heirs realize freedom to finally enjoy lives of their choosing, where and how they please, no longer indentured to the family business. And they have the financial wherewithal to do so, in usually grand style.

However, the homeowners/site lessees left behind, risk seeing rental homesite rates escalate as never before, since the new property owners too often require far more income to cover operating expenses and exorbitant debt, having overpaid for the land lease community.

And as this ‘freedom & bondage’ scenario plays out across the country – from the Pacific Northwest thru the Midwest to New York state – usually at the behest of large private equity firms acquiring said land lease communities, there’s increasing clamor for new landlord-tenant legislation, in the form of local and statewide rent control.

Hence, ‘the end of an era’, where characteristically benevolent land lease community owners/operators provided rental homesites at rates almost always in sync with other forms of multifamily rental housing in the same local housing market.*1 Where prospective homebuyers could count on paying for a new manufactured home (via monthly PITI…principal, interest, taxes, insurance) and site rent together, within the 30 percent Housing Expense Factor (‘HEF’) touted by ‘housers’ (‘housing policy wonks’) as being ‘affordable housing’. But now, substantial increases in site rent reduce the amount of residual dollars available to pay a housing mortgage, limiting ones’ options in the housing purchase.

End Note:

1. Where land lease communities are concerned, this traditionally meant keeping rental homesite rates at approximately one third the rent for a 3BR2B apartment or townhouse in the same local housing market. Today however, there’s an aggressive trend towards pegging rental homesite rates at one half the rent charged for a 3BR2B apartment in the same local housing market. Two examples: 3BR2B apartment = $1200/month; land lease community @ 3:1 ratio = $400/month site rent; but @ 2:1 ratio = $600/month. In this latter example, the $200/month increase in site rent reduces dollars available for PITI by a like amount! And then there’s the controversial matter of whether to include annual household utility payments within the 30 percent HEF – or not, affecting the question of ‘affordability’ or ‘riskiness’ of the housing transaction. But we won’t explore that thorny question here, at this time.

III.

Everyone Should Read SWAN SONG

Here’s Why! Did You Know?

SWAN SONG is the first and only history of land lease communities (a.k.a. manufactured home communities, and before that, ‘mobile home parks’) going back 50 years to 1970.

SWAN SONG is the manufactured housing industry’s Official Record of Manufactured Housing Shipments, from 1955 to the present day. Heretofore the ‘numbers’ were all askew, but not now!

During the long history of manufactured housing and land lease communities, only ten pioneers and entrepreneurs preserved their business legacies by penning autobiographies? All are named in SWAN SONG.

A mass murderer owned four (then) manufactured home communities before committing suicide? Read ‘An Error to Die For…’ to learn just how important due diligence can be!

There were only 25 portfolio owners/operators of ‘mobile home parks’ back in 1987; today there’re 500+/-. Read about them, 100 by name, in SWAN SONG. & the ALLEN REPORT therein.

19 land lease community owners/operators, in 1993, brought national advocacy and representation to the realty asset class! All are named and lauded in SWAN SONG.

The Official Industry Standard Chart of (operating) Accounts & accompanying Operating Expense Ratios (‘OERs’) were first codified in 1992 in the jungles of Honduras.

And lest we forget, the manufactured housing industry’s abuse of easy access to chattel capital for new home loans, circa year 2000, is documented in the classic: ‘Upside Down in a Mobilehome Park’

The strangely but aptly named ‘Ah Ha! & Uh Oh! Formulae’ worksheet for estimating maximum ‘affordable’ & ‘risky’ purchase prices for new and resale homes within & outside land lease communities is included as a tool in SWAN SONG.

Everyone’s heard of or visited Saddlebrook Farms in Grayslake, IL. but few know the inspiring story behind Charles Fanaro’s vision and tenacity to develop and fill this land lease community with new upscale HUD-Code manufactured homes fabricated in his own factory! A must read!

There’s even a chapter in SWAN SONG (2d edition) describing the whole ROC (‘resident-owned community’) phenomenon thru the eyes of ROC USA.

And bet you didn’t know there’s an official Toast to the Community Owner! Inspired by the late Bud Zeman, of Chicagoland land lease community fame, the last stanza reads: “May hitches hold, site rent flow, & all our homes be sold!”

If you don’t yet own a copy of SWAN SONG, but would like to, simply visit www.educatemhc.com

***

No One Is Going To Tell You This – & Much Much More!

April 19th, 2019

2019; www.educatemhc.com

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

This blog posting is sole national advocate, official ombudsman, historian, research reporter, education resource & online communication media for North American land lease communities

To input this blog, &/or affiliate with EduateMHC, formerly Community Owners (7 part) Business Alliance, or COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

Motto: ‘U Support US & WE Serve U!’ Online media goal? Inform, opine, transform & improve manufactured housing & land lease community performance! Visit www.educatemhc.com

INTRODUCTION. OK, the time has come: Nobody Else Will Tell You This! Read Part I following.
&
Two reminders: ‘Two Days of Plant Tours & Home Sales Seminars’ occurs June 17 & 18 at the RV/MH Hall of Fame in Elkhart, IN. To register, phone (317) 247-6258×11 And on June 19th, if you desire professional property management training & certification, like the nearly 1,500 MHMs now owning/operating land lease communities throughout the U.S. & Canada, plan to be at the RV/MH Hall of Fame for the day! Only $395 per MHM candidate. No testing! Visit www.educatemhc.com or phone official MHIndustry HOTLINE:(877)MFD-HSNG or 633-4764 for more information.

I.

Nobody Else Will Tell You This!

Enough of the Name Calling, Sensationalist Caterwauling, & Questionable Claims!

Since 2009, manufactured housing’s nadir (‘worst’) year ever, when only 48,789 new HUD-Code homes were shipped nationwide, we’ve collectively and simultaneously endured and experienced:

• The loss of easy access to chattel capital for new home loans in communities

• Two venerable trade magazines ceasing publication (i.e. Manufactured Home Merchandiser and The Journal)

• Two new trade pubs birthed (i.e. MHInsider and Manufactured Housing Review)

• A near continuous online diatribe (‘bitter & abusive denunciation’) of one – but not both, national advocates for manufactured housing (i.e. MHI but not MHARR), one or another state association executive (e.g. WI being latest target), and specific corporate executives (e.g. from Clayton Homes & 21st Mortgage) not aligned with a particular yellow journalist’s views of the manufactured housing industry.

ENOUGH IS ENOUGH! Together, as an industry and realty asset class, we should be; no, we must be, ‘working together’ to eclipse 100,000 new HUD-Code housing shipments during year 2019. Also to offset negative press coming from social activist quarters regarding predatory site rent practices foisted on homeowners/site lessees! But such a coming together will continue to elude us as long as an industry outlier broadcasts speculative contrarian tripe, tearing down manufactured housing and land lease community business models at will!

SOLUTION? Make it a point, henceforth, to support your state manufactured housing association as an active member, as well as one or more of three national advocacy bodies (i.e. MHI, MHARR & now, NAMHCO). Also ensure you’re on the receiving end of MHInsider magazine, Manufactured Housing Review online ezine, the Allen Letter (if a land lease community owner/operator), and the Allen CONFIDENTIAL! business newsletter – if a top housing manufacturer or portfolio executive!

Frankly, that’s ALL YOU NEED TO READ & BELIEVE, to stay cogently, accurately, and timely informed about industry and asset class matters! Resist any temptation to succumb to reading anything by anyone engaged in name calling, sensationalist caterwauling, and questionable claims! JUST DO IT – resist the temptation to muck & muddle your thinking. You’ll be glad you did!

If you need contact information relative to trade entities and publications identified in the previous paragraphs, simply let me know via gfa7156@aol.com or (317) 346-7156. And to subscribe to the Allen Letter and or the Allen Confidential business newsletter, visit www.educatemhc.com

II.

Exciting New Addition to Networking Roundtable

IMPACT Communities, headed by Dave Reynolds, recently shared videos with this industry observer, demonstrating ‘really good work’ being performed on-site by volunteers, at the firm’s land lease communities. Work such as making repairs to homes, cleaning up debris from homesites, and much more. An impressive story! So impressive, steps have already been taken to showcase IMPACT Cares videos of ‘resident relations in action’, during the 28th annual Networking Roundtable, 8-10 September, in Indianapolis, IN.

And that’s not all!

Allen Letter readers are already familiar with the Noble Home Video Contest sponsored by ROC USA. Well, the contest deadline was extended to mid-April, maybe later. Several excellent videos have been received, showing land lease communities in the very best light. The plan is to also showcase these winning videos, ‘in movie premier fashion’, during the Networking Roundtable, 8-10 September, in Indianapolis, IN. Visit www.educatemhc.com for details.

III.

How Important is MH to HUD?

Did you know? HUD occasionally publishes a Manufactured Housing Newsletter

The newsletter, titled, ‘The FACTs’, when published, is distributed by the Office of Manufactured Housing Programs. Now for the big – and ‘telling’ question: ‘When was the last such newsletter published?’ Our records indicate December 2015, while Pamela Danner was still administrator of the Office of Manufactured Housing Programs. Nothing since then! So, three years and four months of ‘silence’ about manufactured housing, and by extension, land lease communities…the affordable housing & lifestyle combination ‘going begging’ for HUD support, while the affordable housing crisis in the U.S. only worsens! Go figure.

To me, ‘The FACTS’ rarely published newsletter has become the bellwether (i.e. ‘leading indicator’) of HUD’s true level of interest in regulating manufactured housing via the HUD-Code, but its’ lack of interest promoting factory-built housing’s quality, energy-efficient, nonsubsidized housing type as a key component to solving this nation’s ongoing and growing affordable housing crisis!

Is anyone at HUD paying attention? Prove it by preparing and sending us, the manufactured housing industry and land lease community realty asset class, an informative, even exciting updated issue of ‘The FACTS’ before Summer arrives! And then communicate with us on a regular basis thereafter.

III.

Webinar Wows – What’s Next?

If you missed the 16 April IREM webinar, there may well be a print sequel!

Dozens of manufactured housing aficionados and land lease community ‘wanna be’ and present day investors listened in on the one hour Institute of Real Estate Management webinar. The session wound up being, likely, the most statistics and trend-filled description of the industry and realty asset class ever broadcast to a true national audience! And the clamor now is ‘for more’!

So, given the copious amount of material researched and packaged for this webinar, plans are afoot to publish same, either as a feature in a future issue of IREM’s Journal of Property Management, the MHInsider magazine, and or the Allen Letter. So watch for it. At the very least, subscribe to the latter two publications, to know for sure, when and where the compendium will be published. For the Allen Letter; visit www.educatemhc.com

George Allen, CPM, MHM
EducateMHC
Box # 47024
Indianapolis, IN. 46247
(317) 346-7156

MHARR’s Big Three Issues & Everyone Else’s Dozen (+) Do You Feel Abused?

April 12th, 2019

528 @ 7 April 2019; www.educatemhc.com

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

This blog posting is sole national advocate, official ombudsman, historian, research reporter, education resource & online communication media for North American land lease communities

To input this blog, &/or affiliate with EducateMHC, formerly Community Owners (7 Part) Business Alliance, or COBA7, use Official MHIndustry HOTLINE: (8777) MFD-HSNG or 633-4764

Motto: ‘U Support US & WE Serve U!’ Online media goal? Inform, opine, transform & improve manufactured housing & land lease community performance! Visit www.eduatemhc.com

INTRODUCTION: For at least the third month in a row, monthly shipment volumes of new HUD-Code homes have slipped from levels that would have allowed the industry to eclipse its’ informal goal of 100,000 new homes per year. And through February of 2019, the pattern continued. What’s the problem or problems? Theories abound. On one hand, economic forecasters predict ‘record demand for affordable housing’ – well answered by HUD-Code housing, But the Sales Simply Are Not There! In my opinion; until the three national advocates, for manufactured housing and land lease communities, take the lead in identifying and resolving key issues, ongoing challenges and pithy questions facing the industry & asset class, we’ll continue to drift along at ‘less than 100,000 new HUD-Code homes shipped annually’! GFA

And you don’t want to miss Part II of this blog posting. Why? Because; if you watched the John Oliver ‘Warning About Mobile Homes’ on Last Week Tonight, you’ll likely want to read ‘my take’ on it. If you didn’t see it – don’t chase it down – just read Part II to understand what’s a-happening in and around manufactured housing & land lease communities these days. Not good!

I.

MHARR to Address ‘Key Issues the Broader Industry Has Failed to Resolve’; ‘? or !’

April 2 issue of MHARR’s NEWS ITEM Press Release promises Bold New Initiatives to this end…

Or does it? MHARR identifies just “three post-production-related matters”:

1. Exclusionary/discriminatory zoning mandates

2. Placement restrictions or exclusions (affecting development of land home communities)

3. Availability of consumer financing

Now, some might argue the first numbered point, relative to zoning mandates, is a pre-production-related matter; perhaps second numbered point as well. In any event, both issues, along with the third numbered point, are important to the revitalization of HUD-Code housing production and shipment volume. So, applaud MHARR for this new commitment to Bold New Initiatives!

But pray tell; why no mention of Evergreen Issues & Evergreen Questions posed, once again, in blog posting # 527, last week? Do these issues & questions not rise to the import of the three numbered bullet points? Many believe they do! In brief, the ISSUES continue to be:

• Full responsibility for proper, safe & secure installation of new HUD-Code homes!

• HUD’s resistance to promote HUD-Code manufactured housing as affordable housing

• Replacement stock of HUD-Code homes not keeping pace with mobile home attrition

• All seven types of shelter, now commonplace in land lease communities, continue to be ineligible for real estate-secured financing vs. paying higher interest on chattel capital

• Manufactured housing industry to use Area Median Income (‘AMI’) & Annual Gross Income (‘AGI’), to ensure homebuyers/site lessees buy the house they can truly afford!

• Improve public image of HUD-Code manufactured housing via branding, ads, and more

• Lack of secondary market for valuing, selling, & financing resale manufactured homes!

• Lack of secondary market for marketing/selling seasoned chattel capital loan portfolios!

• Lack of widespread professional property management training & certification

In brief, the QUESTIONS continue to be:

• When will HUD-Code housing manufacturers eschew industry’s D&R Delivery (‘Drop & Run’) rep, taking full responsibility for proper, safe & secure installation of homes?

• When will lenders include estimated annual household utilities expenses into the standard 30 percent Housing Expense Factor (‘HEF’), rather than force homeowner/site lessees to pay these monthly bills in addition to monthly loan PITI?

• When will HUD & other regulators ‘get out of the way’ of Free Enterprise efforts to provide quality, affordable housing products to the American citizenry?

• When will property owners ensure rental homesite rates are in sync with other forms of multifamily rental housing in same local housing market?

• When will national advocates for manufactured housing and land lease communities finally work together on a regular basis to advance our industry and realty asset class?

Later in the same NEWS ITEM, MHARR takes a swipe at MHI’s emphasis on “… a ‘new class’ of manufactured homes at a price point significantly higher than mainstream manufactured housing.” (claiming) the “…diversion of DTS (Duty to Serve) benefits the industry’s largest (housing manufacturing) entities and higher-cost market-dominant lenders….”

This is a controversial topic among some, if not many, ‘housers’ & practitioners. My view?

On one hand, we should all hope MHI’s New Type (still in search of a working name) manufactured home concept (i.e. pitched roof, porch, attached garage, etc.) succeeds where ‘big box = big bucks’ Developer Series Homes of the mid to late 1990s failed – when independent (street) MHRetailers, as novice ‘contractors’ at best, attempted to compete head-to-head with 4th generation builders in the ‘land & home’ market. This time around, using GSE’s ADVANTAGE & CHOICE programs, let’s get it right, using ‘company stores’ and independent (street) MHRetailers who know what they’re doing!*1

Furthermore, as a land lease community aficionado, I think the GSEs appear to be taking the easy way out, implementing DTS programs focused on real estate-secured financing, and doing little-to-nothing to help fill an estimated 250,000 vacant rental homesites within 50,000+/- land lease communities nationwide, where chattel capital is the norm!

So, is there a middle ground for the latter, albeit continuing trending matter? (Access to chattel capital for on-site financing of new HUD-Code homes) And what are the answers to the aforementioned Evergreen Issues & Evergreen Questions? The only way we’ll ever know – and resolve, is when the three national manufactured housing advocacy entities, once and for all, sit down for a strategic planning meeting and do so!*2

End Notes:

1. An apt subtopic, to this controversial matter, is the confusing pair of ‘similar in housing product but different in name’ loan guarantee programs, i.e. Fannie Mae’s CHOICE, and Freddie Mac’s ADVANTAGE. Why are the GSEs posturing to almost assuredly confuse prospective homebuyers in this fashion? Which to use? CHOICE or ADVANTAGE? For the whole story, read the May issue of the Allen Letter. Available via www.educatemhc.com

2. Ah, but there’s a CAUTION here. While I’m not a conspiracy theory aficionado, I/we cannot ignore whispers about some Grand Conspiracy where manufactured housing and HUD-Code housing chattel finance markets are dominated by one firm; and where one, possibly more mega-portfolio owners/operators of land lease communities, dominates not only the realty asset class, but sadly, hundreds of thousands of homeowner/site lessees as well.

II.

Another Assault on MH & LLCommunities!

What follow here, are parts of a Special Email Message sent to manufactured housing & land lease community ‘insiders’ and influencers on 8 April, soon after John Oliver’s TV faux documentary aired about ‘mobile homes’ & ‘mobile home parks’. In it, he refers to the former as ‘cars you sleep in’; the latter, ‘what you sell your blood for to pay rent’. Seriously.

Many of us are aware the manufactured housing industry & land lease community realty asset class are under assault from several directions these days, ranging from tenant & social activists, to rent control aficionados, to even well-meaning but misguided non-profits running with half the story. So, the answer to the question: ‘What to say or do?’ can be variously answered:

• Nothing. As this too will pass
• Respond to everything that sees light of day online and in the secular press (like this)
• Attempt to work with parties being accused, rightly & wrongly, of various abuses

Don’t know ‘bout you, but I plan to continue addressing these matters, one by one & one on one, with individuals and firms identified in exposes’ like this. No, not John Oliver, as he’s just a script reader, not a bona fide influencer. But Dave Ramsey and Frank Rolfe are worth the time and effort. The former, because he’s wrong: ‘Manufactured homes indeed can appreciate in value when well cared for and sited in professionally managed land lease communities!’ Frankl Rolfe? I doubt anything I say or write will sway his oft stated, albeit abhorred, business model – though I am encouraged about positive changes I’m hearing, relative to property management, by his erstwhile (?) business partner.

Bottom line for me? While I don’t like what I see and read about large private equity firms overpaying for land lease community acquisitions, then jacking site rents to ‘cover’ same, I believe there’ll soon be a shakeout, as they learn the business model is no longer just about leasing rental homesites, but having to buy and seller-finance new homes to grow and maintain occupancy. That’s more work than they counted on when investing in the unique, income-producing property type.

And where Clayton Homes is concerned. Do you find it ’telling’, as I do, the other two of the Big Three HUD-Code housing manufacturers are rarely, if ever, mentioned in the impassioned attacks we’ve endured to date? The omission comes across more as a ‘piling on’, than an otherwise broad or enlightened view of manufactured housing as affordable housing. No, there’s something fishy going on here, I’ve just not been able to put my finger on it as yet. Any insights from you?
***

George Allen, CPM, MHM c/o EducateMHC: Box # 47024, Indpls, IN. 46247. (317) 346-7156

***

Evergreen Issues & Evergreen Questions ‘&’ 16 April 2019

April 6th, 2019

# 527 @ 1 April 2019; www.educatemhc.com
Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’
This blog posting is sole national advocate, official ombudsman, historian, research reporter, education resource & online communication media for North American land lease communities
To input this blog, &/or affiliate with EducateMHC, formerly Community Owners (7 Part) Business Alliance, or COBA7, use Official MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764.
Motto: ‘U Support US & WE Serve U!’ Online media goal? Inform, opine, transform & improve manufactured housing & land lease community performance! Visit www.educatemhc.com
INTRODUCTION: I’ve been penning this blog posting series for more than a decade. And know what? Many of the same ‘issues & questions’ arise year after year after year! So, awhile back, I started to identify and iterate them in public, as a means of drawing attention to matters deserving resolution albeit improvement, over time and circumstance. Do YOU agree with what follows here? In either event, please let me know via email (gfa7156@aol.com) or the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. In the meantime, if not already subscribed to the Allen Letter, please do so via a visit to www.educatemhc.com Doing so, keeps this blog, and other Resource Documents coming your way! GFA
And, don’t miss Part II of this blog posting, relative to IREM’s webinar on 16 April 2019.

I.
Evergreen Issues & Evergreen Questions
“Evergreen content is content that is always relevant…like evergreen trees retain their leaves all year. Interesting and relevant content that does not become dated, (&) is necessary in order to be found online by search engines.” That’s how blog posting # 512, in early December 2018, began. A brief review of the Evergreen Issues identified at that time, is timely and necessary, before turning our attention towards equally Evergreen Questions. The issues?
• Responsibility for the proper, safe and secure installation of new HUD-Code manufactured homes sited on scattered building sites conveyed fee simple, and on rental homesites within land lease communities. That issue continues to go begging!

• HUD, manufactured housing’s federal regulator resists promoting this type factory-built product as the attractive homelike, top quality, non-subsidized, energy efficient, transportable, affordable housing it is. Our nation’s affordable housing crisis continues!

• Existing manufactured housing stock is aging faster, in toto, than replacement stock can be fabricated and shipped from more than 100+ factories nationwide! And there’s an estimated 250,000+/- vacant rental homesites in land lease communities nationwide.

• All types of shelter sited within land lease communities continue to be ineligible for real estate-secured home financing, forcing said homeowners/site lessees to pay, on average, three points more for home loans than when sited on scattered building sites!

• Manufactured housing industry should sell new HUD-Code homes our prospective homebuyers and homeowner/site lessees can truly afford, based on local housing market Area Median Income, & Annual Gross Income of individuals and households.

• Marginal at best, is the public image of manufactured housing & land lease communities. While this might be the ‘price we pay’ for supplying the most affordable housing & lifestyle in the U.S. today, there is much room for improvement, via ads, etc.!
Those are some of the major Evergreen Issues afoot today. And there are more, e.g.
• Lack of secondary market for valuing, selling, and financing resale manufactured homes

• Lack of secondary market for selling-off seasoned chattel capital loans to replenish $

• Lack of widespread professional property management training & certification of staff
Now we turn to Evergreen Questions. To some wags, these perennial queries are known as the Dirty Little Secrets of Manufactured Housing & Land Lease Communities….
MANUFACTURERS. When will HUD-Code housing manufacturers, after 70 years in business, eschew their salacious D&R Delivery (i.e. ‘Drop & Run’) reputation, taking full responsibility for the installation of their unique housing product? Immediate consequences? Customer satisfaction & far less home warranty and post-installation repair and replacement costs!
FINANCE. When will manufactured housing lenders, independent third party firms and in-community transactions alike, include estimated annual household utilities expenses into the standard 30 percent Housing Expense Factor (‘HEF’) – or ‘front end debt limit’ qualifier, rather than position homeowners & homeowners/site lessees, to pay these bills in addition to monthly PITI (loan principal & interest, taxes & insurance) payments? This single factor accounts for the difference between housing finance transactions being ‘affordable’ or ‘risky’!
GOVERNMENT. When will HUD and other regulators ‘get out of the way’ of Free Enterprise efforts to provide quality, affordable housing products to the American citizenry? For example: once and for all, allow widespread use of properly engineered Frost Free Foundations for manufactured homes within and outside land lease communities. Stop meddling!
LAND LEASE COMMUNITIES. When will property owners ensure rental homesite rates are in sync with other forms of multifamily rental housing in the same local housing market, and cease maximizing profitability that lowers home values, spawns ill will, risks lower physical and economic occupancy, and creates marginal curb appeal along the way? Use the 3:1 Rule as a guide. Apartment rent at $900/month? Land lease community site rent maybe $300+/- month.
NATIONAL ADVOCACY ENTITIES. When will they finally learn to truly work together – if ever? For example: difference in how new home monthly shipment totals, based on Institute of Building Technology & Safety (‘IBTS’) input are calculated. And when will ‘affluence gerrymandering’ end (patronizing expensive meeting venues many cannot afford – discouraging participation), and begin allowing for ‘proxy voting’ to offset sparse meeting attendance?
And of course there are even more Evergreen Issues & Evergreen Questions. Please share your thoughts on these matters via gfa7156@aol.com
Suggest you print off a copy of this blog posting and keep it handy as a reminder of the Evergreen Issues & Evergreen Questions that continue to beg answers & solutions during the months and years ahead.
II.
16 April 2019
I’ve been a Certified Property Manager (‘CPM’) member of the Institute of Real Estate Management (‘IREM’) since before 1980. Over the decades I’ve penned articles about manufactured housing & land lease communities for their Journal of Property Management, and fruitlessly encouraged them to include our unique, income-producing property type amongst the commercial property types supervised by their membership. Well now, after 40 years, institute leaders have, in effect, ‘discovered’ manufactured housing & land lease communities – though 125+/- CPMs claim affinity for the realty asset class! So, on 16 April 2019, I’ll deliver an hour long webinar, introducing

Evergreen Issues & Evergreen Questions – & – 16 April 2019

April 5th, 2019

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

This blog posting is sole national advocate, official ombudsman, historian, research reporter, education resource & online communication media for North American land lease communities

To input this blog, &/or affiliate with EducateMHC, formerly Community owners (7 Part) Business Alliance, or COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

Motto: ‘U Support US 7 WE Serve U!’ Online media goal? Inform, opine, transform & improve manufactured housing & land lease community performance! Visit www.educatemhc.com

INTRODUCTION: If you missed the Tunica MHSHow, you missed out on some superb education (e.g. Spencer Roane, MHM, holding forth on lease-option transactions); emergency preparedness training; and, most important of all, parallel introductions to Freddie Mac’s CHOICE &Fannie Mae’s ADVANTAGE housing finance guarantee programs! And if you read the Allen Legacy column on pp. 81 & 82 of MHINSIDER magazine, you were introduced to industry icon Dick Moore (selling our homes since 1958), and Elvis Presley, his first manufactured home in 1974. Dick and his wife Jean were with us at the Hollywood Casino, for dinner, Wednesday evening.

And if you have any doubt that real estate pros and affordable housing ‘housers’ aren’t paying attention to us today, be sure to read Part II that follows herein!

I.

An Open Letter to the FHFA
(‘Federal Housing Finance Agency’)
concerning
Freddie Mac’s CHOICE & Fannie Mae’s ADVANTAGE*1 Housing Finance Programs
for
Factory-built homes, with site-built housing features, fabricated per HUD-Code!

Blogger’s note to reader. What follows here is a taste of what will be ‘explored in detail’ within the May issue of the Allen Letter, available from EducateMHC via www.educatemhc.com

Therein will be full length narrative descriptions of the two ‘very similar but differently named’ New Type*2 of factory-built housing product. The feature story will begin with a ‘reminder’ of our sad history the last time we attempted to compete head-to-head with site-builders in the land & home package arena, using our brand of ‘big box = big bucks’ homes. Then there’ll be summary descriptions of Freddie Mac’s CHOICE & Fannie Mae’s ADVANTAGE programs, per very similar sets of six/seven features required of New Type factory-built homes, raising these questions:

‘Why confuse prospective home buying customers with two different GSE-specific terms for this New Type housing, when one umbrella term would/should suffice?’ (&) ‘Is this a territorial or charter or ‘some other’ issue not readily apparent to the eye?’

Furthermore, given the two GSE programs are designed for ‘land & home’ package application only, let’s not forget to also serve the fastest growing ‘traditional but renewed market’, that of new home placement on rental homesites within land lease communities, large and small, nationwide! Remember: Fewer than 12,000 new HUD-Code homes shipped directly into communities during 2009, but jumped to more than 28,000 by year end 2015, a 2.35 increase during just seven years!

Finally, there is, in this industry observer’s opinion, an important and historic Achilles ’ heel to this attempt to serve a middle growth market, bridging the $100-250 thousand gap between factory-built and site-built housing. If you’ve been around this business since the 1990s, you likely remember what happened that time around? And I’m not just talking about the housing finance liberties we took, that resulted in loss of easy access to chattel capital – a handicap that continues to this day, but another failed challenge as well! Think about it….

Well, that’s all there is for today’s blog posting, on this timely and evolving subject. Want to read more, be sure the Allen Letter comes across your desk in early May 2019.

End Notes.

1. Published moniker for the Fannie Mae program is MH Advantage. Since one of the recommendations for ‘improving & consolidating’ these two similar programs involves minimizing reference to manufactured housing or MH, said initials have been removed from this introductory piece.

2. New Type is the continuing generic moniker related to a new design of factory-built housing product birthed, via research and discussion, during the Manufactured Housing Institute’s (‘MHI’) annual meeting in October 2017 and continuing. Suggested ‘new names’ to date, will be covered in the aforementioned newsletter if not here.

II.

Where Will You Be on 16 April?

Real estate professionals have discovered factory-built housing, manufactured housing, and land lease communities – but not necessarily in that order. And said interest kinda culminates on 16 April 2019 as three distinctly different realty-related events occur the same day.

National Association of Realtors’ affiliate, the Appraisal Institute, along with Freddie Mac, will be hosting a class that day in Dallas – and several others following, introducing new and improved methodology for MAIs (‘Member, Appraisal Institute’) valuing HUD-Code manufactured housing in general, Freddie Mac’s CHOICE homes in particular! Other classes? 4/23 in Atlanta; 4/25 in Charlotte, NC; and 5/7 in Detroit, MI. A question that begs answering here is, why are Freddie Mac and Fannie Mae approaching this vital valuation matter separately, rather than as a joint effort? Visit ai.org for more information.

National Association of Realtors’ affiliate, the Institute of Real Estate Management (‘IREM’), that same day, hosts an hour long webinar introducing its’ Certified Property Manager (‘CPM’) members to HUD-Code manufactured housing and land lease communities. Cost? Only $99.00. Visit irem.org for more information. I’ll be teaching the webinar….gfa

National Housing conference, also on the 16th, hosts a daylong session in Washington, DC. Title of session? ‘Solutions for Housing Communication’. Visit nationalhousingconference.com for more information.

***

George Allen, CPM, MHM
EducateMHC
Box # 47024, Indianapolis, IN. 46247

(317) 346-7156

An OPEN LETTER to FHFA about Freddie Mac’s CHOICE, & Fannie Mae’s ADVANTAGE Housing Finance Programs – & – April 16, 2019

March 29th, 2019

Blog # 526 @ 24 March 2019; www.educatemhc.com

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

This blog posting is sole national advocate, official ombudsman, historian, research reporter, education resource & online communication media for North American land lease communities

To input this blog, &/or affiliate with EducateMHC, formerly Community owners (7 Part) Business Alliance, or COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

Motto: ‘U Support US 7 WE Serve U!’ Online media goal? Inform, opine, transform & improve manufactured housing & land lease community performance! Visit www.educatemhc.com

INTRODUCTION: If you missed the Tunica MHSHow, you missed out on some superb education (e.g. Spencer Roane, MHM, holding forth on lease-option transactions); emergency preparedness training; and, most important of all, parallel introductions to Freddie Mac’s CHOICE &Fannie Mae’s ADVANTAGE housing finance guarantee programs! And if you read the Allen Legacy column on pp. 81 & 82 of MHINSIDER magazine, you were introduced to industry icon Dick Moore (selling our homes since 1958), and Elvis Presley, his first manufactured home in 1974. Dick and his wife Jean were with us at the Hollywood Casino, for dinner, Wednesday evening.

And if you have any doubt that real estate pros and affordable housing ‘housers’ aren’t paying attention to us today, be sure to read Part II that follows herein!

I.

An Open Letter to the FHFA
(‘Federal Housing Finance Agency’)
concerning
Freddie Mac’s CHOICE & Fannie Mae’s ADVANTAGE*1 Housing Finance Programs
for
Factory-built homes, with site-built housing features, fabricated per HUD-Code!

Blogger’s note to reader. What follows here is a taste of what will be ‘explored in detail’ within the May issue of the Allen Letter, available from EducateMHC via www.educatemhc.com

Therein will be full length narrative descriptions of the two ‘very similar but differently named’ New Type*2 of factory-built housing product. The feature story will begin with a ‘reminder’ of our sad history the last time we attempted to compete head-to-head with site-builders in the land & home package arena, using our brand of ‘big box = big bucks’ homes. Then there’ll be summary descriptions of Freddie Mac’s CHOICE & Fannie Mae’s ADVANTAGE programs, per very similar sets of six/seven features required of New Type factory-built homes, raising these questions:

‘Why confuse prospective home buying customers with two different GSE-specific terms for this New Type housing, when one umbrella term would/should suffice?’ (&) ‘Is this a territorial or charter or ‘some other’ issue not readily apparent to the eye?’

Furthermore, given the two GSE programs are designed for ‘land & home’ package application only, let’s not forget to also serve the fastest growing ‘traditional but renewed market’, that of new home placement on rental homesites within land lease communities, large and small, nationwide! Remember: Fewer than 12,000 new HUD-Code homes shipped directly into communities during 2009, but jumped to more than 28,000 by year end 2015, a 2.35 increase during just seven years!

Finally, there is, in this industry observer’s opinion, an important and historic Achilles ’ heel to this attempt to serve a middle growth market, bridging the $100-250 thousand gap between factory-built and site-built housing. If you’ve been around this business since the 1990s, you likely remember what happened that time around? And I’m not just talking about the housing finance liberties we took, that resulted in loss of easy access to chattel capital – a handicap that continues to this day, but another failed challenge as well! Think about it….

Well, that’s all there is for today’s blog posting, on this timely and evolving subject. Want to read more, be sure the Allen Letter comes across your desk in early May 2019.

End Notes.

1. Published moniker for the Fannie Mae program is MH Advantage. Since one of the recommendations for ‘improving & consolidating’ these two similar programs involves minimizing reference to manufactured housing or MH, said initials have been removed from this introductory piece.

2. New Type is the continuing generic moniker related to a new design of factory-built housing product birthed, via research and discussion, during the Manufactured Housing Institute’s (‘MHI’) annual meeting in October 2017 and continuing. Suggested ‘new names’ to date, will be covered in the aforementioned newsletter if not here.

II.

Where Will You Be on 16 April?

Real estate professionals have discovered factory-built housing, manufactured housing, and land lease communities – but not necessarily in that order. And said interest kinda culminates on 16 April 2019 as three distinctly different realty-related events occur the same day.

National Association of Realtors’ affiliate, the Appraisal Institute, along with Freddie Mac, will be hosting a class that day in Dallas – and several others following, introducing new and improved methodology for MAIs (‘Member, Appraisal Institute’) valuing HUD-Code manufactured housing in general, Freddie Mac’s CHOICE homes in particular! Other classes? 4/23 in Atlanta; 4/25 in Charlotte, NC; and 5/7 in Detroit, MI. A question that begs answering here is, why are Freddie Mac and Fannie Mae approaching this vital valuation matter separately, rather than as a joint effort? Visit ai.org for more information.

National Association of Realtors’ affiliate, the Institute of Real Estate Management (‘IREM’), that same day, hosts an hour long webinar introducing its’ Certified Property Manager (‘CPM’) members to HUD-Code manufactured housing and land lease communities. Cost? Only $99.00. Visit irem.org for more information. I’ll be teaching the webinar….gfa

National Housing conference, also on the 16th, hosts a daylong session in Washington, DC. Title of session? ‘Solutions for Housing Communication’. Visit nationalhousingconference.com for more information.

***

George Allen, CPM, MHM
EducateMHC
Box # 47024, Indianapolis, IN. 46247

(317) 346-7156

Yes, We’re a Big Deal(s)! (&) ‘An Underutilized $ Tool!’ (+) One Unique Book Review a-comimng!

March 21st, 2019

Blog # 525 @ 17 March 2019; www.educatemhc.com

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

This blog posting is sole national advocate, official ombudsman, historian, research reporter, education resource & online communication media for North American land lease communities

To input this blog, &/or affiliate with EducateMHC, formerly Community Owners (7 Part) Business Alliance, or COBA7, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

Motto: ‘U Support US & WE Serve U!’ Online media goal? Inform, opine, transform & improve manufactured housing & land lease community performance! Visit www.educatemhc.com

INTRODUCTION: Manufactured housing industry & land lease community consolidations have been facts of business life for these related enterprises since the late 1970s – upon implementation of the HUD-Code, and appearance of limited partnership syndicators. Today ‘the trigger words’ are mega-manufacturers & mega-property portfolio ‘players’. Read on…

It boggles my mind how otherwise savvy businesspeople ignore the most easily accessible of demographic indicator tools, Area Median Income per postal zip code, when estimating how much house prospective homebuyers & homebuyer/site lessees can afford to purchase!

Not often one reads a book that describes their life experiences during an earlier period of time. When Lou Vela gave me ‘the book’, little did I expect it’d propel me back 50 years in time to when my life was on the line as a young Marine lieutenant. But it certainly has done that…

I.

Now Part of a Much Bigger Busine$$ Picture!

Private Equity Industry Targets Land Lease Communities

By now you’ve likely heard of, if not read, the misnamed ‘Private Equity Giants Converge on Manufactured Homes’ (i.e. insert ‘land lease communities’ in lieu of manufactured homes). And how, in the eyes of some homeowner/site lessees, activist organizations and ethnographer authors, high rental homesite rates levied by private equity owners of communities coast-to-coast, are ‘manufacturing homelessness’ in their pursuit of super profitability.

In the aforementioned report, private equity firms Stockbridge Brookfield, TPG Capital, Apollo Global Management, Federal Capital Partners, Blackstone Group, and Carlyle Group are named as owners of land lease community property portfolios.

The March 11, 2019 issue of Blomberg Businessweek magazine singles out private equity firms in this illustrative fashion:

“…private equity firms manage upwards of $3 trillion. …one firm, Carlyle Group LP…has a total of about 900,000 employees in all the companies it currently owns. Other major players include …Apollo Global Management LLC – which in 2017 raised a record-setting $24.7 billion for its’ ninth fund…TPG Capital, and the biggest of them all, Blackstone Group. These firms raise money from insurance companies, pension funds, endowments, and other big investors. They’re well-paid for their work: typically “2 & 20” – a ‘2 percent annual management fee & 20 percent of any profits’. They remake the purchased companies, sell them off to private buyers or take them public, and reap the rewards.”p.9.

So, where’s the damage being done? From aforementioned report: “When community owners raise the lot (sic) rents, residents are trapped, choosing between paying rent and abandoning their home.” & “…private equity investors are relying on manufactured home residents’ limited mobility to ensure steady revenues, squeezing fast profits out of low-income families and seniors.” Understand, this report is apparently the joint project of MHAction, Private Equity Stakeholder Project, & Americans for Financial Reform Education Fund, so has a specific axe to grind. Continuing, “…realtors estimate that for every $100 increase in space (sic) rent, a manufactured home loses $10,000 in value.” (per Los Angeles Times).

Bottom line? Today we are enduring the effects of a third consolidation wave to hit this real estate asset class since the late 1970s: first, syndicators of limited partnerships who benefitted from an income tax (loss) loophole until mid-1980s; then the mini-REIT wave of mid 1990s, with strident ‘pressure to perform’ from Wall Street analysts; and now, massive acquisition consolidations by private equity giants! Yes, all you just read can adversely affect homeowner/site lessees (i.e. residents) living in communities owned/operated by one or another giant – and some not so giant – private equity firms and funds. But as was oft said during the previous consolidation waves, ‘This too will pass!’ – just maybe not quick enough.

Be sure to read ‘the rest of the story’ in the April issue of the Allen Letter. Subscribe via www.educatemhc.com or phone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

II.

An Underutilized Analytical Tool

HUD-Code Housing Manufacturers & Land Lease Community Owners Selling Homes On-site, Should, Like Banks, Pay More Attention to Area Median Income (‘AMI’) per Postal Zip Code

In the same issue of Bloomberg Businessweek we read “…JPMorgan Chase branch openings and closings, since the first of this year, are determined by median household income of branch zip code.”

For example; in New York City postal zip codes, where AMIs ranged from a low of $27,000 to high of $106,000, bank branches were closed! However, in three areas (a.k.a. local housing markets) where AMIs ranged from $118,000 to $123,000, new bank branches were opened. While apparently not a hard & fast rule, in some markets banks do service a mix of low to moderate AMI consumers.

So, how’s this related to selling manufactured homes within and outside land lease communities? Simple. Using the strangely named, but popular ‘Ah Ha! & Uh Oh! Formulae worksheet, and AMIs of $36,000 in one instance (typical of land lease community residents in family properties), and $51,229 in another (typical of U.S. average AMI), it’s easy to see how homebuyer/site lessees moving into a community charging $333/month site rent, can afford to buy a new or used home for $68,000+/- (if paying household utility expenses separate from PITI or principal, interest, taxes, insurance), and only $41,000 if said expenses are paid along with PITI, together comprising 30 percent Housing Expense Factor (‘HEF’) measure of affordable housing. Therefore; why try selling $100,000 housing in either AMI market, unless prospective homebuyer has verifiable Annual Gross Income (‘AGI’) of that much or more?

And the same principle holds true for HUD-Code housing manufacturers selling into various local housing markets, characterized by AMIs per postal zip codes. Interestingly, the same ‘Ah Ha! & Uh Oh! Formulae worksheet calculates ‘land & home’ housing price points, per postal zip code AMI’s. For example: $36,000 AMI or AGI = $158,000 max housing value (less value of underlying realty), exclusive of household utility expenses. Why higher? Because no rental homesite rent to pay. And, using $51,229 AMI or AGI = $119,000 max housing value (less value of underlying realty), inclusive of household utility expenses.

So, you using AMI to analyze local housing markets targeted for acquisition investment? You should be! If needing a copy of the ‘Ah Ha! & Uh Oh! Formulae worksheet, visit www.educatemhc.com

III.

Coming: A Most Unusual Book Review…

Greg Jones’ Last Stand At Khe Sanh, ‘The U.S. Marines Finest Hour in Vietnam’ (2014).

Why unusual? Because incidents described in this book often interface with my experiences during a 13 month tour of duty ‘there & then’. Book review likely to be published in the April issue of the Allen Letter. Here’s a sample of what to expect.

“About 5:30 a.m., as the North Vietnamese assault on Hill 861 sputtered to a close, the Marines on the battered hill were startled by an ominous sound to the southwest, toward the border with Laos, about seven miles away.’
BOOM BOOM BOOM
BOOM BOOM BOOM
BOOM BOOM BOOM
A few seconds later, they heard the sound of explosions southeast of their position. Forward observer Dennis Mannion looked at his radio operator. He recognized the sounds of big artillery guns firing, and he knew what it meant Khe Sanh Combat Base was under attack.” P.36

***

I arrived in Vietnam in time to participate, as a combat engineer officer, in the breakout from Khe Sanh, clearing roads of land mines, building bridges, and more. I heard about the ‘big guns’ hidden along the Ho Chi Minh Trail.

But it wouldn’t be until a year later, when as a company commander with the 3rd Shore Party Battalion, I saw them firsthand. At that point, they’d been captured during a daring assault by Marine infantry. Twelve 122mm field guns were captured, and all but two were ‘spiked’ (‘destroyed) by the NVA. Two Russian artillery advisors had been killed during the firefight.

My job, as battalion rigging officer, was to supervise the separation of the huge gun barrels from their wheeled carriages, then retrograde them, along with captured ammunition and firing tables, via ‘flying crane’ helicopters, out of the Ashau Valley, and back to the Dong Ha Forward Combat Base. During the night before the helolift began, we endured assault after assault by NVA and Red Chinese troops intent on recovering their weaponry. Once the Russian field guns were back at base they were shipped back to Quantico, VA., and Fort Leavenworth, KS – for test firing, and eventual display in the U.S. Marines Museum – and that’s where one of them is to this day. The other one? An exciting tale for another day.

Reminder. If not yet a subscriber to the Allen Letter; do so by visiting www.educatemhc.com

***
George Allen, CPM, MHM
EducateMHC
Box # 47024
Indianapolis, IN. 46247
(317) 346-7156