Archive for March 21st, 2010

Get Ready, Get Set, LEAP!

Sunday, March 21st, 2010

‘Get Ready, Get Set, LEAP!’

A salmagundi of advice, observations, and opportunities to help you Learn, Earn And Prosper, during these difficult times for manufactured housing!*1

First, for the landlease (nee manufactured home) community owner/operator.

1. Mind your own business like never before! And remember this about your personal and business character: Malcolm Forbes, had a net worth of about $250 million, when asked how he decided where to invest his own fortune, said: “I bet on the jockey, never the horse…I don’t need to know what industry the company is in, or what its’ financials are. All I need to know is what kind of person the CEO is!”*2 “…the character of an organization is established by the character of the people who work there. And that character is determined by the integrity of the leader.’ Rosen & Brown, in Leading People, 1996.

2. Don’t be greedy! Apply the Minnesota/Kentucky Rule of Thumb!*3 In the landlease community (‘LLCommunity’) business environment, ‘Total monthly PITI & rent payment, for a new or resale home transaction and homesite lease combined, must be $50.00/month less than monthly rent for a large conventional apartment unit in the same local housing market, or you’ll lost the deal every time!’*4

3. If personal or corporate funds are available, self – finance new and resale home transactions on – site, forming a separate business entity for this purpose (i.e. ‘captive finance’); or hire a capable, experienced, motivated third party financial services firm to underwrite and service these chattel (personal property) loans! To this end, reserve your copy of the Manufactured Housing $$$ Primer scheduled for release April 13th at the National Communities Council (‘NCC’) FORUM in Las Vegas. How? Call (317) 346-7156 or email: gfa7156@aol.com Price? Indeterminate, as the guidebook is being edited as this blog is being posted.

4. Speaking of ‘captives’. NOW is finally the time to seriously consider joining with approximately two dozen other LLCommunity owners/operators, to form a ‘captive insurance’ firm during 2010, emulating what our campground and RV park peers did so successfully decades ago! For more information, contact Jay Zandman @ (800) 211-0468 x 117. I plan to participate! GFA

Next up; is manufactured housing industry ‘an either or’ proposition or a singular entity?

‘Up & Down’, ‘Left & Right’, ‘Port & Starboard’, Manufacturer & Distributor’, ‘Housing Production & Post Production’. Specifically, Housing Production = HUD code home manufacturers & OEM suppliers; while Post Production (nee ‘the aftermarket’) = lenders, MHRetailers & LLCommunity folk!*5 Does our Business Model really pencil down to being a simple couplet, comprised of one or the other perspective, relative to HUD code manufactured housing; or, are we inextricably bound up ‘in this together’? That’s the first pivotal question being asked, with increasing frequency today, from different corners of this industry and its’ unique realty asset class.

A second question being asked of and from both perspectives: ‘Are we satisfied with the advocacy efforts and trade representation in place inside the Washington beltway at this time?’ Are you?

Now, neither question is particularly new. What’s novel, is the patent recognition the ‘industry’ per se, may have passed the point of (near) ‘no return’. Specifically; did you see, as I did, there were No HUD Code manufacturer ads, of any size whatsoever, in the February issue of The Journal? And after a 50 year run, no Midwest Manufactured Housing Show in Louisville, KY? And the 50+ year old Manufactured Home Merchandiser folded during 2009. For a complete and sobering list of the many HUD Code manufacturers who exited during 2009, read The Grissim Report.

In the meantime, the realty asset class, though some are paying the price for past greed continues to profit from intrinsic benefits of scarcity (few new LLCommunities being developed); being ‘recession proof’; ‘adding value’ via home sales and finance; and, enjoying the fruit of generally low annual turnover of homes and residents, as well as lowest OER among all income – producing property types.*6

How’re answers to the leadership – focused questions going to pan out? For sure, we’ll have to wait and see. In the meantime, MHARR rails against federal regulators (e.g. ‘Further Evidence of HUD Program Mismanagement’, per email correspondence on 3/19/2010). The very same day, MHI’s weekly email report contained little more than pabulum. Just know there’re contingency plans in place, to ensure continuation of political advocacy, regulatory defense, and trade representation – with a minimum of interruption, should a worst case scenario present itself.

And finally; while it’s not really for me to announce; the MHRetailer, some say MHIdea, rejuvenation initiative appears to be dead for now. In last week’s blog posting I apologized for not announcing Big News, stymied by an unexpected power failure in central Indiana. Well, guess what? Still no Big News – of a positive nature, this week either. The truth is, No News. A half dozen and more, really concerned independent MHRetailers and affiliated parties, were ‘standing by’ in the hopes a charismatic leader of financial means, would step up to the plate, and unite disparate ‘players’ throughout this segment of the industry. It simply didn’t happen. However, if the content of this paragraph lights your ire fire, and you decide to get actively and intimately involved; let me know, and I’ll put you in touch with the aforementioned core of seriously concerned independent MHRetailers and affiliated parties.

The week or two ahead. If planning to be in central Massachusetts on Friday, March 26th, consider joining LLCommunity peers at the day long Manufactured Housing Manager (‘MHM’) professional property management training and certification class there. Call Mary McBrady @ (508) 460-9523 ASAP. And early the next week, if you have any excuse to be in Albany, New York, attend the New York Housing Association’s Super Symposium & Showcase of Homes! To date, more than 100 registered to attend this combination of sales and finance seminars and home tours. For information, contact Nancy Geer @ (800) 721-HOME or info@nyhousing.org

Have you been following the ‘Best of MHARR & MHI’ column in the Allen Letter professional journal, penned by ghost writer M.H. Ronin (last name means ‘a covet operations specialist with no governmental ties’)? To subscribe, access the website bearing this blog: www.community-investor.com

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End Notes.

1. salmagundi. ‘a little of this, a little of that’
2. Material quoted from Boa, Buzzell & Perkins’ Handbook to Leadership, Trinity House Publishers, GA, (800) 372-9632.
3. Minnesota/Kentucky Rule of Thumb. Moniker recognizes a wise pricing perspective recognized and espoused by two veteran LLCommunity portfolio owners/operators who independently arrived at the same conclusion; a.k.a. the Schraeder/Smith Rule
4. PITI = principal, interest, taxes, insurance
5. MHRetailers = official abbreviation for manufactured housing (nee street) retailers; and OEM = original equipment manufacturers (e.g. appliances, etc.)
6. OER = operating expense ratio(s). For FREE copy of Official Industry Standard Chart of Accounts and accompanying OERs for the LLCommunity asset class, phone the MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764.

George Allen, Realtor®, CPM®, MHM. c/o Box # 47024, Indianapolis, IN. 46247