Archive for April 18th, 2015

New Paradigm Education & Micro Units/Tiny Houses

Saturday, April 18th, 2015

COBA7® via community-investor.com Blog # 345 Copyright @ 19 April 2015

Perspective. ‘Land-lease-lifestyle Communities, a.k.a. manufactured home communities and ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog posting is a national advocacy voice, official ombudsman (press), research reporter, & online communication media, for all LLLCommunities in North America!

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

COBA7® Motto = ‘U Support US & WE Serve U!’, & the Goal of its’ print & online media = to ‘Not only inform & opine, but transform & improve our MHBusiness model!’

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Introduction to this & next week’s blog postings at this website:

This week. 1) What is seriously missing in manufactured housing’s New Paradigm? The paradigm first described here, for you, last week. 2) The Park Model RV ‘discussion has only just begun. Think too of Accessory Dwelling Units or ADUs & Micro Units – plus what we’re not discussing them yet, Tiny Houses! & 3) This week’s posting concludes with a review of COBA7®s third WISH for 2015: professional property management & certification among all land-lease-lifestyle communities! Are YOU MHM® certified yet?

Next week. Reportedly ‘record attendance’ at MHCongress, but 1) program tainted by crass imitation; 2) a notable and telling oversight during annual awards presentation; and, 3) an off-agenda meeting that made manufactured housing industry history! And maybe ending with 4) the major announcement from COBA7® deferred in Las Vegas. Hint. ‘Official reporting of annual HUD-Code home shipments will never be the same again!’

You do not want to miss reading This & Next week’s blog postings at community-investor.com If you didn’t realize before, LLLCommunities, and by extension, the manufactured housing industry, are in the midst of a NEW ERA, you soon will! GFA

I.

So, We’re In a New Paradigm. What’s Next?

Last week, here at community-investor.com, we described the new manufactured housing paradigm unfolding since the turn of the 21st Century. One in which land-lease-lifestyle community owners/operators no longer rely on independent (street) MHRetailers to fill vacant rental homesites with new and resale homes. Rather, LLLCommunity owners/operators, now buy new Community Series Homes directly from HUD-Code home manufacturers, to be installed on-site, then sold to prospective homebuyer/site lessees at whatever profit margin works in the local housing market. And when need be, LLLCommunity owners/operators also engage in renting homes, and seller-financing, to effect transactions.

With that said, what’s holding the manufactured housing industry back from going ‘gang busters’ filling vacant rental homesites, even boosting annual home shipments up from the 55,145 six year (i.e. 2009-2014) ‘woeful running average’ towards the alleged ‘sweet spot’ of 250,000 new HUD-Code homes per year? In a word, EDUCATION.

This has to be one of the worst industries, and by extension, real estate asset classes, when it comes to educating itself on how to best do something, the right way, at the right time. And this matter is sorely complicated in at least two ways: internecine (‘mutually destructive’) behavior between national advocacy bodies representing the industry, and among business enterprises themselves!

I well remember the late 1980s, when some of us sensed a New Renascence in manufactured housing ‘was upon us’, culminating as it did, in 1998, with 372,843 new homes shipped! There wasn’t a single educational text around, to ‘splain’ how to develop new (then) mobile home parks cum manufactured home communities (by 1994), or even how to search an existing one out, value it to buy, and then turn around (investment wise) as a profitable business. Well, within a few years, J. Wiley & Sons, provided us with Development, Marketing & Operation of Manufactured Home Communities, and How to Find, Buy, Manage & Sell a Manufactured Home Community. With those in hand, as an industry/asset class, we were ‘off and running’ for awhile – until our chattel capital finance bubble burst soon after the turn of the century. And know, the preparation and distribution of these seminal texts received little to no interest or help from either of the national advocacy bodies at the time. Nada.

Well, we’re in the same unfortunate state of affairs today. There are at least two tomes begging to be authored and published – to EDUCATE, the sooner the better. And a third title that’d sure be nice to have around. In this order, they’re:

• How to Market & Sell New & Resale Manufactured Homes in-Community! I’d love to write this one myself, but I’m not a practitioner, so won’t be doing so, except as an editor. In my opinion, it needs to begin with ‘how to assess a local housing market’s acceptance of manufactured housing sales’, and what the affordable housing price points will be. Then, how to set up an on-site sales center, spec homes, order same, and begin the marketing, and the sales drill. There’s a key difference between ‘these sales’ and those by independent (street) MHRetailers: on-site we’re selling lifestyle and covet retention, so prequalification plays a major role in the selling process. This must not be a deal-to-deal, or ‘churning’ sales exercise, as was too oft the case within the previous paradigm! So, who’s going to author this text? It will not be an easy task, but certainly a rewarding one. This I know.

• How to Engage in Seller-finance of New & Resale Home Transactions in-Community! Early in 2010, I penned the industry’s first Manufactured Housing $$$ Primer. It sold out at that year’s MHCongress in Las Vegas – that’s how hungry folk were – and continues to be, for that sort of detailed, albeit changing housing finance information. But there hasn’t been anything akin published since, despite my encouragement to qualified practitioners and trainers. We sorely need an updatable reference describing the various ways to finance new and resale homes on-site in LLLCommunities, and how to be in compliance with various state and federal regulations. Also, how to raise capital for said transactions, and the basics of lease-option methodology. So, who’s going to author this text? Hint. Probably best if this is a team effort.

• Land-lease-lifestyle Community Valuation, with & without Property Owner-owned Homes. Believe it or not, the valuation chapter penned by Laurence Allen, MAI®, for inclusion in the aforementioned How to Find, Buy, Manage & Sell…book continues to this day, 20years later, to be the seminal work on this timely topic. But today, considering the new paradigm’s influence regarding ‘six types of shelter on-site, not just two’, and presence of property owner-owned homes as rentals, contract sales, and lease options, we’re in dire need of a contemporary reference of this sort. So, again, who’s going to author this text? I can think of at least three MAI®s who’re qualified to do so….

I’ve encouraged qualified and experienced individuals, with expertise and successful experience in all three areas, to step forward and ‘make their mark’, as David Alley, Edward Hicks, & I did with our raw land development classic 21 years ago. But so far, no takers. How ‘bout you? Seriously interested? If so, I’d like to hear from you. With everything else that’s going on with COBA7® these days, I’d still help get one or more of these needed books written, edited, published and distributed to the industry/asset class. And don’t forget, COBA7®, unlike any other national trade group, is closely affiliated with a commercial printer (i.e. Spotlight Strategies) and MHIndustry publisher (i.e. PMN Publishing). To talk about one or another of these heady projects, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

II.

Room in the Park Model RV Discussion for Micro Units?

As you may recall, the park model RV confab (‘conversation’) of nearly a year ago, promises to heat up again in the not too distant future. First off, everyone – rightly or wrongly, agrees park model RVs are not designed or intended for permanent residency – even though hundreds, if not thousands, of them are already used as such in RV parks in Sunbelt regions. The present pressing issue is, however, whether or not to include the front porch overhang in the 400+/- square feet limit that differentiates between HUD-Code manufactured homes (i.e. more than 400 square feet in size) and recreational vehicles (i.e. less than 400 square feet in size). To do so cuts back on the living space ‘inside the walls’; to not do so, makes for a larger than usual park model RV.

Well, there’s yet another contemporary aspect of this discussion. It involves ‘dainty urban dwellings’, a.k.a. micro units, as apartments and condominiums. The Urban Land Institute recently published a 46-page report titled, ‘The Macro View on Micro Units’. The report draws on three information sources.

According to the report, a micro-unit is roughly 350 sq. ft. in size, “slightly larger than a one-car garage but considerably smaller than a two-car garage.” Some micro-units are as small as 220 sq. ft. (in San Francisco, CA. & Washington, DC), others as large as 400 sq. ft., (in New York City & Philadelphia, PA). In Seattle, WA. & Portland, OR., there are no square footage minimums. Apartments without bathrooms and kitchens are classified, in this report, as single-room occupancy (‘SRO’) units and not qualify as micro-units.

There’s a significant user difference preference relative to micro-units and park model RVs. According to the ULI report, micro-units target “predominantly young, professional singles, typically under 30 years of age, trending slightly more male than female.” Whereas, park model RVs, have become the abode of choice among retirees and senior citizens, often living alone (i.e. ‘granny flats’) in Sunbelt regions of the U.S. Interestingly, HUD itself has a trade term of long standing that includes both these very small shelter types: Accessory Dwelling Unit or ADU. And if that didn’t cloud the issue enough, here’re rebranding terms being bandied about relative to micro-units: launch pads, nano units, urban flats, innovation units, and even fun units.

And lest we forget to mention it, there’s another whole sidebar topic to this discussion, called Tiny Houses. More about these in a later blog posting, as HUD is also deciding whether this shelter type should also be brought in under, or excepted from the HUD-Code that regulates manufactured housing..

In any event, we’re likely in for some rough sledding during the months ahead, as HUD, the RV industry, even manufacturers in the HUD-Code housing business, and now NAHB homebuilders (re: Tiny Houses) strive to protect what they view as their proprietary and regulatory territories in whatever manner appears best to them. Let’s hope though, the housing wants and needs of consumers are included in these discussions.

The material describing ULI’s report was taken from ‘Small Small World’ in the March/April 2015 issue of Multihousing Professional magazine, pp. 36 & 37.

III.

Reviewing COBA7®s WISH LIST for Year 2015

Here we review the fourth of five WISHES identified early this year, as being goals for the Community Owners (7 Part) Business Alliance® during 2015. The WISH?

“Do whatever necessary and possible, to promote professional property management of on-site, regional, and executive managers, via training and certification of LLLCommunity owners/operators, as CPM®s, MHM®s, & ACM®s.”

Well, from my perspective, there’ve been three, and will soon be a fourth initiative in this direction. Three months ago, I taught the Manufactured Housing Manager® program at the Louisville MHShow. A few weeks ago, I taught the same one day MHM® course to a dozen on-site and regional property managers from two Midwest firms, along with two property owners.

And just this past week, handled a telephone inquiry from an ‘asset aggregator’ seeking professional third party property management services for the land-lease-lifestyle communities his firm recently acquired. That was easy. As you likely know, one can count on one hand the number of reputable, capable, experienced, motivated ‘fee management firms’ serving the realty asset class – and not one of them, that I know of, is an AMO® or Approved Management Organization® per the Institute of Real Estate Management. Sad but true. Of course, there’s also that understandable economic reason why there’s so few such firms throughout our realty asset class: most LLLCommunities are too small (i.e. too few rental homesites) to support third party fee management. And most large size communities (e.g. 200+/- rental homesites apiece) are in property portfolios managed centrally.

On 20 May 2015, I’ll again be teaching the one day MHM® class. This time we’ll convene at the Par-a-Dice Hotel Casino, in East Peoria, IL., the day before the Illinois Manufactured Housing Association has its’ annual business meeting. It’s still more than a month away, and already the class is half full (max of 20-25). If you’re interested in attending, register – for only $250.00/person – via (217) 528-3423. What a deal! For that low tuition fee, MHM® candidates receive a copy of Landlease Community Management, a monograph of contemporary manufactured housing readings, and gold MHM® lapel pin and sequentially numbered MHM® certificate.

To date, there’re barely more than 100 Certified Property Managers® active as LLLCommunity owners/operators; 200+/- Accredited Community Managers via the Manufactured Housing Educational Institutes; but nearly 1,000 Manufactured Housing Managers, under the auspices of the COBA7® division of GFA Management, Inc., dba PMN Publishing.

So, if not presently trained and certified as a professional property manager, give this upcoming opportunity serious consideration. It’s the only such MHEducation opportunity taught by a veteran LLLCommunity owner/operator, CPM®Emeritus, & MHM®Master. Register today!

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