Archive for October 7th, 2016

MHShipment ‘#s & $’ for August; How to Sell Homes to LLLCommunity Owners!

Friday, October 7th, 2016

Blog # 416 Copyright 2016 COBA7® @ 9 October 2016; community-investor.com

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 the sole national advocacy voice, official ombudsman & historian, research report & online communication media for North American LLLCommunities.

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!’ Goal of its’ print/online media = to ‘Not only inform & opine, but transform & improve MHBusiness Model Performance!’

INTRODUCTION. This likely the most EXCITING blog posting I pen during 2016!

How so? After 2 ½ years, the Community Owners (7 Part) Business Alliance®, takes on the major role of research & reporting statistician for the MHIndustry & LLLCommunity asset class!

And, Thanks to the Success of the first ‘Two Days of Plant Tours & Home Sales Seminars’, held this Spring at the RV/MH Hall of Fame in Elkhart, IN. – and the 100 page HOW TO guidebook it inspired, COBA7® is able to assist HUD-Code home manufacturers significantly increase their market penetration among land-lease-lifestyle communities coast-to-coast. That is, IF manufacturers step forward and express a sincere desire meet and learn how to do so together! What can be more exciting than shipping a minimum of 75,000 new HUD-Code homes (out of an annual total of 100,000 units) into LLLCommunities by yearend 2020? Nothing!

But first, the…

I.

COBA7® MHShipment ‘#s & $’ Report for August 2016

(An attachment to the BEBA – ‘Blast Email Blog Alert’, introducing this week’s blog posting at community-investor.com)

You don’t want to miss this! COBA7®, in the stead of MHARR, MHI, & HUD, has stepped into the role of Official MHIndustry & LLLCommunity research statistician.

The attached COBA7® MHShipment ‘#s & $’ Report for August 2016, is a prime example of obtaining (by subscription, in this case) accurate data from credible sources (e.g. in this instance the Institute for Building Technology & Safety or IBTS) and reporting same in 1) unadulterated fashion, & 2) useful format, to end users such as you, HUD-Code home manufacturers, and land-lease-lifestyle community owners/operators nationwide!

If you have suggestions for improving the format of said report, please let us know by email or other means, e.g. GFA c/o Box # 47024, Indpls, IN. 46247.

II.

COBA7® Offers to Help HUD-Home Manufacturers
Better Market New Homes to All LLLCommunities!

HUD-home manufacturers recognize LLLCommunities and their need for Community Series Homes, as a key emerging market for their housing product, as independent (street) MHRetailers continue to languish. But they have little idea how to effectively market to all 50,000+/- such properties nationwide!

At a recent meeting of MHI’s Manufacturer Division, it was obvious to this observer, the Big Three-C firms (i.e. Clayton, Cavco & Champion), and others represented there – while alternatively focusing on

1) Creating a new type or brand of factory-built housing. (Anyone recall Edward Hicks’ Interlock Homes design of a decade ago?) And,

2) Exploiting emerging energy markets geographically.

3) Little to no mention of HOW TO reach ALL land-lease-lifestyle communities (a.k.a. manufactured home communities) nationwide.

Following said meeting we sent a letter to JR Daily, chairman of MHI’s manufacturer division, offering to assist to this (market penetration) end.

First, COBA7® ‘made the case’, how between years 2009 & 2015, as annual new HUD-Code home shipment volume increased from 49,789 to 64,331 units respectively, an eye-opening 25% of these homes (estimated at 12,500 in 2009) jumped to 40+% (estimated at 26,000 in 2015) six years later! Why? At first, few were buying new homes, let alone understanding how to seller-finance them. Then Community Series Homes (i.e. modest-sized singlesection homes and small multisection homes, all with durability-enhancing features) came onto the scene, meeting needs of LLLCommunity owners/operators filling an estimated 250,000 vacant rental homesites nationwide.

Harkening back to the INTRODUCTION to this blog posting, there’s no reason the just cited 40% shipment volume into LLLCommunities shouldn’t leap to 75% by year end 2020, if more new HUD-Code homes are marketed aggressively to this emerging market!

Then we described the national LLLCommunity market in three parts, only the first of which HUD-Code home manufacturers have effectively penetrated:

• While there’re 500+/- LLLCommunity property portfolios in North America today (i.e. Most Canadian portfolio ‘players’ own/operate LLLCommunities in the U.S.), only a couple dozen of the largest sole proprietors, partnerships, corporations, and three REITs (real estate investment trusts) routinely buy new HUD-Code homes in quantity, for specific properties or spread throughout their portfolio(s).*1

• The majority of property portfolio owners/operators continue to buy, if at all, one, two or three new HUD-Code homes per year. Why? Because, like their smaller Mom & Pop-sized owner/operator counterparts, they’ve not had to do so in years past, and their present day staff is unfamiliar with the ‘wholesale/retail’ drill. And, of course, there remains the daunting challenge to seller-finance these transactions.

• 85+/-% of 50,000+/- LLLCommunities located throughout the U.S. contain fewer than 100 rental homesites apiece. Many of these are owned and operated by second, third, fourth – and yes, even fifth generation family members (e.g. in SE Pennsylvania) who frequently do not live on-site, know little to nothing about the day to day operation of their investment properties, let alone now how to sell and seller-finance new homes on-site. They’re often aficionados of rental units, contract sales, even ‘churn & burn’ reality when need be. So, that’s the challenge of 2017: ID them, then teach the needed skills!

Just look at the shipment numbers. Given the accuracy of 26,000 new HUD-Code homes shipped into LLLCommunities during year 2015 – and applying the Pareto Principle – that suggests 20,800 new homes (i.e. 80% of 2015 shipment volume) going into larger ‘institution investment grade’ properties, or fewer than one home per every two large LLLCommunities! And the remaining 5,300 new HUD-Code homes shipped in 2015 (i.e.20% of 2015 shipment volume), to be spread among an estimated 42,500 Mom & Pop-sized properties, or one new home per eight smaller LLLCommunities.*2 That gives you an idea of the scope – and potential market of this major challenge.

So there is much much improvement to be had, marketing new HUD-Code homes to LLLCommunities nationwide, especially given the accuracy of the estimate of 250,000 vacant rental homesites figure!

How to do this?

In our correspondence to Mr. Daily, COBA7® suggested two already somewhat proven avenues:

• Home manufacturers to caucus with affiliates of COBA7® to 1) “agree on the general description and specifications characteristic of Community Series Homes”, eliminating any ‘confusion’ present today.*3 AND, 2) at the same caucus, learn how to effectively access all 500+/- property portfolio owners/operators via a direct mail resource that’s 99% accurate (address wise) and goes directly to the decision-maker at every portfolio.

• “Discuss the initial Two Days of Plant Tours & Home Sales Seminars (effected during May 2016 in Elkhart, IN.), to decide if similar venues might produce like and better results in the Southeast (including Texas) and West (including Pacific Northwest).” The added challenge here, will be to identify charismatic, capable, experienced (in the MHBusiness as a successful entrepreneur), motivated individuals to lead said efforts. I have no desire to do so. And, once again, these Plant Tours/Sales Seminars venues, endorsed and supported by state MHAssociations are likely the best way to ID & train Mom & Pop-sized LLLCommunity owners/operators.

What’s next?

HUD-Code home manufacturers, of all sizes, need to let COBA7® know of their interest in increasing new HUD-Code home penetration among 50,000+/- LLLCommunities nationwide! How to do this? Via response to this blog, for sure, but there’re also two additional and timely, face-to-face opportunities (venues) to do so:

• I will be present during upcoming 6th annual SECO Summit in the South, 26 & 27 October in Atlanta, GA. I am making one presentation: ‘State of the MHIndustry & LLLCommunity Asset Class’, so will have time to meet one-on-one, or via a group, if preferred, to lay plans for a national or regional caucuses just described; and/or discuss details of the Two Days of Plant Tours & Home Sales Seminar. HUD-Code home manufacturers who participate, will be given a FREE copy of Guidelines for Selling & Seller-financing New Manufactured Homes On-site in LLLCommunities. For more info about SECO Summit in the South, reach out to Genevieve @ secoconference.com And tell her of your interest in meeting with me….

• I will also be present during Iowa Manufactured Housing Association’s annual meeting on 6 & 7 November in Cedar Rapids, Iowa. Similar situation here, but I am a participant, not lecturer. Going to hear Spencer Roane, MHM® ‘hold forth’ on the merits of the lease-option methodology re seller-finance on-site in LLLCommunties. Want to get together? Contact Joe Kelly via (515) 265-1497 to register for the event – and tell him too, of your interest in meeting with me.

• Already I’ve been asked by one HUD-Code home manufacturer to plan and host a mini-seminar (i.e. two to three hours length) on Tuesday, 17 January 2017, the day before the Louisville MHShow begins. This would be along the line just described: ‘HOW TO identify and effectively market new HUD-Code homes (presumably CSH Models) to large and small LLLCommunities nationwide’. If this idea appeals to you, as a manufacturer, let me know via email or via Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Frankly, if we do this, there’s no reason why the same or similar material and focus couldn’t be presented at the MHCongress in Las Vegas next Spring – if requested by MHI.

That about does it for near future planning relative to the Marketing of New HUD-Code Homes to ALL LLLCommunities during Year 2017! The ball is now in your court. COBA7® is willing to assist in the manners just described. YOU have to decide whether it’s worth your time to learn the ‘secret sauce’, so to speak, of marketing to this emerging national market for your HUD-Code housing product!

End Notes

1. What’s a LLLCommunity property portfolio? It’s when a sole proprietor, partnership, corporation or REIT owns and or fee manages a minimum of five such properties and or at least 500 rental homesites. According to the 26th annual ALLEN REPORT, a.k.a. ‘Who’s Who Among LLLCommunity Portfolio Owners/operators in North America’; among the reporting 120 portfolios (of 500+/- total known) who reported, their property count averaged 33 LLLCommunities apiece, and average sized property contained 215 rental homesites. To obtain a copy of this year’s report (2016), simply phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 and request it. The 27th annual ALLEN REPORT is being compiled for distribution during January 2017. To obtain a copy of that Signature Series Resource Document (‘SSRD’), affiliate with the Community Owners (7 Part) Business Alliance®, or COBA7® at the Option III level ($544.95/year), by phoning the same number.

2. Pareto’s Law, a.k.a. ‘80/20 Rule’, or ‘law of the vital few’. For many events, roughly 80% of effects (e.g. home sales) come from 20% of the causal factors (LLLCommunities and or property portfolios, in this case).

3. Community Series Home design concept was birthed on 27 February 2009 (Note the year: lowest annual new home shipment volume in more than 70 years!), at a National State of the Asset Class Caucus (‘NSAC’) attended by more than 100 (then) MHCommunity owners/operators and home manufacturers, at the RV/MH Hall of Fame in Elkhart, IN. Actual design term was suggested by industry consultant Don Westphal.

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