Archive for June, 2010

What MHRetailers & LLCommunity owners/operators Should Learn from their Apartment Community counterparts!

Sunday, June 27th, 2010

What MHRetail Salescenter Operators & Landlease Community Owners Owners
Should Learn from the Apartment Industry

Apartment owners have the job performance of their leasing (sales) consultants Mystery Shopped regularly, landlease community folk rarely do, and MHRetail salescenter managers almost never do!

Apartment community leasing consultants are believers! They KNOW their individual job performance, during telephone and on – site interviews will be monitored monthly, year in – year out. Accordingly, they treat every incoming telephone call from, and every on – site visit by, a prospective lessee, as interactions with bona fide ‘shoppers’! As they should; because all inquirers are ‘shoppers’, just like the callers and visitors to landlease communities and MHRetail salescenters. Only diff, is the goal to get interested and qualified ‘shoppers’ to rent and or buy from us; while (professional) ‘shoppers’ are paid to measure how well or poorly on – site staff carry out their job descriptions! Here’re basic lessons we can learn from our apartment community consultant counterparts…
Apartment leasing consultants answer incoming telephone calls on the second ring – not the first (too quick) or fifth (too slow), with a sure SMILE in their voice! They then ask the caller’s name, recording it on a daily traffic record, and then use it several times during the conversation. How important is this initial conversation? Many believe it’s the key first step in establishing Good Resident Relations (in the LLCommunity setting) and Good Customer Service (in the home sales environment)
Consultants then identify caller’s housing needs: immediate or 30 days out; size of living quarters needed, etc., while also ascertaining whether they’re ‘qualified’ to lease and or buy at this particular location (e.g. employed, retired, family or adult only, etc..), being very careful not to discriminate along the way. Why should this be any different in a LLCommunity or MHRetail salescenter?
The ‘close’ of a telephone interview with an interested and qualified prospective lessee or buyer is to ‘Get an Appointment on – site!’ Do all our consultants know & practice this? As a pro ‘shopper’ I know they don’t!
Once this is accomplished, offer Travel Directions to the property or salesceneter, AND ask how they first learned of the property or salescenter – to measure effectiveness, or not, of marketing efforts, re advertising, etc.. This latter information should also be recorded on aforementioned daily traffic record, with results tallied and acted upon at the end of each week.
When prospective lessee or homebuyer is enroute to the property or salescenter, is there signage helping him/her find their way? Two ways to do this. First, consider buying and installing bootleg signs (exact imitations of aluminum plate DOT signs, per print style and PMS colors) at exit(s) from nearest interstate highway (Just name of property, with an appropriately – directed arrowhead). Then, within a quarter mile of the property, ‘adopt’ the highway, either officially – if a program is in place, or constructively, by installing a 2’X2’ sign, on an engineer stake, announcing ‘This Highway Lovingly Cared for by (name of property or salescenter)’. Must maintain that ¼ mile stretch of road, and be sure not to infringe on a neighbor’s property without securing permission.
When prospective lessee or homebuyer arrives on – site or at the sales center, is there a sign out front Welcoming them? For example, at every entrance to an apartment or landlease community there should be a small (1’X2’) sign, saying WELCOME HOME! On the front side, and DRIVE CAREFULLY on the back side. All apartment communities do this. Do you?
Do you reserve the best parking site outside the Information Center (Surely you’re not still calling it an office) for visitors? For example: RESERVED FOR FUTURE RESIDENT! Or’ Reserved for Dream Home Buyers!’ Apartment folk do this all the time! Makes you feel special when visiting the community or salescenter for the first time, every time….
Are your sales and leasing consultants schooled in how to ensure their personal safety and security when working alone in the Information Center and or demonstrating product (i.e. rental units, new homes, etc.)? Apartment consultants practice such measures all the time. Want a free list of ten such personal tips? Request it via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.
OK, let’s stop here for a moment and concentrate on the landlease community lifestyle.
Have vacant rental homesites? Sure you do. BUT, do you manicure them (i.e. trim any shrubs, mow the grass, pick up debris, remove earth anchors & dangerous steel strapping, protect utility risers, and rake the site)? Once that’s done, on some of the sites, install a 2’X4’ sign, painted both sides, that proclaims: THIS CHOICE SITE AVAILABLE! Call (information center telephone number)! Captures the attention of visitors and drive – thrus all the time – if you do it.
Do YOU allow free and random storage/parking of vehicles, boats, trailers, and RVs on vacant rental homesites? NOT. Provide a fenced, secure area for this service and charge a fair storage fee, as one more measure of AITR (alternative income to rent). Otherwise, over time, you host a junkyard and increase your liability for various forms of risk.
AND, conventional apartment communities routinely reduce their monthly ‘call rental rates’ (i.e. The rate they quote over the phone during the initial interview) when physical occupancy begins to drop, then raise them when occupancy rebounds. Do LLCommunities do this? Rarely. Wonder if there’s a message here? Think about it….
This is plenty to consider for the time being. However, questions, suggestions, or ideas from your personal and corporate experience are welcome. Let me know via this website or phone (317) 346-7156 or via gfa7156@aol.com
What does it cost to Mystery Shop LLCommunities and MHRetail salescenters? Fee varies, but oft about $500.00 per location, plus out of pocket travel expenses. Sometimes less, if four or five properties/salescenters are close enough together, geographically, to ‘shop’ in one day. What’s $500.00 get you? Phone and on – site performance evaluation of personnel and property by an experienced ‘shopper’, completed Standard Shopping Report with narrative, documenting discrepancies (curb appeal, rules enforcement, marketing and sales/leasing shortfalls). Also attached are handouts from the consultants, along with color photographs of what needs improvement at this location. Interested? Let us know…
What else is going on in the MHIndustry & LLCommunity asset class these days?
Will I see you at MHI’s Summer meeting in Washington, DC., @ 14 & 15 July? Hope so. For details, phone Thayer Long at (703) 558-0678. National MHRetailer & LLCommunity councils meet then too.
How ‘bout during the week of 23 August in Chicago, IL. So far, I know of a possible networking dinner among area LLCommunity owners, the one day MHM class, Precision Capital Funding’s two day seminar (Call 217/971-3968 for information), and a planning meeting for the Grand ‘One & For All’ Tour of seven regions of the U.S., scheduled during remainder of this year and throughout year 2011.
Most important though, is the upcoming 19th annual International Networking Roundtable at the Pointe Hilton Tapatio Cliffs Resort Hotel in Phoenix, AZ. As this is a ‘by invitation only’ event, contact us via the MHIndustry HOTLINE cited earlier, to request a registration brochure. What’s going to happened there this year?
New Community Series Homes on display, a couple dozen LLCommunities ‘for sale’, Randy Rowe’s ‘take’ on the MHIndustry & LLCommunity asset class today. And much much more. Want to know how truly exciting this event will be? We’ve already been accepting registrations and haven’t distributed the first brochure yet. They will be soon forthcoming though, with the July issue of the Allen Letter professional journal. If not a subscriber, call (317) 346-7156 to become one.
And while you’re at it, ask about the new 100 page Manufactured Housing $$$ Primer! Contains the writings, on chattel finance, of more than 20 MHIndustry experts intimate with this timely, and oft confusing, subject. Only $29.95 postpaid.
Geroge Allen, Realtor®, CPM®, MHM
Consultant to the Factory – built Housing Industry & the Landlease Community Real Estate Asset Class
Box # 47024
Indianapolis, IN. 46247
(317) 346-7156
gra7156@aol.com

A Potpourri of Blog Commentary

Sunday, June 20th, 2010

A Potpourri of Blog Commentary

What readers of this weekly blog are saying about it, and what’s ‘going on & not going on’ throughout the MHIndustry & LLCommunity asset class….

One faithful reader (Defined as someone who’s communicated with this blogger several times during the past 90 weeks of blogging), when reflecting upon the alleged Grand Conspiracy and or Near Perfect Storm endured by, and seriously affecting, HUD Code manufactured housing these days, was inspired to put the matter into prose:

‘While we watch the cheese move, some move and eat their fill.
Tis the right of passage on the open market.
The old way is the old era, and it is now gone.
Today we’ll win with new ideas, despite HUD’s and government’s design for us to fail.’
Lightly edited. GFA

Obvious references here, to the business bestseller Who Moved My Cheese, and last week’s bold blog, announcing the ‘End of an Era & Beginning of Another’. Miss reading it? Just scroll back into the blog archives at this website to read ‘the rest of the story’.

Let’s see, it was 2 June 2010, that fateful day in Elkhart, IN., when during a Manufactured Housing Finance Roundtable, co – hosted by Congressman Joe Donnelly (D-IN) and Federal Housing Commissioner David H. Stevens, the FHFA confirmed distancing itself from ‘all things chattel’, when it came to financing manufactured housing sited in 50,000+/- landlease (nee manufactured home) communities nationwide! Well, a scant two weeks later, the Federal Housing Finance Agency (‘FHFA’) restricts Freddie Mac from providing LLCommunity realty – secured lending! That means Fannie Mae will continue as the sole GSE participating in this mortgage arena. What else might be in the offing? Watch here for news about a new emerging conduit market….

Understand; I only report – and occasionally comment on, MHIndustry & LLCommunity NEWS. I generally don’t ‘make the news’, except when releasing a new annual ALLEN REPORT, announcing the International Networking Roundtable, and awarding Manufactured Housing Manager (‘MHM’) certifications. But readers, like you, often comment on MHIndustry & LLCommunity NEWS from a personal perspective. The following quote, from a respected portfolio owner/operator of LLCommunities, is straightforward and thought – provoking:

“I have said it before and still believe it; the REITs and big operators squeezing people on (high) rent is what started this whole mess. The little guys thought they could simply follow suit. When the big boys became REITs, they gave the (LLCommunity asset class) legitimacy on Wall Street. The money flowed into the REITs and into financing their (and our) home sales, and thus we had the false (housing) boom of the late 90s. This (manufactured housing) industry should be good for a couple hundred thousand homes per year. I am getting tired my friend. But I will push on as I have faith this is the best (housing) product for our market segment. (Prosperity) will return when all the shaking – out is done, and I hope we can be satisfied with our niche and not try to expand it beyond its’ reality.” Lightly edited. GFA

On the East coast this past week, there was a hush hush meeting between LLCommunity owners/operators and a major national name brand lending institution, to talk about the dire and timely need for chattel financing in LLCommunities, for new and resale home transactions. Here’s part of the initial report I received regarding proceedings:

“Our exploratory meeting with…went well, (and) as is frequently the case with such meetings, we ended up discovering areas of interest we didn’t anticipate early on. They are now considering the idea of several veteran LLCommunity owners putting on a ‘MHFinancing 101’ seminar for their clients and non – clients, interested in this form of investing. We’re planning the follow – up meeting.” Lightly edited. GFA

Know what? Assuming this chattel finance initiative, by LLCommunity owners, ‘grows legs’, it’ll be very interesting to hear ‘the progress report’ during 19th International Networking Roundtable (‘INR’) in Phoenix, AZ., 15 – 17 September 2010. It’s already on the agenda!

Now here’s a cryptic paragraph for you. Veteran MHIndustry & LLCommunity folk will know ‘in a heartbeat’ about which timely and historic matter the writer describes. The rest of you will have to be content to wait till an official announcement of approval is forthcoming, and I can ‘splain’ it fully in this weekly blog posting or elsewhere….

“We have gone to the ‘mountain’ one last time, and returned without any darts in our neck. We have succeeded. Considering the benefit to this (manufactured housing) industry, you would think it would be on the nightly news on all channels – but of course it isn’t. This is the biggest change in basic foundation design since the Greeks and Romans started putting rocks in trenches, under walls, for better support (That’s about 3,000 years ago!). It is truly a marvelous engineering discovery and only the MHIndustry can use it. Sadly, installation never was of much interest to most people in this business and it still isn’t.” Lightly edited. GFA

This is exciting stuff! And when we can finally ‘go public’ with it, expect to read the full story – and description of the entire revolutionary process, in the Allen CONFIDENTIAL! business newsletter and the Allen Letter professional journal.

In last week’s blog posting, after describing the paradigm shift intrinsic to the MHIndustry & LLCommunity asset class, beginning at the ‘turn of the century & advent of the new millennium’ during year 2000, and consummated at the aforementioned 2 June 2010 Manufactured Housing Finance Roundtable in Elkhart, IN., I reiterated desirable business model features and changes for HUD Code housing manufacturers and property owners/operators alike. Then there was talk of ways to calculate homesite rental rates in sync with local housing market characteristics (e.g Area Median Income or AMI) as well as property features (e.g. good vs. bad location, all adult vs. family, new vs. functionally obsolete, verbal month to month vs. written long term leases, etc.). Some felt the formulae too simplistic; others decried guidelines altogether, i.e. favoring charging ‘What the market will bear!’, proofing the old bromide: caveat emptor. Fortunately, others take a more enlightened view, seeking a fair balance between the affordability needs of the lessee, and profitability for the lessor. In this instance, the tenant ‘fairness factor’ can be, and increasingly is, enhanced with desirable guarantees related to future rent increases, change of use, ‘closure’, and other resident concerns. FYI. This topic too is already on the agenda of the aforementioned 19th INR @ 15 – 17 September 2010!

Assuming you read this blog during the week of 21 June, you know the Manufactured Housing Institute’s (‘MHI’) annual Summer meeting and legislative session, in Washington, DC., is only three weeks away! If not already a direct, dues – paying member, you should seriously consider becoming one, and attend this meeting! Simply phone Thayer Long @ (703) 558-0678. The agenda he’ll provide is compelling. And in addition, there’re other reasons to attend:

• National Communities Council (‘NCC’) convenes 13 July. If you own/operate one or more LLCommunities in the U.S., this is your national advocacy body! If you don’t participate, and make your views known, you deserve to have happen to you, whatever it is you don’t know about, or support or fight!

• National CONSORTIUM of print & online MHIndustry & LLCommunity trade publications, will hold its’ second meeting during the MHI function. To attend, tell me of your print or online publication(s) and interest in participating.

• Possibility of a planning meeting re the Grand ‘Once & For All’ Tour series of meetings, comprised of actionable seminars and issue discussion groups, scheduled for seven geographic regions throughout the U.S. later this year and during 2011. All this in preparation for the possible launch of an independent, not for profit, Manufactured Housing & Landlease Community Think Tank in year 2012. This is yet another initiative spawned by the aforementioned ‘End of an Era & Beginning of Another’ blog posting from last week.

As usual, I solicit your responses, pro and con, regarding the content of these weekly blog postings. It’s easy to do. Contact me via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or via (317) 346-7156, FAX @ (317) 346-7158, email: gfa7156@aol.com; and easiest of all, respond via this website.

Use this contact information to subscribe to the Allen Letter professional journal; order the 21st annual ALLEN REPORT; request an ‘invitation to attend’ the 19th annual International Networking Roundtable; schedule the one day Manufactured Housing Manager (‘MHM’) professional property management class and certification program for your team of on – site and regional LLCommunity managers; even order the recently – released Manufactured Housing $$$ Primer, and FREE copies of the Real Estate Lenders’ Registry, ‘Who Ya Gonna Call in 2010’ list of freelance consultants, and list of three dozen Business Development Mangers (‘BDM’) specializing in Community Series Homes (‘CSH’) for placement in our unique income – producing property type.

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

End of an Era & Beginning of Another!

Sunday, June 13th, 2010

End of an Era & Beginning of Another; In Search of a Formula That Works

If you manufacture homes & or own one or more landlease communities, listen up!

I

Here’s a sampling of responses to last week’s blog, ‘PRO & CON, & Not Much Else!’, describing the public distancing by GSEs, and federal regulators, from anything having to do with HUD Code manufactured housing chattel (personal property) financing pursuant to siting new & resale homes landlease (nee manufactured home) communities:

1) “George, it really is an end of an era, and I’m not the least bit happy about it. What will we do? If we don’t have access to significant long term capital sources for buying, selling and financing homes ourselves, we are in serious trouble. It’s been 10 years in the making, but the ‘perfect storm’ is at its’ climax….”

2) “Business is really tough out here, but my clients are now convinced, we must buy, install, sell, and finance new (manufactured) homes ourselves, if we have any desire to grow and prosper in the next two to five years.”

3) “Here’s a copy of new GNMA guidelines. I’m told the program will require a 10% reserve. That alone will doom the program to non – use, as it is cash flow negative.”

So, what is one to do? To begin with, it depends on one’s business perspective or role in the MHIndustry and or LLCommunity real estate asset class.

First the manufacturers! YOU took two bold steps during the National SUMMIT Meeting at the RV/MH Heritage Foundation’s Hall of Fame facility in Elkhart, IN., on 2/27/09. You entered into dialogue with counterpart owners/operators of LLCommunities from throughout the U.S. Results? You redesigned homes, making them more appropriate for in – community siting, and identified Business Development Managers (‘BDM’s), tasked with growing your market share of homes within this 50,000 property arena. And six months later, at the 18th International Networking Roundtable we labeled your redesigned housing product as Community Series Homes or CSH. So today, when LLCommunity owners/operators access the regularly updated and widely distributed BDM list, they call and ask for floor plans and elevation drawings of CSH models, from which to order new HUD Code homes for infill! Ask me for a free copy of the BDM list.

But there are still as many manufacturers who haven’t figured out this ‘drill’ as there are of you who’ve benefited from it. Despite encouragement to designate additional BDMs, and design more CSH product, it’s been slow to happen. Sp, if you’re reading this blog, and have influence within the two national trade advocacy bodies, MHARR and MHI, please ‘Pass this word’: Selling new HUD homes into LLCommunities is the future of manufactured housing for the time being, maybe even the long haul! And, while you’re at it, give financing more creative thought. Now that GSEs and others, ‘inside the Washington beltway’, have distanced themselves from us, every home manufacturer should/must be aligned with source(s) of wholesale and retail capital, as in the manner of Clayton Homes and CAVCO. If you don’t know who to talk to, give me a call and I’ll provide some names.

Also know, there’s a quiet effort afoot, among some of the largest private and publicly – owned property portfolios, to justify legitimate rekindled interest in, and eventually restore, chattel ‘paper’ for use in the landlease community investment environment, as well as marketing fully compliant collections of such home loans. For more information, as it becomes available over time, follow this weekly blog posting….

Now for the LLCommunity folk! Actually this segue from ‘one era to another’ has been underway ‘for us’ for more than a decade – as was alluded to in one of the three opening quotes. As you likely know from the 21st annual ALLEN REPORT, published in January of this year; among the 500+/- property portfolio folk alone, we’ve seen the total volume of ‘contract sale paper’ held by LLCommunity owners/operators swell from ‘maybe a few million dollars’ in years 1999 & 2000, to more than $ 3 ½ billion dollar by year end 2009! And, last week I read an estimate, published by what appears to be a knowledgeable source, where said total is now approaching five billion dollars plus! So, ‘We’re there, right smack in the midst of a (re)new(ed) business model, one popularized in the late 1970s (When, upon HUD Code implementation, shipments plunged from 575,940 new ‘mobile homes’ shipped in 1972, to an average of 250,000 homes per year over the next 20 years), now popularly known as (property) ‘owner – assisted finance’ of new and resale homes sold on – site!

FYI! Whether you’re already into this new business model, or now seriously thinking about it, be sure to read the July 2010 issue of the Allen Letter professional journal! Why? The entire issue is devoted to describing this paradigm shift occurring in the manufactured housing industry and landlease community asset class. ‘Seven Steps to Success’ selling and financing new and resale homes on – site, including the timely and increasingly important role of nurturing a secondary market for selling used homes, will also be detailed. In addition to that, there’re just as many Bullet Points, identifying the Lessons Learned ‘first time around’ (i.e. ‘back in the 1970s’) that LLCommunity owners/operators must be diligent not to replicate ‘this time around’! Hint. Ever hear of ‘churn’? I hope not, but it’s related to another five letter word, GREED, that helped create our industry and property type’s enduring negative image – unchanged for the past 30 years. Let’s not make those, and other mistakes again!

And there’s a third strategic, upcoming opportunity to bear in mind. With all that’s happening right now, in social, political, and business circles, one can’t do enough to stay abreast of what our MHIndustry & LLCommunity peers are doing successfully – initiatives we should consider implementing as well. And there’s a proven way to do so; by attending the 19th annual International Networking Roundtable in Phoenix, AZ, during 15 – 17 September 2010. The agenda has been set. Marcus & Millichap will lead off at 4PM on 9/15 with their annual LLCommunity Investors’ Symposium, sharing 2010 ‘stats’ and showcasing dozens of such properties for sale. Next morning, Randy Rowe, founder of Hometown America and Green Courte Partners, (and, with David Lentz, heading the management team at American Land Lease) will lead – off as keynote presenter, sharing his informed and insightful ‘State of the MHIndustry & LLCommunity Asset Class’! After Randy? All told, there’re 20 educational seminars and panels scheduled – and CSH model homes on the plaza next to the meeting rooms! Program brochures will be enclosed as lagniappes with the July issue of the Allen Letter professional journal. Since this is a semi – ‘by invitation only’ event, ensure your invitation to attend, by subscribing to the newsletter and or requesting the brochure (and a reprint describing last year’s exciting program, with three CSH models, in Chicago), by phoning the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, or (317) 346-7156. Also check this website for Roundtable meeting registration information.

II

OK; by now, if a loyal reader of this blog series (Incidentally, this is the 90th consecutive blog posted during the past nearly two years!), you know my angst about ‘too high rental homesite rents’ in LLCommunities throughout this land. And you likely know I believe LLCommunity homesite rent, ideally, should be somewhere in the neighborhood of one third the dollar amount charged by the largest (comparably sized, square foot wise) conventional apartment or townhouse in the same local housing market. For example, if a 2 or 3BR, 2B apartment (not subsidized) rents for $900.00/month sans water/sewer charges, then a LLCommunity homesite in the same local housing market might/should rent for roughly $300.00/month sans water/sewer charges. Adjustments to these amounts are likely warranted given comparable quality of respective living environments, whether family properties or all adult, even good vs. poor location.

But here’s a new wrinkle, maybe. In the same local housing market where I’ve seen the above $900 – $300 relationship in balance per the 3:1 Rule of Thumb or ratio, I’ve learned, via zipskinny.com, the individual citizen or consumer’s Average Median Income (‘AMI’) is $36,000.00 per year. Hmm. ‘Wonder what, if any, relationship there might be, between a local housing market’s AMI and aforesaid homesite rent?’ Here’s the way it pencils out in the market described in the previous paragraph:

AMI @ $36000.00 divided by 12 months = $3,000.00/month divided by an arbitrary divisor of ‘10’ = $300.00/month target site rent; the very same amount calculated using the aforementioned 3:1 Rule of Thumb or ratio, comparing conventional (3BR2B) apartments & LLCommunity homesite rents.

Know what? Using John Turzer’s rent surveys, I’ve found markets where this formula works ‘spot on’, but not as well in others; apparently having to do with whether looking at family or 55+ LLCommunities. So, what do you think or, better yet, actually experience, in your local housing market, to this end? Does dividing AMI, for your local housing market(s), by 12 months, and then by 10, come up with a homesite rent rate comparable to application of the aforementioned 3:1 Rule of Thumb or ratio? Does it trend in one direction or the other? I’d like to know your thoughts on the subject….

III

What you’ve just read, in parts I & II of this blog posting, is but ‘half the complete story’. For ALL the NEWs on these, and other timely manufactured housing and landlease community matters, you should be reading the Allen Letter professional journal each month! It’s the only print trade media penned and published by individuals active in the MHIndustry & LLCommunity asset class, as business and income – producing property owners/operators; and, participants in most – if not all major industry events, and a direct, dues – paying member of every appropriate national advocacy and trade body, e.g. MHI’s NCC and ULI’s MHCC! To subscribe, at only $134.95/year for 12 monthly issues, phone the MHIndustry HOTLINE listed in paragraph II above, via this website, or simply phone (317) 346-7156. AND, to learn even more firsthand, be present at the 19th annual International Networking Roundtable in Phoenix, AZ., 15 – 17 September 2010! While subscribing, ask for a FREE copy of the next monthly issue of the Allen CONFIDENTIAL! business newsletter…read by most MHIndustry execs!

In the meantime, plan to meet with manufactured housing executives and landlease community owners/operators at the Manufactured Housing Institute’s Summer meeting in Washington, DC @ 13 – 15 July 2010. For registration information, contact Thayer Long via (703) 558-0678. I plan to attend; how ‘bout you? If so, make it a point to talk to me there, about this and other weekly blog postings, giving me your ideas and suggestions on how to make it an even better, useful communication tool for our industry and asset class at large! FYI. We’ll likely have the second meeting of the Print & Online Trade Media CONSORTIUM sometime during the MHI meeting. Interested?

Also let me know personally, if you’re seriously willing to help plan, and or host, a Grand ‘Once & For All’ Tour series of meetings, comprised of actionable seminars and issue discussion groups, scheduled for seven geographic regions throughout the U.S., later this year and during 2011, in preparation for the launch an independent, not for profit, Manufactured Housing & Landlease Community Think Tank in year 2012. Yes, this is a key event(s) spawned by the ‘End of an Era & Beginning of Another’. The question for YOU is, are or will you be an integral part, better yet a leader, within this latest, and maybe largest, manufactured housing and landlease community paradigm shift?

George Allen, Realtor®, CPM® Emeritus, MHM Box # 47024
Consultant to the Factory – built Housing Industry & Indianapolis, IN. 46247
The Landlease Community Real Estate Asset Class (317) 346-7156

PROS & CONS, & NOT MUCH ELSE!

Sunday, June 6th, 2010

PROS & CONS, & NOT MUCH ELSE!
Well attended, lousy room; common focus, many tangents; informative start, weak ending

60 executives from business, government, and federal regulatory agencies – but NO GSEs, gathered, 2 June 2010, in the second story , acoustically challenged, stuffy Athenian Ballroom of a 100 year old downtown Elkhart, Indiana, building . They’d flown in the night before from as far afield as Colorado, Washington, DC. and Florida. Better the next meeting (None was announced, or even hinted at, hence an indication of interest and effectiveness right there!) be held at the RV/MH Heritage Foundation’s mall of Fame, museum and library facility (also) in Elkhart, Indiana.
Originally described as a Manufactured Housing Finance Roundtable, by the time we arrived, it’d been relabeled a Manufactured Housing Summit. Small difference perhaps, but predictive of how difficult it was to keep everyone on point (MHFinance), with so many disparate aspects to and of the subject. And Yes, there was an agenda; but once the group got past Welcome & Introductions (Really weren’t many, just the meeting hosts. Maybe next time they’ll go ‘round the room’, to facilitate networking and participation), and Manufactured Housing Institute’s excellent ‘State of the MHIndustry’ Power Point presentation, the remainder of the morning was a round robin discussion of real estate and personal property -secured lending, as they pertained to manufactured housing.*1
What transpired at this morning meeting? Well, as to substance, I’m going to leave that to folk who garnered the most attention, by design, at this roundtable/summit: Federal Housing Commissioner David H. Stevens, and MHI representatives Dick Ernst and Thayer Long. Just about everyone in the room seemed to have a hobby horse interest to ride – if they even deigned to share their thoughts. Many didn’t. Will tell you this; I was as pleasantly surprised at MHI’s Thayer Long’s passionate remarks challenging an FHFA representative about their ‘chattelless’ Duty to Serve stance; as I was disappointed at MHARR’s Danny Ghorbani’s lukewarm commentary from time to time.*2
What I will share, are some general pro & con observations recorded during the 2 ½ hour meeting.
An eight page, undated (presumably 2 June 2010) memorandum was distributed at the summit/roundtable, re: ‘Title I Manufactured Home Loan Program Clarification and Guidance.’ This was well received, and, hopefully, is a precursor of improved chattel finance conditions for the MHIndustry once Ginnie Mae puts their ‘chop’ on it. Want a copy? Contact Danny, Thayer, or me.
In my opinion, the best – but – dismal summary of MHIndustry’s present day malaise was offered by Larry Keener, president & CEO of Palm Harbor Homes. He described how the affordable nature of HUD Code manufactured housing has been destroyed by cost of capital (i.e. 3 basis point differential between personal property and real estate – secured loans), and, present day competition with ‘short sales’ occurring throughout the site – built resale housing market nationwide. His bottom line? The manufactured housing industry sorely needs ‘a level playing field’ to survive!
Mr. Keener’s apt observations highlighted two additional factors; one repeated over and over at the event – but never with any definition or quantification; and another, while brought up twice, was all but ignored.
In the first instance, ‘affordable housing’ was cited in near mantra fashion, time and again, sans any attempt at definition or description whatsoever. No one in the room had any idea whether the ‘speaker of the moment’ was referencing housing expense factors, the Housing Opportunity Index, housing wage, or workforce housing perspectives. This was an apt example of why everyone involved in housing discussions should go back to the drawing board and agree upon what they’re talking about; otherwise, ‘affordable housing’ and ‘housing affordability’ can – and will continue to mean, whatever the user/misuser, of the moment, wants it to mean!*3
And then there was the perennial issue regarding how manufactured housing is – or should be valued: either via cost – based (book) method, or the comparable sales method used for all site – built housing? This controversial subject is touched upon in the Manufactured Housing Financial Primer (p.29).*4 What it does not say, nor was this brought out at the Summit Meeting, is the MHIndustry, out of one side of it’s mouth, lobbies for a level playing field (e.g. ‘Treat us like housing, not trailers!’), while routinely using the ‘book method’ to generally undervalue homes when repossessed, and or taken in trade for higher priced new ones, widening the loss and profit margins respectively. As long as GSEs (Government Sponsored Enterprises) opt for ‘the easy way out’ by endorsing book valuations of manufactured homes, this double standard will continue to be a proverbial albatross around the industry’s collective neck, dragging it down, down, down. And don’t forget, the GSEs declined to participate in this event! What’s that tell you?
As the roundtable/summit drew to a close, Commissioner Stevens shared his five ‘takeaways’ from this meeting: an openness to chattel finance guidelines and best practices, learn more about lien perfection matters, ascertain ‘real pricing’ of manufactured housing*5, study new duration models re lifetime loan default statistics, and, seek a clearer separation between the characteristics and needs of lenders serving manufactured housing, and those active in conventional housing markets.
Finally; the 800 pound guerilla in the room! Perhaps it’s my affinity for landlease (nee manufactured home) communities, and ‘matters thereto pertaining’, but I found myself wondering, all morning, ‘when’ are they going to talk about how manufactured housing chattel finance relates to the contemporary on – site sale and financing of new and resale manufactured homes within 50,000 such income – producing properties nationwide? Well the matter never really did come up – except when Ed Hussey of Liberty Homes tried unsuccessfully to interest Commissioner Stevens in the aforementioned ‘appraisal issue’. Then, at the very end of the meeting, Lois Starkey, of MHI, asked Gary McDaniel of YES! Communities, to tell the gathered execs about ‘what was going on in the LLCommunity asset class’. Gary was quick to point out this was somewhat off – topic, but went on to describe an ongoing project orchestrated by several major property portfolio owners/operators, to ‘grow’ a new body of chattel loan performance data, to effectively counter the infamous Greentree ‘killer’ stats of years past. Point? This is another worthy aspect of manufactured housing chattel financing that received little to no attention at this (One time?) event.
Will this roundtable/summit produce measurable results? I doubt it – for two reasons. First, had there been any real passion going into this meeting, hints would have been dropped beforehand, to plan to stick around for working sessions during the afternoon, i.e. one – on – one opportunities to learn and discuss various aspects of manufactured housing finance. That didn’t happen. Even more telling, was the obvious and complete lack of public notice or request, for a follow – up session to this one. SO, with no subsequent performance measurement events in place, it’s highly unlikely there’ll be significant performance improvement! For this industry observer the MHSummit simply an educational, worthwhile networking event, but not much more than that.
For that matter, here’s a summary statement that encapsulates where HUD Code manufactured housing and chattel (personal property) finance is, at this time in our industry’s 60 year history:
“Say ‘Good bye’ to the GSE’s as a secondary market for manufactured housing – related (chattel) capital, & ‘Hello’ to landlease (nee manufactured home) community owner – financing of new and resale home transactions on – site, ‘Duty to Serve’ verbiage notwithstanding! And, the Grand Conspiracy, or Near Perfect Storm continues to grow in reality and intensity!” You’ve gotta be asking yourself: ‘Who’s going to be left to manufacture, sell, and finance manufactured homes when all this plays out?’
As always, I welcome your opinions and critique of these views. Reply directly to this blog posting or via the MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764.
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End Notes:
1. For a copy of MHI’s excellent Power Point presentation, contact Thayer Long @ (703)558-0678
2. MHARR. Manufactured Housing Association for Regulatory Reform @ (202) 783-4087
3. For a detailed treatment of ‘affordable housing’ and ‘housing affordability’, read HOUSING AFFORDOGRAPHY, PMN Publishing, Franklin, IN. 2008
4. Available for $29.95 (postpaid) from PMN Publishing: (317) 346-7156
5. For a clear and startling look at ‘real $ pricing models’ comparing land & home vs. in – community housings sales transactions, from ‘affordable’ and ‘risky’ transaction perspectives, request a free copy of the widely – used ‘Ah Ha!’ & Uh Oh!’ formula page, by phoning the MHIndustry HOTLINE; (877)MFD-HSNG or 633-4764.
Postscript. Want to read even more on the subject meeting in Elkhart, IN? MHI & MHARR have already published summaries penned from their perspectives. What you’ll want to read, however, is Precision Capital Funding’s lengthy, pithy letter to Congressman Donnelly. Phone 9217) 971-3968 to request a copy! It’s interesting this viewpoint is penned by a financier who was not invited to ‘have a seat at the table’ where manufactured housing chattel finance was discussed for 2 ½ hours….
FINALLY,
If you own/operate one or more landlease communities in North America, and haven’t already done so, mark your planning calendar to be in Phoenix, AZ. @ 15 – 17, 2010, for the 19th annual International Networking Roundtable! This is a ‘by invitation only’ event, limited to the first 200 sign – ups. Product and service vendors are welcome to attend as event sponsors. In both instances, contact us for a registration brochure, containing the list of 20+ seminars and panels, scheduled for this year’s event – complete with Show Homes! (317) 346-7156
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George Allen, Realtor®, CPM® Emeritus, MHM
Consultant to the Factory – built Housing industry &
The Landlease Community Real Estate Asset Class
Box # 47024