Archive for November, 2012

Lunch Anyone? Fallout Continues. Best of times, Worst of Times

Saturday, November 24th, 2012

Blog # 221 Copyright 2012 25 November 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

Lunch Anyone?

1/23 in Louisville, KY: Dine & Network with Movers & Shakers!

II.

Fallout Continues!

Amazing! Little Official Action, but Lots of Support from You!

III.

Best of Times, Worst of Times…

What I Tell Prospective LLCommunity Investors When They Call

***

I.

Lunch Anyone?

1/23 in Louisville, KY: Dine & Network with Movers & Shakers!

Who’s up for starting a new tradition at the Louisville MHShow?

‘More than a few of you are’, since several manufactured housing and land lease lifestyle community businessmen and women have asked me – since the ‘free lunch is long gone at the Louisville MHShow’, Why don’t I host an annual ‘by invitation only’ luncheon and networking event, at a nearby hotel, for those who want to get off the showroom floor for awhile, to dine & socially mingle with ‘friends in the MHBusiness’?!

Well, I’m game, if You’re really interested! Tell you what we’ll do…

I’ll soon drive down to Louisville and reserve a venue. In the meantime, you indicate interest in being invited to the networking luncheon, by responding via phone (e.g. MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764) or email: gfa7156@aol.com
Simply state your desire to participate, leaving me your preferred contact information.
I’ll send you an invitation, & read future blog postings here for details, $ amount, etc..

So, what do we have in mind? An appropriately sized hotel meeting room, probably a buffet luncheon, with seating conducive to interpersonal networking; then a special speaker (not me), followed by opportunities for open discussion – or maybe three ‘directed discussions’ on such topics as lease option, financial regulatory compliance, and how to collect 100% of your site rent. And there’ll be no pressure to conclude the event. I suspect we’ll convene between 11 & 11:30AM, break bread together from11:30AM to 12:15PM, titillate you with the surprise presenter from 12:15 – 1PM (I do have someone in mind.) And you’ll be free to return to the MHShow anytime you wish: before or after 1PM, or later – if you participate in one or more of the three directed discussions described above. In any event, I plan to keep the meeting room available for networking, discussion, and more, until at least 3PM. Cost? Too early to say, but as reasonable a fee as I can negotiate with the host facility.

Wanna participate? You’ll need an ‘invite’; and the first step to receiving that, is to phone the above – listed MHIndustry HOTLINE or email me via gfa7156@aol.com

***

A Postscript of Virginia Sorts…

Speaking of networking, as well as education and industry/asset class matters! Don’t forget. If you own and or fee manage one or more land lease lifestyle communities in VA, MD, NC, WV, and surrounding areas, plan to be in Richmond, VA., on 6 December 2012! Why? The Virginia Manufactured & Modular Housing Association is hosting a day long opportunity for Education (‘How to Set Affordable & Risky Price Points on New & Resale Homes’ & ‘How to Turnaround Troubled & or Abused Properties!’), Information (‘State of the MHIndustry & LLLCommunity Asset Class!’ & 21st Mortgage’s cutting edge C.A.S.H. Program, funding on – site home loans in partnership with LLLCommunity owners!), and superb interpersonal networking (luncheon) among land lease lifestyle community owners/operators. Tyler Craddock, VAMMHA’s exec, is your point of contact for more information and to register (only $35.00/person!): (804) 750-2500. Hope to see you there!

***

II.

Fallout Continues!

Amazing! Little Official Action, but Lots of Support from You!

Haven’t said much yet, about what happened at the NCC meeting on 8 October 2012, during MHI’s annual meeting in San Antonio, TX. Suffice it to say however, an unexpected, unfortunate public incident occurred that begs redress for the injured parties.

As of 21 November, MHI’s Executive Committee attempted, by email, to dodge responsibility for said incident, even though it occurred at their annual meeting venue; suggesting offended MHI members take the matter up with the NCC division officer effecting the highly embarrassing incident.

With that said, know nary a week goes by – and there’s been seven of them so far, when we haven’t heard from one or another land lease lifestyle community ‘owner’, assuring us of their ongoing support. Here’s the most recent email commentary and challenge to come our way:

“A long time ago, I got sick of the ‘do nothing clique’, who are ONLY in the mix for their own selfish reasons. Why invest personal money, and more importantly TIME (to this end). Keep up your tenacious fight, and continue to be our voice! Help to crystallize the issues, and support people who can really help make a difference.” JR (Emphasis added. GFA)

Where does this sorry matter stand today? Correspondence continues to pass back and forth among the elected and salaried leaders of our industry’s primary national Advocacy body, and the injured parties. I’m hoping there’ll be resolution by the end of November, certainly by 8 December, which will mark two full months of waiting for this situation to be made right. Beyond that? Well, guess you’ll need to read this blog posting, from week to week; as well as upcoming issues of the Allen Letter professional journal; and, certainly plan to be at the next NCC meeting in Arlington, VA., on 26 February 2013.

***

Best of Times, Worst of Times…

What I Tell Prospective LLCommunity Investors When They Call

By now, most of you reading this 221st consecutive weekly blog posting, know I make my living as an independent, freelance consultant to the factory – built housing industry, land lease lifestyle community owners/operators, and affordable housing purists and enthusiasts nationwide. As such, we field a wide variety of task inquiries every week, including: deposition and jury trial testimony in expert witness cases; telephonic & on – site inspection Mystery Shopping assignments throughout the U.S.; covert property management criminal investigations; property takeover & turnaround planning services; public, private & corporate speaking engagements; as well as, professional property management (Manufactured Housing Manager® or MHM®) training & certification class scheduling – and more.

The one near routine inquiry these days, for ‘private industry & realty asset class briefings’, comes from financiers, equity funds, Wall Street analysts, hedge fund directors, lending institutions, academics, and now, realty – secured mortgage servicing firms, all asking the same or similar questions:

Is now the right time to invest in manufactured housing & or land lease lifestyle communities? If so, why? And if not, why not?

To begin with, those are not generally the two ‘trade terms’ inquiring clients use in their question or questions. But their choice of lingo is usually a clear indication as to how little or much they already know about our interrelated business types and models. What’s contained in the following paragraphs, albeit in abbreviated fashion, is what I shared with a paying client this past week; and frankly, the ‘drill’ doesn’t change much from client to client, or month to month, unless new information or helpful statistics become available for my use. Ready?

I won’t tell you ‘up front’, whether this is the Best of Times, or the Worst of Times, to invest in manufactured housing and its’ real estate component, the land lease lifestyle community (a.k.a manufactured home community). But you’ll be able to make up your own mind, by the time we’ve worked through the following paragraphs, and you’ve studied the 23rd annual ALLEN REPORT, as well as other contemporary trade articles. The 24th annual ALLEN REPORT will be published 1 January 2013 as a lagniappe to the Allen Letter professional journal.

To begin with, ‘manufactured housing’ and ‘land lease lifestyle communities’ (a.k.a. LLLCommunities) are two different, but closely related business types and models. HUD – Code manufactured housing, on the one hand, has to do with the design, fabrication, shipment, and installation of factory – built housing constructed in accords with a federal preemptive performance – based building code. Manufactured housing production, marketing health, and industry performance are measured by ‘annual shipment volume’ of new HUD – Code homes. At present, and for the past several years, annual shipments have been at an historic and dismal nadir of only 50,000+/- new homes per year, down from a renascence high of 372,843 new HUD – Code new homes shipped during 1998. No significant change, or improvement, is seen on the horizon – unless there’s an increase in crew housing demand from natural oil – fracking regions of the U.S.; or FEMA needs thousands of specially – designed homes, following natural and weather disasters. Of course, a wholesale return of the now decade – long – gone accessible chattel (personal property) financing of HUD – Code homes would also be a major game changer!

LLLCommunities are neither growing or declining in number. It’s estimated there are 50,000+/- of them nationwide, with 85 percent of that number characterized by properties containing 100 or fewer rental homesites apiece. Because of their scarcity (i.e. 50,000+/-), stable occupancy (homes too large & expensive to relocate), stable & competitive site rent (compared to conventional apartments in the same local housing market), affordable home ownership & equity opportunity, being ‘recession proof’, and unique opportunities to ‘add value’ in difficult economic times, these income – producing properties enjoy the near perennial reputation of being a Sellers’ Market. It’s, in large part, why the majority of the 15 percent of LLLCommunities, larger than 100 rental homesites apiece, are today in 500+/- known property portfolios domiciled throughout North America only. For more details read the 23rd & 24th annual ALLEN REPORTs.

With all that said, what are the unique, encouraging, even troubling trends characteristic of many, if not most or all LLLCommunities across the U.S. today?

Traditionally, when one acquired a LLLCommunity, it was commonplace to rely on local independent ‘street’ MHRetailers (formerly referred to as ‘street dealers’) to sell new and resale manufactured homes, then encourage buyers to site their new home in (then) mobile home parks cum manufactured home communities. Well, due to a plethora of undisciplined lending practices, throughout all segments of the manufactured housing industry before, during, and after the ‘turn of the century’ (i.e. 1996 – 2005), most independent sources of chattel (personal property) finance have disappeared from our industry and are remain gone. Same with the MHRetailers; their number is estimated to have plummeted from 11,500, at the turn of the century, to but 4,000 independent ‘street’ MHRetailers & ‘company stores’ today. And no near term relief or change is foreseen there as well.

At that point in time – when independent, third party – originated chattel mortgage financing disappeared from the manufactured housing business scene, owners/operators of LLLCommunities, from coast – to – coast, exercised one of the aforementioned unique characteristics of this property type, i.e. ‘ability to create additional streams of income’ by selling and self – financing new and resale home transactions on – site! This worked fine for awhile – until getting (some say, unintentionally) swept up in financial reforms, following our nation’s recent economic hiatus, specifically, the S.A.F.E. Act (Safe And Fair Enforcement of Mortgage Licensing), provisions of Dodd – Frank legislation, Red Flag, American Patriot Act, AML, and more. Now $$$ matters have become much more complicated; enough so, many LLLCommunity owners, like me, when needing to fill vacant rental homesites, opt to buy resale homes (Some buy new homes), then lease them as ‘rental units’ on – site, rather than ago through the complicated and inherently dangerous hoops of becoming and remaining compliant with onerous state and federal $$$ regulations. Speaking of ‘new homes’, know that one area where HUD – Code home manufacturers work closely with LLLCommunity owners/operators, is in the area of designing, building and shipping Community Series Homes, a.k.a. CSH Models. These are generally modest size singlesection homes or smaller multisection homes, often featuring front porches, but almost always characterized by durability – enhancing features, to prolong the home’s utility and life as it passes among multiple homeowners/site lessees and unit renters.

Another dynamic that’s been playing out, during the past decade, is the shake out of properties, sometimes even entire LLLCommunity portfolios, where owner/operators, in an attempt – I suppose – to emulate the real estate investment trusts (‘REIT’s) in this asset class, ‘raised site rents too much too fast’, to maximize profitability during the Go Go economic times, roughly between 1998 and 2008. The inevitable consequence was, as ‘rents went up’ (in effect stealing value from homes sited in affected properties), we turned our customers ‘upside down’ in their transactions. They then, ‘voted en masse, with their feet’, becoming ‘no money down’ buyers of new, cheaply constructed tract homes (which included underlying realty in the transaction) financed via undisciplined lending practices akin to what cost the manufactured housing industry their sources of capital just a few years earlier! Then that site – built home finance bubble burst.

Now today, many of these LLLCommunities, large and small, whose rental homesite rents rose to ‘double or more’ what local housing markets indicated, or could bear, have become tied up in forbearance agreements, and most recently – back on the market, as foreclosure deals. So properties are indeed available for purchase; it’s just that, in many cases, one must craft a viable turnaround Management Action Plan or MAP, that effectively deals with curb appeal issues, deferred maintenance, filling vacant rental homesites (marketing), collecting delinquent site rent, and adjusting rental rates – all at the same time, or in tight sequence. And there’s this strategic question; ‘Where will the funds come from, to purchase new and resale homes to then be either resold and self – financed (e.g. via lease option or one or another type of ‘captive finance’*1), or leased as on – site apartment units?’

The intent here, has not been to ‘scare you off’ the asset class as an investment vehicle, but to deliver a healthy dose of contemporary reality, before you begin a serious search for the ‘right property’ in the ‘right location’, at the ‘right time’, and for the ‘right price’, that meets your investment needs and goals. *2 There are additional resources to access, as you continue your research and decision – making. They include:

• Manufactured Housing Institute’s (‘MHI’) National Communities Council (‘NCC’) division; the national Advocate for land lease lifestyle communities nationwide: (703) 558-0678

• Center for Manufactured Housing Studies or CMHS, the new, academic Research arm, for manufactured housing, land lease lifestyle communities, and affordable housing nationwide. Calls temporarily being taken and forwarded, via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

• Manufactured Housing Communities Association of North America or MHCA, maybe the new ‘comprehensive Resource servicing’ arm for land lease lifestyle communities throughout North America. Phone the MHIndustry HOTLINE: (988) MFD-HSNG or 633-4764.

End Notes.

1. For lease option information, contact Spencer Roane, MHM® via spencer@roane.com And for ‘captive finance’ alternatives information, and training relative to being compliant with finance regulations, contact Ken Rishel via (217) 971-3968.

2. For further information on the land lease lifestyle community, as investment vehicle, read: How to Find, Buy, Manage & Sell a Manufactured Home Community ($75.00) & Landlease Communities, Manufactured Home Communities, Mobile Home Parks, Trailer Courts & Camps, and Affordable Housing ($19.95). Both books available from PMN Publishing. Order via MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or visit community-investor.com

***

George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry,
The Land Lease Lifestyle Community Asset Class &
Affordable Housing Purists & Enthusiasts Nationwide
Box # 47024, Indianapolis, IN. 46247 (317) 336-7156

ALLEN REPORT, trade secrets, & Future @ 2022

Sunday, November 18th, 2012

Blog # 220 Copyright 2012 18 November 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities,
& earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

Getting Ready for the 24th annual ALLEN REPORT, a.k.a.
‘Who’s Who Among LLLCommunity Portfolios in North America

II.

Trade Secrets to be Revealed During Virginia’s First Symposium;
A special day for land lease lifestyle community owners/operators

III.

The Future (out to year 2022) of the Manufactured Housing Industry & the Land Lease Lifestyle Community Asset Class!

***

I.

Getting Ready for the 24th annual ALLEN REPORT, a.k.a.
‘Who’s Who Among LLLCommunity Portfolios in North America

If you are reading this blog posting and own, fee manage, or otherwise operate one or more land lease lifestyle communities, the annual ALLEN REPORT is likely required reading for one of two reasons: you own such properties and use the helpful information contained therein, to position your LLLCommunities to achieve greater profitability and value; or, you’re a salaried professional property manager, or freelance management consultant, and know this is the only published document containing the names of 20 percent of the known 500+/- portfolio owners/operators in business today throughout North America.

For the past 23 years, the ALLEN REPORT has been the sole researcher and purveyor of benchmark statistical data and trade knowledge pertaining to this unique, income – producing property type, in the U.S. and Canada! Not only is it a veritable ‘Who’s Who’ of investors and professional property management firms active in this realty asset class, but every year includes special features available nowhere else:

• List and comparison of 13 unique LLLCommunity characteristics in years 2000, 2010, & 2020! A list first compiled by the ULI’s Manufactured Housing Communities Council in 2009, and featured in the 23rd annual ALLEN REPORT.

• ‘Seven reasons’ LLLCommunities enjoy a near perennial ‘sellers market’ as a commercial real estate investment. This list is now codified in Landlease Communities, Manufactured Home Communities, Mobile Home Parks, Trailer Courts & Camps, and Affordable Housing, PMN Publishing, IN. 2011.

• Setting ‘affordable’ & ‘risky’ Price Points on new and resale manufactured homes to be sited in LLLCommunities, or on private sites conveyed fee simple, using Area Median Income (‘AMI’) &/or Annual Gross Income (‘AGI’) and the ‘Ah Ha! & Uh Oh! Worksheet’. Now available in the Book of Formulae, Rules of Thumb & Helpful Measures for manufactured housing, LLLCommunities, real estate investors, affordable housing aficionados, & realty mortgage originators. PMN Publishing, via MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764.

• ‘Rental Homesite Counts Among All Land Lease Lifestyle Community Real Estate Investment Trusts (‘REIT’s) from 1994 through 2012’. Question: How many LLLCommunity REITs have there been since 1994? Hint. More than three and less than 10. Read the 24th annual ALLEN REPORT for this & much more!

It’s almost ‘too late’ for owners/operators of LLLCommunity property portfolios to submit rental homesite count data for inclusion in this year’s report, but it’s worth a try. Phone the above referenced MHIndustry HOTLINE and tell me, or leave a message.

And while you’re at it, tell me who YOU think is the single most influential person in the MHIndustry and or LLLCommunity asset class! As we announced a few months ago, a ‘List of the Top 25 Most Influential Individuals in the MHIndustry & LLLCommunity Asset Class’ debuts in this year’s 24th annual ALLEN REPORT. Use MHIndustry HOTLINE to make your recommendation. We have more than 20 on hand and nominees don’t have to be members of national MHTrade or Advocacy bodies!

OK, so how does one obtain a copy of the 24th annual ALLEN REPORT? The retail price for the report, when requested by Wall Street analysts, hedge fund managers, university and business libraries, and would be real estate investors, is $500.00 per copy – along with one or another of the dozen Signature Series Resource Documents (e.g. 14th annual Registry of Real Estate & Chattel Finance Lenders in the MHIndustry & LLLCommunity Asset Class’) we research, update and publish every month of the year.

However, for ‘insiders’, specifically MHIndustry businessmen and women, along with LLLCommunity owners/operators, the annual ALLEN REPORT is FREE to subscribers to the Allen Letter professional journal! For $134.95/year, you receive an Allen Letter each month of the year, usually chock full of lagniappes (Free enclosures, e.g. recent summary of the ‘biggest & best networking roundtable ever’, and much more!), and ALLEN REPORT, specifically, with the January issue. SO, if not already a newsletter subscriber, simply phone the MHIndustry HOTLINE and sign – up today.

II.

Trade Secrets to be Revealed During Virginia’s First Symposium; A special day for land lease lifestyle community owners/operators

If you’re reading this blog posting, and own/operate one or more land lease lifestyle communities in Virginia, Maryland, West Virginia, or North Carolina – and elsewhere, you should consider spending the day in Richmond, VA., on Thursday, 6 December, a scant two weeks away. I’ll certainly be there for the day, and hope to see you there as well!

Why attend? Because Virginia Manufactured & Modular Housing Association (‘VAMMHA’) executive director Tyler Craddock, has cobbled together one terrific day of education, information sharing, interpersonal networking, and chattel finance sourcing for land lease lifestyle community owners and operators.

• Education? Two of the hottest topics, nationwide in this realty asset class today, are ‘How to Set Affordable & Risky Price Points on New & Resale Homes Today – particularly for those in LLLCommunities; and, How to Turnaround Troubled and or Abused Properties! (Latter topic is where ‘trade secrets’ come into play!)

• Information Sharing? Two things you’ve gotta experience! In the first instance, the State of the MHIndustry & LLLCommunity Asset Class presentation you’ll hear, is unparalleled at any other venue in the U.S. these days. Why? Because no one else covers what’s happening throughout the LLLCommunity asset class! And Tyler will brief participants about what’s happening legislatively in Virginia.

• Interpersonal Networking? When was the last time LLLCommunity owners/operators from the above – listed states have gotten together for a joint symposium like this? Maybe NEVER? Don’t miss this historic opportunity to attend a SECO – like event (Recalling the very successful 140 LLLCommunity participant symposium in Atlanta, GA. earlier this year) right in your own back yard! Seating is limited, so don’t risk not being able to attend.

• Personal property (chattel) financing? If you’re marketing homes For Sale and engaging in self – financing on – site (e.g. ‘captive finance’, lease option, etc.) and haven’t learned firsthand of 21st Mortgage Company’s cutting edge C.A.S.H. Program, this reason alone is worth participating in this one day event in Richmond on 6 December 2012.

For more information, and to register @ $35.00/person, contact Tyler Craddock via (804) 750-2500 or tcraddock@vammha.org for meeting location address (Home Building Association of Virginia’s facility) and host hotel (Hampton Inn) information. Remember; seating is limited, so don’t risk missing this near – historic event for VA, WV, NC, & MD owners/operators of land lease lifestyle communities. Should be a Good Day for All!

***

III.

The Future (out to year 2022) of the Manufactured Housing Industry & the Land Lease Lifestyle Community Asset Class!

Do you like being among the first businessmen and women to learn of inside ‘goings on’, relative to the manufactured housing industry and land lease lifestyle community asset class? Well, so do dozens of other MHExecutives around the U.S. and Canada. And they satisfy that need by reading an exclusive monthly newsletter known as the Allen CONFIDENTIAL! This savvy communiqué has been around for a dozen years, but is rarely shared in public. And it’s not inexpensive. An annual subscription is $950.00/year for 12 monthly issues; but only $750.00/year for subscribers to the Allen Letter professional journal. To subscribe, use the aforementioned MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

Now here’s an interesting ‘bottom line’ figure for you. All three items mentioned in this blog posting, two newsletters and the annual ALLEN REPORT, ordered and paid for separately cost $1,584.95; but, bundled together, only $884.95; a savings of $700.00! So, are you missing out? Take that first step to being fully informed TODAY!

Back to that titillating title of Part III of this week’s blog posting at community-investor.com.

Awhile back I was asked by Susan Brenton, executive director of the Manufactured Home Communities of Arizona association, to research and pen a forward – looking feature article for her group’s monthly publication. Well, I’m still putting the final factual details and prognostications together, fleshing out what I’ve tentatively titled:

‘Past as Predictor of the Future – or Just Another Crapshoot?

Here are a couple interesting questions answered in the first part (i.e. past and present time frames) of the feature: What were two cynical and foretelling industry – wide slogans commonly used and heard during years 2002 & 2003? And the well known MHIndustry businessman, who accurately foretold the near total financial collapse of site – built housing a half dozen years before it happened? Too bad the right people didn’t listen to him!

Now, switching to the future. What changes in the manufacturing segment of the MHIndustry will likely be necessary (In addition to the return of chattel financing) for it to return to the Glory Days of new home shipment volume (There’s a hint, right there!)? And how ‘bout the independent ‘street’ MHRetailers, and their ‘company store’ counterparts? What’s the future maybe hold for them? And let’s not forget the land lease lifestyle community segment. Sure is a mixed – bag of successes and failures today, but what’s it going to take to see increased physical and economic occupancy during the years ahead, where national Advocacy, performance Research, and ‘comprehensive Resource servicing’ are concerned – and more!? (This might just turn out to be some of the most important business reading, for you, during all of year 2012; Oops, 2013). The two finance segments of MHIndustry & LLLCommunity asset class? Their intertwined or mutually exclusive future? Guess you’ll have to read the details in the Arizona – commissioned feature.

Unless you’re presently a dues – paying member of the MMC of A, you’ll have to get in touch with Susan Brenton, to order and or obtain a copy of the January 2013 publication that’ll feature this ‘ten year look into the future of our industry and asset class’. Contact her via (480) 345-4202 or sbrenton@azmhca.com

***

George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry,
The Land Lease Lifestyle Community Asset Class &
Affordable Housing Purists & Enthusiasts Nationwide
Box # 47024, Indianapolis, IN. 46247
(317) 346-7156

MH ‘qualaiaty & price’; redux or new paradigm?

Sunday, November 11th, 2012

Blog # 219 Copyright 2012 11 November 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

Talking to One Another About Ourselves & Our Business Model..

II.

‘Selling New Homes’ at 2013 MHCongress in Las Vegas in April!

III.

More on ‘that book’ I’ve Been Telling You About for Weeks….

***

I.

Talking to One Another About Ourselves & Our Business Model..

“Bottom line. You can’t sell (manufactured) housing for half price without a fair bit of compromise. Increase your (home sale) price ten percent and you’re toast. It’s competition that brings prices down, and it’s price that moves the goods. The magic of manufactured housing has long been, and apparently still is, the ability to build decent housing at costs nobody else can touch, and make good profits along the way. Invest every nickel of profit in upgrading the product, and you gain a five percent advantage. But of course, you go out of business. It’s a brutal world out there George. We have to find a way to improve the quality of our golden eggs without killing the goose!” RV (Lightly edited. GFA)

There’s a significant measure of truth in the previous paragraph. To this day, it boggles my mind, when walking into an attractive, brand new HUD – Code manufactured home, to experience the eclectic right mix of ‘bells & whistles’, e.g. laminated flooring instead of carpeting in some rooms; heavy gauge recessed flap hinges on all doors, instead of thin gauge surface hinges; and more. But then, to observe dozens of cheap white plastic switch and outlet covers at every light switch and electric outlet in the house; and doors hung ‘inches off the floor’ to facilitate return air flow to the heater/air conditioner, rather than enhancing privacy via installation of air vents near the bottom of passage doors hung nearly flush with the floor; and more.

Is there an answer to this perennial quality – price conundrum? I think so, and not; the answer being in the form of this question: ‘When was the last time you heard or saw HUD – Code home manufacturers caucus and cooperate with one another to this end?’ Answer: Almost never. Why? Competition. Oh, innovative ideas have been tried ‘over the years’ (Think back to aluminum wiring, culturally sensitive exterior designs for urban infill, etc.), but we still lack the will to meet and work together towards a common solution – with one notable exception, the National State of the Asset Class (‘NSAC’) caucus, 27 February 2009 in Elkhart, IN. That was when 100 reps from the manufacturing and land lease lifestyle community segments of the manufactured housing industry caucused to figure out ‘How to Sell More New Manufactured Homes into Land Lease Lifestyle Communities?!’ Results? The Community Series Homes, or CSH Models, relatively common today, with many featuring front end loaded porches, and durability – enhancing features needed to ensure habitability over an extended period of time. Perhaps now it’s time, once again, for HUD – Code home businessmen and women to look past their competitive nature, to solve the quality – price golden egg conundrum, without killing the goose that manufacturers them!

So, here’re two Questions of the Hour, Day, Month and for the Year 2013: If YOU agree there should be a soon national caucus, call it a MHInitiative® *1, to address this perennial, and as yet unsolved, manufactured housing industry conundrum, WHO should and will step forward to lead, plan, organize, and facilitate this timely, strategic effort in behalf of HUD – Code home manufacturers nationwide? I’ll be pleased to help if asked; but rather than being the catalyst and meeting planner this time around, the organizing and executing of such a MHInitiative® should rightly come from the manufacturing segment of the manufactured housing industry! And know what? There isn’t a more appropriate time and opportunity for elected and salaried leaders of MHI and MHARR to come together, for the good of the entire industry, than auspicious occasion!

Now, let’s wait to hear and see what happens, or doesn’t happen regarding this challenge, between now – mid November, and the end of year 2012. This could be the HUD – Code manufactured housing industry’s 60 year bellwhether event! *2

End Notes:

1. MHInitiative® is the term that’s replaced National State of the Asset Class (‘NSAC’) caucus, used to effectively in Tampa, FL., @ 2/27/2008, and a year later in Elkhart, IN., @ 2/27/2009. A hint, for anyone who’s read this challenge thus far; 2/27/2013 might be a possibility, as MHI’s annual Legislative Conference, in Arlington, VA., ends, and just before the Great Southwestern Manufactured Housing Show begins in Tulsa, OK. Or, the MHInitiative® might be an appropriate sidebar event to the 2013 Manufactured Housing Congress in Las Vegas, 16 – 18 April.
2. Bellwhether ‘a person or thing that assumes leadership., a person or thing that indicates a trend.’ And does the manufactured housing industry need a unifying bellwhether leader and bellwhether trend at this point in its’ history!

II.

‘Selling More Homes’ at 2013 MHCongress in Las Vegas, NV.

Switching our focus to market research. Here’s what another industry observer has to say about that subject and manufactured housing. “The vehicle industry, from which our industry evolved, spends multiple millions (of dollars) researching who their potential customers are, and what it will take to make them customers, while manufactured housing spends almost nothing; relying instead on borrowed site – built housing research and gut instinct. What is wrong with our industry, that this basic (research) function goes unmet? George Allen is the closest we have to a research arm, with his community – oriented publications, and ongoing efforts to get an Ivy League university actively and permanently involved in (‘teaching us how to effect and share’) manufactured housing and land lease lifestyle community market research.” KR (Again, lightly edited. GFA)

As mentioned in the last paragraph of Part I of this blog posting, ‘How to Sell More New Manufactured Homes into Land Lease Lifestyle Communities?!’ will be a primary focus during year 2013. Yes, it’s early in the (business) game – like five months early, to be writing and talking about one of the key topics to be covered at the Manufactured Housing Institute’s annual Manufactured Housing Congress in Las Vegas, 16 – 18 April. But guess what; it’s going to take those five months to get this alert out, and the training material prepared, for HUD Code home manufacturers and land lease lifestyle community owners/operators wanting to cultivate this emerging market. It’s simply a shame though, that MH – focused ‘market research’ is not an integral part of our industry’s package – yet.

So, here’s where the matter stands today, and what’s expected to materialize during the next five months, as the MHCongress approaches. During August, a blog posting, at this web site, introduced a Ten Point Plan to help HUD – Code home manufacturers ‘Sell More New Manufactured Homes into Land Lease Lifestyle Communities!’ Since then, copies of the Ten Point Plan have been mailed to every HUD Code home manufacturer in the U.S., and it was published in the September issue of the Allen Letter professional journal. This same Ten Point Plan will serve as the core of the program being prepared for public presentation at MHI’s annual MHCongress in Las Vegas.

In the meantime, it’s hoped at least one HUD – Code home manufacturer takes ‘point number ten’ seriously, to wit: #10. ‘Want to corner the on – site new home sales in land lease lifestyle community market? Research, write, publish and distribute, for a price or for free, the MHIndustry’s first HOW TO guidebook on this subject! Seriously. No one has done so to date. Be the first to do so, and watch LLLCommunity folk beat a path to your plant door, when you teach them how to properly select, fairly price, skillfully market, and effectively sell ‘your homes’ on – site at their properties!’ I’ve personally challenged Business Development Managers, or BDMs, at each of the Big Three ‘C’ manufactured housing firms (Clatyon, Cavco, & Champion) TO DO SO, but still await a manuscript! Even volunteered to provide all the self – publishing services (e.g. editing, printing, binding, distribution) needed, to pull this project off successfully. Anyone listening out there?

Proof of the validity of this #10 point? 25 years ago, I authored and self – published Mobile Home Park Management. Today, with tens of thousands of copies sold, it’s been retitled twice, and now is Land Lease Lifestyle Community Management. In its’ eighth edition, this is the core textbook for the Manufactured Housing Manager® or MHM® professional property management certification program.*3 And know what? The same could well be the case now – and 25 years from now, for whoever pens and publishes the first and best ‘How to Sell More New Manufactured Homes into Land Lease Lifestyle Communities!’ guide or text. I’m not qualified to author it or I would….

Bottom line? See YOU in Las Vegas at the MHCongress, when we will learn together, ‘How to Sell More New Manufactured Homes into Land Lease Lifestyle Communities!’

End Note.

1. To order a copy of Land Lease Lifestyle Community Management, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. If interested, also ask for information on the Manufactured Housing Manager® or MHM® program. A one day class is scheduled in Tulsa, OK., during late August 2013.

III.

More on ‘that book’ I’ve Been Telling You About for Weeks….

As you’re reading this weekly blog posting at community-investor.com, know that author Bob Vahsholtz is diligently working, somewhere in the U.S., diligently researching, carefully compiling, and skillfully writing the first definitive book on factory – built housing in general, manufactured and modular housing in particular. When this tome is completed, hopefully during 2013, it’ll be the first such book in more than two decades!

In the meantime, if after reading the following list of chapter headings and subtopics, you’d like to provide input, in the way of ideas, suggestions, material, etc., to the author, send it to me via GFA c/o Box # 47024, Indianapolis, IN. 46247 or FAX it to (317) 346-7158. Any questions, contact me via the aforementioned MHIndustry HOTLINE.

Here’re the chapter headings and subtopics Bob V is working with at this time:

1. There’s Always a Better Way. Stick – built housing, the ailing beast? America, the nation of shortcuts to success, and more….

2. Leadership & Innovation. The risks of pioneering. Introducing Richardson’s.

3. Introduction to the Learning Curve. Theory; how it works in the real world. Classic example of the Model T Ford.

4. Niche Markets, the Way into the Battle. Using Detroit as an example; introduction to Midget Motors.

5. The Biggest Market in the World; Housing. Size of the challenge? And bureaucracy, the ultimate stranger (or maybe ‘strangler’) of progress.

6. Big Guns Step into the Fray. An introduction to Sears, Levitt, National Homes, and Lustron.

7. The Elephant in the Room. Code challenges to innovation, barrier of cultural momentum, and more….

8. Manufacturers Climb the Blind Side. Origins of the MHIndustry; the story of Schult Homes.

9. The Support System. Suppliers, dealers (Wish he’s say MHRetailers), parks (Wish he’d say communities), lots (Wish he’d say rental homesites or sites), and installation ‘foundations’, the origin of the industry’s stigma?

10. How to Cut Housing Cost in Half. Fundamentals of MH efficiency, comparison with stick – building costs, matters of quality and more….

11. Leadership & Management. Art Decio builds a learning curve; the Skyline experience.

12. Managing in Troubled Times. Think Gold Seal, ANSI, and early codes; then the HUD code, along with government ambiguity.

13. How Much Can One Leader Do? Norcom & Canada; federal industries, and more

14. Manufactured Housing Hits the Wall. Who’s in charge of MH strategy? Lack of overview. Role of government, MH & long term finance. Land Lease Lifestyle Communities, a financing niche.

15. A Way Through the Woods? The Clayton story, park models, mobes redux, sectionals, etc. The Cavco story.

16. Getting Serious about the Opportunities Ahead. Riding a focused learning curve; risks vs. gambles – and a big difference. Role of team building….

Well, there you have it. Your advance peek at a text that will describe and parse parts and much of your business livelihood. David Funk, MHM, and I are working closely with Bob V, introducing him to key personages and firms throughout the manufactured housing business. Feel free to contact either of us if you have questions and comments.

***

George Allen, CPM®Emeritus, MHM®Master
Box # 47024, Indianapolis, In. 46247
(3170 346-7156 or gfa7156@aol.com

Beware Faux Management Consultants!

Sunday, November 4th, 2012

Blog # 218 Copyright 2012 4 November 2012

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’

I.

WARNING! Land Lease Lifestyle Community Owners/operators
Beware of Faux Management Consultants!

II.

More Differences Between Small & Large Owners/operators of
Land Lease Lifestyle Communities….

III.

Initial Blog Reader Responses to ‘A Lesson in Growing & Caring for One’s Reputation’, from Management 101, for Land Lease lifestyle Community Owners, Property Management Executives,
Regional & On – site Managers & Others!

***

I.

WARNING! Land Lease Lifestyle Community Owners/operators
Beware of Faux Management Consultants!

They’ve resurfaced again. Sometimes they’re unemployed land lease lifestyle community on – site and regional managers looking for work, other times interlopers from other segments of the manufactured housing industry, even other income – producing property types. Irregardless, they hang out their shingle as independent, freelance management consultants, oft promising to quickly fill vacant rental homesites; trim operating expenses; in effect, maybe executing the turnaround or rehabilitation of an ailing or management – abused, income – producing property. A desirable end game, for sure; just be fully aware of to whom one is entrusting this multi million dollar real estate investment! More later….

This phenomena pops up every ten or so years, as the LLLCommunity realty asset class suffers through the ‘down stage’ of an economic life cycle. For example; we saw this in the late 1970s, as the manufactured housing industry adjusted to HUD’s new performance – based national building code (Causing new ‘mobile home’ shipments to plummet from 575,940 in 1972 to 250,000+/- by the end of the decade), initially resulting in tens of thousands of newly constructed ‘mobile home parks’ going into foreclosure as the historically heavy flow of new homes dried up.

We saw a similar, though not as massive adjustment in the late 1980s, after the Federal Tax Code was changed in 1986, forcing limited partnership syndicators to market the ‘profitability’ of their deals, rather than ‘tax losses’ heretofore. That raft of freelance consultants had their work cut out for them, as they were forced to implement basic principles of professional real estate management to salvage and then rebuild profitability. That time around, compared to the decade before, it was easy to spot the charlatans, as they were forced to quickly produce positive results or quickly move on.

A decade later, at the end of the 1990s, following a second REIT wave (mid – 1990s), LLLCommunity income – producing properties as a whole, enjoyed – albeit only for a brief period of time – the statistical and historical acme (highest point) of national rental homesite physical occupancy, at 95 percent! And if we needed any independent consultancy advice at the time – which we did not get, it should have been as a loud and stern Warning, to stop going down the slippery slope of predatory (chattel) lending that had taken the manufactured housing industry by storm! And we’re still paying for that misguided era of greed, more than a decade later.

Now it’s 2012, about to morph into year 2013. This time around, thousands of LLLCommunities have slipped into foreclosure, or are approaching that unfortunate destiny, as physical and economic occupancy (Do you understand the critical difference? See *1), for the most part, continues to decline in local housing market after local housing market – but with some notable exceptions. While some of the general occupancy decline is driven by tenant relocation, and near disappearance of independent ‘street’ MHRetailers, as well as many ‘company stores’, from most markets (i.e. The manufactured housing industry’s traditional ‘fillers’ of vacant rental homesites), most of the asset class’ stress comes from a lack of ability to obtain chattel (personal property) financing for new and used homes sold on – site. And with the exception of the innovative C.A.S.H. Program available from the 21st Mortgage Company (Lance Hull @ (800) 955-0021), not much improvement to this situation is anticipated anytime in the near future.

Now here’s where the WARNING about faux management consultants becomes important. Let’s begin by describing what a LLLCommunity owner/operator should look for in a bona fide management consultant, one specializing in this unique income – producing property type, and not from outside this realty asset class. First off, what are his/her property management consultancy capabilities?

One way to measure this is to look for – and verify, nationally – recognized credentials. And there’s really only one; whether the individual is an active Certified Property Manager® member of the Institute of Real Estate Management®. Sure, IREM does not train and certify LLLCommunity managers per se, but their requisite course work and rigorous peer approval system generally ensures a CPM®s application of ‘professional property management principles’ to one’s property challenge – once they know and understand property owner’s goals for a specific location or locations. There are 147 such LLLCommunity specialty CPM®s at work throughout the U.S. today. If listed here, every one of them would be viewed as a ‘household name’ throughout the asset class; as they hail from CA, AZ, OR, IN, IL, MI, PA, FL and beyond. To identify these specialty CPM®s in your region, simply go online to IREM.org and left click on the Find a Member tab.

Another means is to identify, and then verify, a would be management consultant’s claims of work experience. If you don’t perform this critical step, you deserve whatever results you experience. Right now, there are land lease lifestyle community owners in MI and IL who sorely wish they’d made such a phone call or two, in recent months, before retaining the services of one or more freelance PM consultants.

So, are CPM®s and experience – verified independent consultants, the only credible freelance property management experts afoot these days in the LLLCommunity realty asset class? No. There are indeed some Accredited Community Managers® or ACM®s and Manufactured Housing Managers® or MHM®s out and about; but guess what? Their ‘cred’ too needs to be tested, not only in personal interviews featuring pointed questions (e.g. Do they know how to compute physical & economic occupancy and understand the difference; same with Operation Expense Ratios or OERs – and are they conversant with the LLLCommunity Standard Chart of Accounts and Model OER percentages? If not, how do you and they expect to set performance standards, then measure results against them? *2), and make phone inquiries to previous employers and consulting clients as well. A key issue, relative to an ACM®, is to contact the certifying body, in this instance, the Manufactured Housing Educational Institute, via (703) 558-0653, ensuring the individual has completed all three stages of that educational program and actually been awarded the coveted ACM® designation. Same for the MHM® designee. In this instance, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 and request verification of MHM® status.

Any other touchstones along the way to retaining the services of a freelance PM consultant? If a formal report is required, as part of the assignment, beforehand request a copy of their Mystery Shopping reports to other clients,
End Notes.

1. Physical occupancy = # rental homesites with homes on them; Economic occupancy = # rental homesites with homes on them where resident’s rent is paid current. For example: 180 occupied sites, divided by 200 rentable sites = 90% physical occupancy; while 160 occupied & paid sites, divided by 200 rentable sites = 80% economic occupancy. The latter calculation is more a performance ‘acid test’ than the former.

2. Want a resource featuring all the MHIndustry & LLLCommunity – related formulae, etc? Phone the aforementioned MHIndustry HOTLINE, and for only $19.95, order the new Book of Formulae, Rules of Thumb, & Helpful Measures for LLLCommunities, MHIndustry, commercial real estate, affordable housing, and realty – secured mortgage origination. PMN Publishing, Indpls, IN. 2012.

II.

More Differences Between Small & Large Owners/operators of
Land Lease lifestyle Communities….

OK, if you reading this line, and did not peruse last week’s blog posting at this web site (community-investor.com); you’d be better – served, right now, to scroll down thru this posting to blog # 217. There read what prompted the responses you’re about to hear in the paragraphs that follow…

Ready to go? The following commentary was penned by a several decades veteran of land lease lifestyle community on – site home sales and property management. He/she begins with a general statement, then focuses on one more key difference between, in this case, large versus small LLLCommunity owners/operators, specifically, consequences foisted on the latter by actions of the former.

“George. I’m sure I’m not the only one who recognizes the 800 pound gorillas (i.e. large property portfolio owners/operators) may be able to take advantage of their strength to float their realty assets along the meandering river of (business) life, but their lack of commitment to the long term health of their assets…and their leadership’s disdain for their customers…will eventually float them over the waterfall.”

“The…characteristic you may have overlooked (in the previous blog posting) rears its’ ugly head in certain local housing markets. When these (owners/operators) make large portfolio transactions, they essentially assign values to each asset (i.e. LLLCommunity), which are less grounded in reality, than in finance. So, trading them like baseball cards, at inflated values, winds up (providing) prima facia evidence for every county property appraiser’s inflated valuation calculations, and ultimately the amount of ad valorem taxes paid by smaller LLLCommunity owners/operators(in the same local housing market) – as well as residents, via pass – ons and pass – throughs. Witness what is happening to _______________ in ____________, after the ______________deal.” (Lightly edited.) GFA

Other blog readers weren’t as verbose; one simply wrote: “ (You) Hit the nail on the head!” – with the characteristics described in the previous blog posting.

III.

Initial Blog Reader Responses to ‘A Lesson in Growing & Caring for One’s Reputation’, from Management 101, for Land Lease Lifestyle Community Owners, Property Management Executives,
Regional & On – site Managers & Others!

Here too, if you didn’t read last week’s thoughts about earning and preserving one’s ‘rep’ in the business world, you might want to stop; scroll back to blog # 217, and read ‘A Lesson in Growing & Caring for One’s Reputation’.

Now today, recalling the totally unexpected, undocumented personal attack, followed with no opportunity to explain or defend myself, during a national business meeting in early October – and hinted at in blogs # 217, 216 & 215, the following ‘rep’ encouragement, coming from a manufactured housing industry veteran, is highly appreciated:

“I know you are too secure to worry about any of this, but I still wanted to remind you that the right people in our crazy industry love and respect you, and that’s not going to change. You are about results, not hot air, and you’ve proven you know what you are talking about, time and time again.” SF

See what I mean? Does take time, effort, and positive results, over time, to cultivate one’s good personal and business reputation. But, from time to time, there’ll be individuals who’ll make an effort to besmirch what one has done, said, penned, or otherwise. And there’ll also be other individuals with which, and to whom, one has proven themselves, repeatedly, who will come to one’s defense, one way or another – just as in the previous paragraph!

And to these latter, supportive individuals, who’ve stepped forward since this recent contretemps and voiced and written of their support, I say a sincere ‘Thank You!’ The status of this affair? Still awaiting a formal response and apologies resolving this sorry matter. GFA

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