Archive for July, 2013

4 Tough Questions; the NFPA, NEC, GAO & U

Sunday, July 28th, 2013

Pithy Blog # 256 Copyright 2013 28 July 2013

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America’

I.

Pithy Responses to ‘Four Tough Questions’ Continue….

II.

Here’s Why the NATIONAL FIRE PREVENTION AGENCY Should Have Land Lease Lifestyle Community Representation & Participation During NATIONAL ELECTRIC CODE Proceedings

III.

Manufactured Housing Association for Regulatory Reform Meets with the GOVERNMENT ACCOUNTABILITY OFFICE in Behalf of YOU & the Entire Manufactured Housing Industry…

IV.

Preview of Year 2014. Maybe Landfall by then, for Manufactured Housing’s PERFECT STORM (It Is Indeed On the Horizon), &
Certainly a New Era, one way or another, for Land Lease Lifestyle Community Owners/operators, of all sizes, Nationwide!

***

I.

Pithy Responses to ‘Four Tough Questions’ Continue…

“George. To successfully build a lasting home or an organization, one must have a strong foundation, in accords with one’s landscape or market. The recent commentaries to your (blog) questions are well – crafted and thought – provoking. I propose this group of intelligent, industry – experienced, successful men and women ‘start from the beginning’ with: Who are we? What do we want to be? How will we achieve agreed upon goals? How much will we spend to be successful? Where and when will we do this? Perhaps our contemporary model should be akin to what we experienced in the late 1960s and early 70s, before acquiescing to a national building code that – in the minds of some – has contributed to our eventual suicide as an industry.” NB (lightly edited. GFA)

Well, I promised in my reply to this blog flogger (reader), I’d throw this challenge out to ‘any and all takers’ in the manufactured housing industry and land lease lifestyle community realty asset class. What I read in the previous paragraph was a plea for National Dialogue Relative to Issues that plague us today; everything from the woeful lack of trade communication (e.g. ‘Why is there no manufactured housing – specific finance language in the GSE reform legislation’, and now, the Protecting American Taxpayers and homeowners Act or PATH legislation?’) to the increasing presence of ‘big business’ cliques on manufactured housing’s national advocacy scene.

There’re historic precedents such strategic coming – together of various MHIndustry segments. The first National State of the Asset Class caucus occurred 27 February 2008, when more than 100 (then) manufactured home community owners/operators convened in Tampa, FL., and identified five foci to guide their collective future; foci, that two years later, was crafted by Randy Rowe of Greene Courte Partners, into a Five Part Market Share Recovery Plan for the entire MHIndustry.

And the following year, on 27 February 2009, more than 100 HUD – Code home manufacturers and (then) MHCommunity owners/operators, from throughout the U.S. convened for a second NSAC caucus, at the RV/MH Heritage Foundation’s Hall of Fame facility in Elkhart, IN. Results? Agreement on the need for specially – designed lines of new HUD – Code homes, to eventually be labeled as Community Series Homes or CSH Models (i.e. singlesection & smaller multisection homes with durability – enhancing features), for siting in MHCommunities nationwide.

Well, it’s been half a decade since anyone has stepped forward, from either the manufacturing/distribution or real estate development/investment segments of the MHIndustry, to ‘collectively and strategically plan how to break out of the five year new home shipment nadir of only 50,000+/- units shipped per year.’ Perhaps the suggestion and passion expressed in the opening paragraph will motivate one or more national MHIndustry leaders, salaried or elected, to take the first step to this end. Know when the perfect time might be to do this? At the annual meeting of the Manufactured Housing Institute (‘MHI’) the end of September and beginning of October, in Carlsbad, CA. Anyone out there listening? Anyone out there willing to lead? Nathan? John? Dick? Danny?

NOW, let’s turn our attention to the ‘Fourth Tough Question’, to wit: “Does the HUD – Code manufactured housing industry Really Want to See the Return of ‘easy access to chattel capital’….? Well, this one spawned two really interesting responses, and they’re posted here in their edited entirety. The first is from a veteran land lease lifestyle community owner/operator who routinely buys new HUD – Code homes to sell on – site, and finance said transactions within his properties.

“Chattel lending seems to have evolved into two distinct categories. The first occurs where loans stand on their own, via independent third party lenders like the Big Four + One (now, Big Four + Five) = 21st Mortgage Corporation, Triad Financial Services, Inc., CU Factory Built Lending, and U.S. Bank – Manufactured Housing Finance; and recent debut of Green Hill Financial. These firms know default – related costs will be high, so create very restrictive (i.e. high credit scores) and expensive (i.e. high interest rates) chattel mortgage programs. The second, and newest category, involves what’s advertised as a cooperative efforts between LLLCommunity owners and lenders, e.g. the 21st Mortgage Corporation’s two year old C.A.S.H. Program, Cavco’s (new in 2013) 360 Program, and a unique home finance program offered by Legacy Homes, domiciled in Texas. While most LLLCommunity owners feel these programs are certainly a step in the right direction, they’re presently too one – sided, making lenders appear to be taking advantage of the property owners, with chattel loan terms as high as 12 – 20 percent.” SR

Then, from another equally successful and veteran manufactured housing industry businessman, this contrarian conundrum:

“SURE THEY DO! The problem is, it’s not going to happen! Why? Sources of capital well understand the problems related to financing manufactured housing – and they’re reacting accordingly. For example; when Wall Street financiers call, they ask ‘on target questions’ regarding the challenges and weaknesses of financing manufactured housing. And once they confirm what they suspect is the case, they’re gone!

Furthermore; banks and credit unions routinely hear their respective regulators quote national directives critical of manufactured housing lending. So, even though chattel lending, on this type housing, can be the most profitable consumer loan they originate, it is from their perspective, fraught with peril.

Another example. Recently received notice from a regional lender pulling out of chattel lending on manufactured housing. Why? Because land lease lifestyle community owners resist forming meaningful relationships, and express lack of willingness to assume part of the loan risk – by eliminating some of the home seller’s ability to take advantage of the lender if or when chattel loans go bad.

What the manufactured housing industry wants, it isn’t going to get! What they can get, they don’t like! Specifically, they don’t like being forced to engage in regulated and professionally – operated seller finance operations; so, many independent (street) MHRetailers and LLLCommunity owners avoid the business opportunities staring them in the face. So, until the players ‘grow up’ and face facts, as they exist today, and embrace performing like mature (finance) professionals, not much is going to change on the chattel loan lending front!” KR

End of Story. And if we’re not careful, ‘End of an Industry’; or, certainly one that’ll not return to the oft cited ideal performance level of 250,000 new HUD – Code manufactured homes shipped per year.

II.

Here’s Why the NATIONAL FIRE PREVENTION AGENCY Should Have Land Lease Lifestyle Community Representation & Participation During NATIONAL ELECTRIC CODE Proceedings.

While NFPA and NEC might be familiar entity and code abbreviations to some segments of the HUD – Code manufactured housing industry, I’d wager few, if any of you reading these lines, have any idea that ARTICLE # 550 of the National Electric Code, clearly labeled as ‘Mobile homes, Manufactured Homes, and Mobile Home Parks’ even exists, and WHY it should be important to you. *1

First the (kinda) good news. Though both national manufactured housing advocacy bodies have ignored suggestions, over the years, to petition to participate in behalf of mobile homes, manufactured homes, & mobile home parks seat on the NFPA – created NEC Code Making Panel, there is one RV/MH supplier who has kept the manufactured housing industry informed of proposed changes to the NEC that might detrimentally affect it, and the LLLCommunity asset class. In this latter instance, think electrical pedestals, and electrical hook up of manufactured homes within and outside this property type. *2

The not so good news. “This Summer (2013), the NFPA board will give final approval to the 2014 edition of the NEC.” Do we, as an industry and realty asset class know of changes therein that might or will affect our type housing and installation of electrical components thereto pertaining? Nope! Should we, as an industry and realty asset class be aware, beforehand, of any changes to the National Electric Code that might, or will, affect our type housing and installation of electrical components? Yes! Talk about leaving ourselves open to be blindsided by a code – writing agency, particularly the land lease lifestyle community segment of the manufactured housing industry.

Frankly, I understand maybe why the manufacturing/distribution segment of the manufactured housing industry eschews participation here. After all, they’re pretty much sheltered from local – if not all building codes, by the federally preemptive nature of the HUD – Code, and existence of the MHCC or Manufactured Housing Consensus Committee. What is not ‘sheltered’, however, is what happens after new HUD – Code homes leave the factories and are installed, permanently or temporarily, on scattered building sites conveyed fee simple, or on a rental homesites within LLLCommunities. Right now we, as LLLCommunity owners/operators, are completely ‘unprotected’ from arbitrary electric code – making, except for the presence of one industry – friendly person on the NFPA board’s Code Making Panel, capable of recommending proposed changes, good and bad, to the NEC.

Are YOU happy with the foregoing happenstance or status quo? I’m not. And while not presently in a position to influence or effect a soon change thereto, it’s certainly on my agenda to bring the matter to a head during the months ahead. If YOU feel similarly, let me know via the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or via email: gfa7156@aol.com

In the meantime, ‘Thanks Wade!’ By the way, he’ll be present at the 22nd Networking Roundtable, 18 – 20 September, in Bloomingdale, IL., If you’d like to learn more about this game of Russian roulette we’re playing with the NEC these days, talk to him there.

End Notes.

1. ARTICLE 550.1 Scope of Article. “The provisions of this article cover the electrical conductors and equipment installed within or on mobile and manufactured homes, the conductors that connect mobile and manufactured homes to a supply of electricity, and the installation of electrical wiring, luminaires, equipment, and appurtenances related to electrical installations within a mobile home park up to the mobile home service – entrance conductors or, if none, the mobile home service equipment.”

2. ARTICLE 550.4(B) General Requirements. “In Other Than Mobile Home Parks. Mobile homes installed in other than mobile home parks shall comply with the provisions of this article.”

III.

Manufactured Housing Association for Regulatory Reform Meets with the GOVERNMENT ACCOUNTABILITY OFFICE in Behalf of YOU and the Entire Manufactured Housing Industry…

Remember a few months ago (March), when This Blog ‘broke the story’, describing how a team of federal government interviewers was traveling the U.S., meeting with HUD – Code home manufacturers, and others, asking:

“What effect would it have on your business if HUD was no longer the federal regulator tasked with overseeing the manufactured housing industry?”

Well, that matter came to a head recently, when “A group of MHARR member – company chief executives (comprised of the current MHARR Chairman – John Bostick – and two past chairmen) met in Washington, D.C. , with officials of the Government Accountability Office or GAO, tasked with conducting an investigation of the HUD manufactured housing program, at the request of Congress.” This, and following passages, quoted from a story in the July 2013 edition of the Journal.

Result? A clear and timely look at how the Manufactured Housing Association for Regulatory Reform looks after our manufactured housing business interests, whether we’re (That’s YOU & ME) members of their trade advocacy body or not: “During a nearly two – hour session at GAO headquarters, the MHARR – member executives spelled – out, in no uncertain terms, the absolute necessity of the federal manufactured housing program in ensuring both the affordability and availability of manufactured housing, for Americans – and especially lower and moderate – income families. The group also addressed and put to rest questions previously posed by GAO, which raised concerns that it could be considering recommendations either to eliminate or significantly downgrade the federal manufactured housing program.”

Furthermore, the MHARR team “…provided the GAO investigative team with specific examples of HUD’s resistance to, and non- implementation of, major provisions of the Manufactured Housing Improvement Act of 2000 (a.k.a ‘MHIA @ 2000’), methodically explaining the ramifications of each, while walking GAO officials through the importance, relevance, and inter – dependence of the full and proper implementation of all those reforms.” (Lightly edited. GFA)

All that needs to be said at this point, is ‘Be Grateful the MHARR is in Washington, D.C., Looking After the Political & Regulatory Interests of Manufactured Housing &, when possible, the Post Production Segments of the Industry!” GFA

IV.

Preview of Year 2014. Maybe Landfall by then, for Manufactured Housing’s PERFECT STORM (It Is Indeed On the Horizon), & Certainly a New Era, one way or another, for Land Lease Lifestyle Community Owners/operators, of all sizes, Nationwide!

Geesh! I’d really like to tell you more, but can’t. Why? Well, in the first instance, I’d be violating confidences of individuals still in their decision – making process; and frankly, consequences of such a PERFECT STORM, where manufactured housing is concerned, are at the same time, unpredictable – and as such, could wind up being either a Middle Ages – like hiatus, OR ‘not really bad at all’, depending on who, if anyone, steps into the gap and how they perform. Perplexed? At this point in time, I am too.

In the second instance, a New Era for Land Lease Lifestyle Community owners/operators is unfolding according to plan. The first steps have already occurred; with the program being refined this month and next. During the hectic Fall meeting schedule…

LLLCommunity owners/operators will see their perennial need for effective national advocacy, ongoing statistical research, timely print & online communication, superb peer networking & realty deal – making, as well as professional property management training & certification addressed, consolidated, and improved!

Suggest you copy or clip the lines immediately before this sentence, carry them with you this Fall, challenging present and future industry/asset class leaders, salaried and elected alike, to deliver this Six Part Agenda, ushering in a New Era for LLLCommunity Owners/operators, of all sizes!

Hectic Fall Meeting Schedule? By way of review, here’s where we (*) can meet & talk:

• 5 August @ RV/MH Hall of Fame Induction Banquet (*) in Elkhart, IN. (574) 293-2344. Craig Bollman & Theresa Desfosses will be among ten inducted. And new Fairmont Home, out in front of the facility will be almost ready for touring!

• 18 – 20 September @ 22nd International Networking Roundtable (*) in Bloomingdale, IL. (317) 346-7156. ‘Celebrating 20 Years of Camaraderie!’ 100 registrants already; so if a LLLCommunity owner/operator, don’t risk missing it!

• 29 September – 1 October @ MHI’s annual meeting(*) in Carlsbad, CA. (703) 558-0678. National Communities Council division (*) will also meet during the same time frame. This will be first time NCC has met since October 2012.

• 8 – 10 October @ 3rd annual SECO Symposium in Forsythe, GA. ((865) 385-9675. Only regional event planned & hosted entirely by LLLCommunity owners/operators, with emphasis on seller – financing of homes; & several homes on display. For more information, talk with Spencer Roane, MHM®

• 10 & 11 October @ MHC or Arizona meeting (*) in Tucson, AZ. (480) 345-4202 Very special program being planned. Call & ask Susan for details!

• 15 – 17 October @ WMA’s annual convention & expo in Reno, NV. (916) 448-7002

• 15 – 19 October @ Institute of Real Estate Management’s Leadership Conference in Scottsdale, AZ. (312) 329-6000

• 16 – 18 October @ National Communities Council division’s Leadership Forum (*) in Chicago, IL. (703) 558-0666

• 23 & 24 October @ New York Housing Association’s annual meeting at Turning Stone Resort in New York. (518) 867-3242

• 5 & 6 November @ London Computer’s annual Rent Manager Conference (*) on Marco Island, FL. Primarily for Rent Manager users.

• 5 – 8 November @ Urban Land Institute’s Fall Meeting in Chicago, IL. Manufactured Housing Communities Council will also meet during this time frame.

***

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

Answers to ‘Four Tough Questions’ & More….

Sunday, July 21st, 2013

Blog # 255 Copyright 2013 21 July 2013

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America’

I.

‘Four Tough Questions’ & Heavy Reader Response!

II.

When It Rains It Pours – Imperfectly at Times….

***

I.

‘Four Tough Questions’ & Heavy Reader Response!

Every once in a while, the gist of this weekly blog ‘hits a nerve, resulting in a plethora of response’. Well that happened last week, when blogs # 253 & 254, in a two day period, posed Four Tough Questions within the news story, ‘More Manufactured Housing Shipment Statistics’. Here are those Four Tough Questions, along with lightly edited, thought – provoking responses from manufactured housing executives from throughout the U.S. My favorite? “I find your questions and comments similar to my observations. Now, how do we get the (salaried & elected) executives of the HUD – Code manufactured housing industry to answer them?” Answer? Unlikely to happen…

1) ‘Why does the MHIndustry eschew (‘shun’) national brand promotion in lieu of stealth deal – making at the local housing market level? Possible answers: Maybe corporate self – protection, a woeful lack of macro vision regarding the industry at large, and or simple resistance to change.”

“There are many partial explanations, most of which are steeped in the tradition of a fragmented industry, dependent upon independent (street) MHRetailers and ‘company stores’. Now however, we have (three) dominant manufacturers (garnering 86 percent of national market share of factory – built housing), known as the ‘Big – 3Cs’, so time is ripe for dealing with the issue, but it remains a highly complex matter, with no simple or quick answers – especially mid – crisis, like now. BV *1

Another blog flogger (reader) writes: “We recently went back and reviewed our (state’s) image campaign activity, and was it ever discouraging. The excitement level was high, until we got to implementation, and then the ‘wheels fell off’, as participants discovered we didn’t have the money to buy coverage deep enough in all the targeted housing markets; and then the competitive juices drowned the project altogether.” RK

Here’s Newport Pacific’s image changing strategy for the next dozen or so years: “Rent new solar homes to upcoming Baby Boomers, with probable life expectancies of another 15 – 20 years, replacing our existing crappy pre-1976 era ‘trailers’, improving the desirability (of the lifestyle) and improving our image along the way.” SL. Amen to that!

“It appears advertising, with some firms, targets a defined demographic, unfortunately (?) perpetuating that pesky ‘trailer image’, rather than a broader cross section of the national market, e.g. ’Clayton Homes has rolled out a Good Call promotion, endorsed by stars of the reality TV show Duck Dynasty. The promotion features a sweepstakes that’ll give four winners, from four geographic regions of the country, opportunity to meet some of the Duck Dynasty cast on location in West Monroe, LA.’

2) ‘Why do HUD – Code housing manufacturers continue to perplex independent (street) MHRetailers and land lease lifestyle community home – buying customers, by routinely ‘mixing & remixing’ building product quality, standard features and unit pricing? Possible answers: Maybe to purposely breed confusion; and, lack of understanding, appreciation, even respect for other business models and segments of the MHIndustry.”

“It’s because the LLLCommunity market you cite, is a small part of a complex manufactured housing market, where every manufacturer is struggling for survival, and every aspect of the small remaining market has its’ own concerns. Development of special CSH Model homes was and is, a major recognition of one relatively small portion of the overall market that remains. Manufacturers find it difficult to cater to changing market requirements, especially in perilous times. The ‘community market’ is hardly new, and represents about as large a proportion of the new home market as in the past. In unit numbers, it’s very small today. Don’t expect too much in a hurry. What’s far from clear now, is when robust growth returns, will there be new MHCommunities to fill?” *2 BV

3) “When will someone finally and definitively ‘make the case’ for HUD – Code manufactured housing, and its’ sister business model, the LLLCommunity, as being this nation’s Perennial Affordable Housing Type & Lifestyle? Possible answers: Maybe the soon – to – be – released, ‘Contemporary Archetype of Truly Affordable Housing in the United States!’, as a lagniappe in the August issue of the Allen Letter professional journal, will be a first step in that direction *3; and, when HUD finally (Maybe too late already) recognizes and promotes manufactured housing to that end!”

Then there’s this contrarian, or perhaps ‘realist’ view. “One thing we could do is give up on the prideful claim to be the only form of unsubsidized housing. Where has that gotten us? (Nowhere). The developers building apartments with tax credits are the darling of city hall – not us.” Now that’s what some might call ‘harsh reality’; but should we simply give up and take our affordable football home with us and ‘play no more’ – or continue to rail away at the manifold barriers to affordable housing in general, manufactured housing and LLLCommunities in particular? RK

“I’m working on that very problem George. However, it is far from clear to me that LLLCommunities are the key to the road ahead. What is strikingly clear, however, is manufacturing has become, and remains, the nation’s most affordable way of building housing, and land availability for low cost housing remains the nation’s biggest housing development challenge. Despite the heavy burdens of expensive financing, and requiring more acreage (i.e. greater density), manufactured homes are roughly competitive with apartments, and generally preferred by dwellers. If governments and local community planners have their way, apartments will win the low cost housing market, as they have done worldwide. If ‘our’ product is to win, we’ll all have to pull together more than we are today.” BV

4) “Does the HUD – Code manufactured housing industry Really Want to See the Return of ‘easy access to chattel capital’, stimulating new home shipment volume, and filling vacant rental homesites in LLLCommunities, of all sizes, throughout the U.S.? OR, has the nearly five year shipment nadir (‘Lowest point’ in MHIndustry history!’) become an accepted and manageable status quo benchmark in the minds and operations of one or more fully (regulatory) compliant lenders who’ve cornered the severely constricted manufactured housing loan origination market?

Here’s what one of our peers has to say on this business – model changing trend: “There’s long been an appetite for ‘stupid money’ in the (manufactured housing) industry. For a long time, it was my opinion, the bulk of the industry thought easy money would return, but it might take longer this time than before. However, a combination of factors, but most notably banking regulators and regulations, have made that eventuality all but impossible. Can this industry survive as an all cash business? Most new home sales in our state are currently cash transactions; or circumstances where LLLCommunity owners and investors turn them into rentals. This is changing the business model in ways we‘ve not seen before. The traditional LLLCommunity model, where the property owner owns and rents homesites to homeowners is transitioning to: 1) community – owned home rentals, 2) investor – owned home rentals, and 3) low end new or aged homeowner – owned units and the resale thereof. And nowhere in this trifold mix are there moderate to high end homeowner – financed new homes, the very homes that drove our industry’s growth in the 1995 – 2000 period. So, the question might not be so much as to whether the industry wants the return of ‘easy money’ OR is satisfied with the 50,000 shipment status quo, but IF ‘easy money’ returned, would shipments actually increase – or has the model shifted, as described, and said structure is the New Reality for our industry? In my state, the Big Box = Big Bucks’ house is no longer HUD – Code, but modular in nature, with decent financing, based on favorable value appraisals and quality collateral, making them attractive to local lending institutions.”

Hey; it’s not too late for YOU to weigh – in with your considered opinion and answers to these Four Tough Questions. Again; to do so, simply phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 – or as most folk do, email your input to me via gfa7156@aol.com

End Notes.

1. Big 3Cs of HUD – Code manufactured housing: Clayton Homes, Inc., Cavco Industries, Inc., and Champion Home Builders, Inc.

2. Rejoinder: presently 250,000+/- vacant rental homesites to fill with new and or resale homes; asset class was last at 95%+ physical occupancy in 1998, now at 85%+/- nationwide – so plenty of such homesites available now, and in the near future, for new HUD – Code manufactured homes. GFA

3. To subscribe to the Allen Letter professional journal, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. The 24th annual ALLEN REPORT (a.k.a. ‘Who’s Who Among LLLCommunity Portfolio Owners/operators Throughout the U.S. & Canada!) is available FREE to subscribers; otherwise, $500.00 per copy.

***

II.

When It Rains It Pours – Imperfectly at Times….

‘Two New Surveys in as Many Weeks’

Two weeks ago, it was the mislabeled ‘2012 Mobile Home Market Facts’; this week, a ‘Manufactured Housing Survey Summary’. The first, a corporate study updated every four years by Foremost Insurance Company; the latter, a first time effort by Colliers International Valuation & Advisory Services (Specifically, Bruce Nell, MAI® & Charles Schierbeck, II., MICP).

Why ‘mislabeled’? Frankly, having served homeowners’ insurance needs of the manufactured housing industry for decades, one would think such an established business would have long ago moved away from trade terminology officially scrapped by the industry’s regulator, and most of the firm’s peers, way back in the mid – 1970s. Let’s hope, in 2017, when the next study appears, it’ll be labeled as ‘2016 Manufactured Housing Market Facts’

Want copies of these seminal reports? In the first instance, free copies of the Foremost MHMarket Facts are available by contacting Joe Kaffenberger via (616) 956-2514. the MHHousing Survey Summary via Bruce.Nell@Colliers.com

I’ve already quoted many of the interesting and helpful statistics and trade trends identified in the Foremost report, in earlier postings of this blog, within the Allen Letter professional journal (That’s why you need to be a subscriber), and the Allen CONFIDENTIAL! business newsletter. So, just scroll back through the blog archives at this website (community-investor.com) to review them.

Now for a multi – part commentary of the Colliers’ MHHousing Survey Summary:

• TERMINMOLOGY. These guys know better than to use four different property – type labels: mobile home park(1), manufactured home community (1), manufactured housing community (7), and manufactured community (1). As this blog’s aficionados know, my preferred contemporary label for our unique type income – producing property is ‘land lease lifestyle community’, or LLLCommunity in short. But some, if not many folk active, in the realty asset class, aren’t as ready for that moniker, and opt for one or another of the aforementioned aberrations. The one most out of line however, is the rendering of ‘manufactured HOUSING community’. Know when and how this aberration first appeared? Well, back in the mid – 1990s, as the second REIT wave began (First REIT wave occurred in the 1980s; think UMH Properties, Inc.), one of the firms launching their IPO (Initial Public Offering of stock) apparently thought it’d be a strategic marketing coup, to convince their peers a trade term that aped (imitated) their firm’s name would (somehow) be a good idea for all. Not. But that’s when the practice started – despite the fact in 1994, J. Wiley & Sons published Development, Marketing & Operation of Manufactured Home Communities, a text replete with ‘agreed upon trade terms’ based on national terminology surveys via the (then) Manufactured Home Merchandiser magazine, with results confirmed by state MHAssociation execs. The preferred term? Manufactured HOME Community. And, to take the matter a step further; here’s the rationale for the LLLCommunity label. This property type no longer sites just pre – 1976 ‘mobile homes’ & post – 1976 manufactured homes, but modular homes (Think BayWood in DE, etc.); ‘park model RVs’ – throughout FL & other Sunbelt states; ‘RVs for a season’ (i.e. Transients splitting their residency between the Midwest & Rio Grande Valley in TX, etc.); and ‘stick – built homes constructed to imitate manufactured homes’ – in Florida after major hurricanes. One more reason to use HOME & not HOUSE: As an industry, we sell manufactured HOUSING to prospective homebuyers. Once they ‘buy’, the HOUSE becomes their HOME, often sited among other like (manufactured) HOMES. So, ‘Why would anyone want to sully the HOME in which our homeowner/site lessees live, by referring to the property where they live as a ‘manufactured HOUSING community’?’ Again, Not!

• A DISCONNECT? Thinking the MHHousing Survey is national in scope, see if you consider the following sentences, quoted from an introductory letter, track logically. “Manufactured Housing Communities are an area of real estate that lacks comprehensive market data that research institution (sic) supply for other segments of the real estate industry. There are some providers of general data in the industry, but Wisconsin is an area that was largely ignored by these firms.” NOTE: (sic), by the way = ‘quoted exactly as written even though incorrect.’ So, is this a national or Wisconsin survey or both? It’s both, but with unclear delineations, here’s another disconnect. The authors state “The manufactured housing industry does not have a standard rating classification.” But it does! The ABClassification System for the Manufactured Home Community Real Estate Asset Class’ was copyrighted in 1998, revised but not endorsed by MHI’s National Communities Council in 2001; and further updated in October 2003 – ten years ago! The ABClassification System rates LLLCommunities per A, B, C & D grade quality, based on a quantified score (maximum of 100percentage points), drawn from the seven evaluation areas of Appearance, Layout, Individual Homesites, Individual Homes, Infrastructure, Amenities, and Community Management. FREE copies of the ABClassification System score sheet are available from PMN Publishing. To order, see end note (above) # 3.

• ERRORS, or matters in need of CLARIFICATION &/or DOCUMENTATION. Early on in this survey, relative to availability and cost of consumer financing, this statement is made: “One third of all manufactured home purchases are financed through credit.” Credit meaning debt financing or something else? Does that mean two thirds or purchases are cash transactions? And ‘all’ = new and resale transactions taken together, or just the former? And, most important; what’s the empirical source of this statistic? There are no footnotes, to speak of, in this survey. Somewhat apropos to this point, is a recent communiqué (7/16/2013) from the Manufactured Housing Association for Regulatory Reform, telling us: “…per U.S. Census Bureau statistics in 2011, 76% of all manufactured hosing placements are titled as chattel.”, suggesting a much higher credit (debt?) presence than just 33%. Then, later in the report, there’re these unclear statements: “Smaller communities operated with only a resident manager (only two of the surveyed communities which indicated this structure, had more than 76 homesites). One employee was also typical of the smaller communities. Only three smaller communities had more than one employee.” Simply: What homesite number characterizes a ‘small community’; 76 or 100 or some other number? What ‘structure’? And are these fulltime or part time employees?

• CONFIRMATION of an ASSET CLASS Rule of Thumb. While the specific nature of ‘high quality’, ‘moderate quality’, and ‘fair to average quality’ grades, among LLLCommunities, was not specifically defined in this survey, the bar graph numbers for each, confirmed the asset class’ widely used Rule of Thumb – ‘subject to local housing market research and adjustment’, as being: ‘A’ or ‘High Quality’ grade being 8%+/-; ‘B’ or ‘Moderate Quality’ grade being 9%=/-; ‘C’ or ‘Fair to Average Quality’ grade being 10%+/-; and, ‘D’ grade (not covered in this survey) being 11% or worse.

Frankly, this survey was a pretty good ‘first effort’ by Mssrs. Neal and Schierbeck. We have no idea how often they plan to research and update, if ever, this Manufactured Housing Survey Summary, but they’re certainly addressing a longstanding need, for reliable and current statistics regarding this 50,000+/- property real estate asset class, and its’ 500+/- known property portfolio owners/operators domiciled in the U.S. and Canada.

Some may have already noticed. A recent updating of the LLLCommunity Standard Chart of Operating Accounts and related Operating Expense Ratios, distributed as a lagniappe to the Allen Letter professional journal, contained not only the ‘standards’ first published in the early 1990s, but new OERs recently researched and published by the ARA Manufactured Housing Community Group in Austin, TX and Denver, CO. Other national real estate brokerage firms, with a specialty department, marketing LLLCommunities, have been invited to share their like data and have it considered for addition to the next updating of said Standard Chart of Operating Accounts & OER Percentages chart. For a FREE copy of this newly revised document, contact PMN Publishing per end note # 3. Better yet; every LLLCommunity owner/operator should have a copy of the ‘Book of Formulae, Rules of Thumb, & Helpful Measures’ (for this income – producing property type) on their desk or in their corporate library. This 2012 book available for only $19.95 from PMN Publishing.

***

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

The Fourth Tough Question & More…

Monday, July 15th, 2013

Blog # 254 Copyright 2013 15 July 2013

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America’

Oops!

Here’s the ‘Fourth Tough (two part) Question’ Promised, but Accidentally Omitted From Sunday’s Blog Post at the community-investor.com website….

“Does the HUD – Code manufactured housing industry Really Want to See the Return of ‘easy access to chattel capital’, stimulating new home shipment volume, and filling vacant rental homesites in land lease lifestyle communities, of all sizes, throughout the U.S?

OR, has the nearly five year shipment nadir (‘Lowest point’ in MHIndustry history!) become an accepted and manageable status quo benchmark in the minds and operations of one or more fully (regulatory) compliant lenders who’ve cornered the severely constricted manufactured housing loan origination market?”

Now, don’t just sit there! Give this two part question some deep and serious thought; then let us know your ‘take’ on the matter. Respond via the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764, email: gfa7156@aol.com, or phone (317) 346-7156.

And know what? There was even more substance to the first three questions in the edited – but – not – posted version of Sunday’s blog, than in the DRAFT copy as accidentally published. Here are those questions, along with some probable answers:

• “Why does the MHIndustry eschew (‘shun’) national brand promotion in lieu of stealth deal – making at the local housing market level? Possible answers: Maybe corporate self – protection, a woeful lack of macro vision regarding the industry at large, and or simple resistance to change.”

• Why do HUD – Code housing manufacturers continue to perplex independent (street) MHRetailers and land lease lifestyle community home – buying customers, by routinely ‘mixing & remixing’ building product quality, standarad features, and unit pricing? Possible answers: Maybe to purposely breed confusion, and lack of understanding, appreciation, even respect for other business models and segments of the MHIndustry.”

• When will someone finally and definitively ‘make the case’ for HUD – Code manufactured housing, and its’ sister business model, the LLLCommunity, as being this nation’s Perennial Affordable Housing type and Lifestyle? Possible answers: Maybe the soon – to – be – released, ‘Contemporary Archetype of Truly Affordable Housing in the United States!’ will be a first step in that direction; and, when HUD finally (Maybe too late) recognizes and promotes manufactured housing to that end!

Again; we welcome you’re musings, opinions, critiques, and suggestions relative to all four tough questions. And while you’re at it, maybe pose these same questions to the MHIndustry & LLLCommunity ‘salaried & elected’ leaders you know….

&

Here’s what else was in the edited version of Blog # 253, but not in the DRAFT copy you received and read on Sunday….

Add this to the list of dozen or so meetings planned for this Fall:

15 – 19 October. “Institute of Real Estate Management (‘IREM’) will have its’ annual Leadership Conference in Scottsdale, AZ. For information, visit IREM.org or phone (312) 329-6000.***Since there’re nearly 150 Certified Property Manager® or CPM® members of IREM who express PM affinity for the LLLCommunity asset class, I plan to try to be present.”

Who are the most well known CPM®s throughout the LLLCommunity asset class? Mike Sullivan, Brian Fannon, John Rogosich, Alan Alt, Bill Cramer, Greg Johnloz, Casey Kelly, Russ Petralia, Jon Zorn, Lori Burger, Mike Campbell, Leonard frenkil, Lu Hocker, Bev Schmidt, & George Allen.

***

Next Sunday?

Depends on whether I describe the imminent PERFECT STORM rapidly approaching the HUD – Code manufactured housing industry & land lease lifestyle community real estate asset class – or not.

For these housing manufacturing/distribution & real estate development/investment halves of the HUD – Code manufactured housing industry, this pending PERFECT STORM carries potential for two ‘failure to perform’ scenarios, and a stellar opportunity for two ‘fresh starts’!

But since wholesale ‘change’ is rarely – to – never easy, especially on simultaneous fronts, what will be the probable consequences, pro & con, of such a PERFECT STORM?

‘Ah’, as they say, ‘there is the rub!’ – and why said PERFECT STORM has not been heretofore described and warned of, so significant are the consequences of failure and opportunities for simultaneious fresh starts!

***

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, Indpls, IN. 46247
(317) 346-7156

More MHStatistics & Four Tough Questions…

Sunday, July 14th, 2013

Blog # 253 Copyright 2013 14 July 2013

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

Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America’

I.

More Manufactured Housing Shipment Statistics

II.

Picking & Choosing Among the Dozen Meetings This Fall

***

I.

More Manufactured Housing Shipment Statistics

Were you as surprised as I was, to learn last week – from the article preview of ‘Contemporary Archetype of Truly Affordable Housing in the United States!’, that 68 percent of all 2012 manufactured housing purchases were retail priced at less than $40,000.00 apiece? *1 We should be asking ourselves ‘Why the drop in price?’ and then take steps to ‘sell even more new houses to prospective homebuyers’! But are we doing so? Not that I hear. There’s still a penchant afoot, throughout the HUD – Code manufactured housing industry, for a revival of the ‘Big Box = Big Bucks!’ days of yore.

And how ‘bout the fact that, for two years in a row, 2011 & 2012, the volume of new singlesection and multisection homes reached a near equilibrium – at 25,289 for the former and 26,317 for the latter, combining for a total of (a still nadir) 51,606 new HUD – Code manufactured homes shipped during 2011. *2 To me, this product mix factoid simply confirms ‘the return to affordability’ hinted at in the first paragraph. Lest we forget, there’s an estimated 250,000 vacant rental homesites among the 50,000+/- land lease lifestyle communities throughout the U.S. Let’s fill those sites with more and more Community Series Homes or CSH Models, with their durability – enhancing features!

Well, here’s an equally interesting ‘third (statistical) piece’ to the aforementioned unfolding of this affordable housing puzzle. The Manufactured Housing Association for Regulatory Reform, or MHARR, in a Press Release dated 3 July 2013, listed the ‘top ten shipment states, from the beginning of the industry production rebound (Now there’s a bit of an overstatement) from August 2011, through May 2013…’ as follows:

Texas 19,143 new HUD – Code homes shipped
Louisiana 7,788 homes
Florida 4,861 homes
Alabama 4,411 homes
North Carolina 4,357 homes
Kentucky 3,887 homes
Mississippi 3,812 homes
Oklahoma 3,185 homes
North Dakota 3,165 homes
Tennessee 3,117 homes

OK, what common denominator jumps off the page at you, when looking through that list, besides the fact that Texas shipments are more than double the next state in line, and in fact eclipse the total shipments of Louisiana, Florida, and Alabama combined! The next most significant ‘leading indicator’ is that these are mostly Southern states, with the exception of ‘oil fracking state’ North Dakota. *3 And so, what does this third hint say to you? Here’s what it means to me….

Affordable housing is on the rebound despite what many HUD – Code home manufacturers would like the rest of us to believe – based on the type and size homes they routinely continue to display at regional manufactured housing show. Yep. We can clearly see how nearly as many singlesection homes (i.e. smaller and less expensive) are being shipped today as multisection ones (i.e. reminiscent of the Big Box = Big Bucks! Days, circa 1998), that our new home Price Points are lower than they were 15 years ago, and that most HUD – Code manufactured housing shipments are being effected in the South, where labor is generally less expensive.

But Stop! Right here, in the midst of documenting the HUD – Code manufactured housing industry’s return to ‘affordability’ roots, we hear ‘more than rumors’ of 10 percent wholesale price increases, among some manufacturers, for new manufactured homes! And this at a time when inflation is less than half that percentage increase. Why the increase? Given the accuracy of said 10 percent home price increase, is it that, as an industry, we’ve grown accustomed (To pen ‘comfortable’ here would be a misleading overstatement) to operating at the 50,000+/- homes annual shipment level – for the fifth year in a row; and so, opt for a little ‘profit taking’ now, rather than grow shipment levels back to a general level of profitability and prosperity?

Know what? ‘Right here’ is where this industry needs ‘more than one good investigative journalist’! How so? Until this happens – which, frankly it won’t – during these dire economic times for the MHIndustry, these questions will go unanswered:

• Why does the MHIndustry eschew national brand promotion in lieu of stealth deal – making at the local housing market level?

• Why do HUD – Code housing manufacturers continue to perplex their independent (street) MHRetailer & land lease lifestyle community customers, by routinely ‘mixing & remixing’ building product quality, features, and pricing?

• When will someone finally and definitively ‘make the case’ for HUD – Code manufactured housing, and its’ sister business model, the land lease lifestyle community, as being this nation’s perennial affordable housing type and lifestyle?

Frankly, there’s nothing really all that new in the preceding paragraphs. It’s all part of the marketing and production cycle this industry has experienced, time and again, since the late 1940s. It’s just that right now – and for the past four plus years, we’ve been functioning at historic low home shipment levels, for a variety of reasons, and appear to have lost our will and ability to climb out of this collective malaise, to regain at least a 25 percent national market share of housing starts!

End Notes.

1. Foremost Insurance Group’s 2012 Mobile Home Market Facts report. Foremost report available FREE, by contacting Joe Kaffenberger via (616) 956-2514. Article will be lead feature in the August 2013 edition of the Allen Letter professional journal, available by phoning the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

2. ‘White Paper: Issues & Opportunities Facing the Illinois Manufactured Housing Industry’, by Dr. Theodore C. Alex, under contract to the IMHA, Springfield, IL.

3. To request to be put on MHARR’s Press Release distribution list, contact Mark Weiss via (202) 783-4087.

II.

Picking & Choosing Among the Dozen Meetings This Fall

And the list just keeps getting longer! Realizing few of us can afford the time and money to attend all the manufactured housing and LLLCommunity – focused meetings scheduled for this Fall, thought I’d share insights as to what’s going to be happening among some of the more important (Shouldn’t miss!) venues…

5 August. RV/MH Heritage Foundation’s annual Hall of Fame Induction Banquet in Elkhart, IN. This is the only RV/MH annual event that equates with the Academy Awards Ceremony. There’ll be hundreds of RV and MH executives, pioneers, celebrities, and ten Hall of Fame inductees present that evening, to hear Richard Jennison, president of MHI, give the keynote address. To register, phone (574) 293-2344. I certainly plan to attend. *** Want to do breakfast together next morning? If so, call me beforehand at (317) 346-7156.

18 – 20 September. 22nd annual International Networking Roundtable in Bloomingdale, IL. This year’s theme: ‘Celebrating 20 Years of Camaraderie!’ will be highlighted by honoring 13 of 19 LLLCommunity owners, still active in the MHBusiness, who started our national Advocacy effort on 8/31/1993; the release of a new book: ‘The First 20 Years!’ by Bruce Savage; and implementation of a new industry tradition: Offering of the Formal Toast to LLLCommunity Owners, in the form of a poem honoring the memory of the late Bud Zeman, a Chicago – based portfolio owner/operator. For agenda & to register, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. And, by the way, new sets of plastic wallet cards, describing three applications of the ‘5 – RPs of Marketing & Selling New Manufactured Homes & Leasing Rental Homesites, will be given to all registrants! *** Carolyn & I look forward to seeing many of you again this year!

29 September – 1 October. Manufactured Housing Institute’s annual meeting, in San Diego, CA. This meeting might mark the beginning of a New Era for land lease lifestyle communities of all sizes. To register, phone (703) 558-0666. *** Carolyn and I plan to attend. Anyone up for a networking party by the pool? Call (317) 346-7156.

8 – 10 October. Third annual SECO Symposium, in Forsyth, GA. Here there’ll be new homes on display, with an emphasis on creative financing for new home sales transactions. Know what? The LLLCommunity owners who’re planning and hosting this event have recently made major headway in securing alternative financing for new and resale home transaction on – site. If you’re selling and self – financing home sales transactions on – site, you cannot afford to miss this stellar event. For more information, contact Spencer Roane, MHM® via (678) 428-0212. *** At present I have a schedule conflict, but am trying to be present to hear, learn and write about their success!

10 & 11 October. MHCommunities of Arizona is planning two days of intensive HOW TO seminars for its’ members. I’ll be a keynote speaker, delivering presentations on ‘State of the MHIndustry & LLLCommunity Asset Class’, as well as a variation of the ‘5 – RPs of Marketing’ talk featured at the aforementioned 22nd Networking Roundtable. Hint. The handout material here will be the best of any distributed during all of 2013! To register, phone Susan Brenton via (480) 345-4202. *** As AZ owners/operators know, I almost always host a private networking dinner while I’m in town. While nothing is planned just yet, if YOU are interested in doing so, let me know via (317) 346-7156.

15 – 17 October. WMA’s annual Convention & Expo, in Reno, NV. I can’t make this one, but wish I could. If you’re interested, phone Sheila Dey @ (916) 448-7002, and tell her ‘George told me to call!’

16 – 18 October. National Communities Council Leadership Forum, in downtown Chicago, IL. As one of the NCC’s founding board members, and present day board member, *** I certainly plan to attend. To register, phone Jenny Hodge via (703) 558-0666

5 & 6 November. London Computer’s annual Rent Manager® conference, on Marco Island, FL. While a ‘closed’ meeting, for the firm’s existing clients, there’ll be a couple hundred customers present. *** The focus of my presentation, this year, will be on Housing Price Point Methodology. For further information, contact your local Rent Manager representative.

5 – 8 November. Urban Land Institute’s Fall Meeting, in Chicago, IL. Green Courte Partners’ founder Randy Rowe is co – chairman of this year’s event. There’ll also likely be a Manufactured Housing Communities Council meeting at this Fall event. *** If I can get Press Credentials, I might attend the ULI & MHCC meetings.

And now what? These aren’t all the meetings scheduled between now and year end, just the ones I have generally complete details for at this time. If you’re planning a meeting, and would like to have it included in a future update at this blog posting, or in the Allen Letter professional journal, let me know by phoning the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

***

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

MH Statistics You Haven’t Seen Before!

Tuesday, July 9th, 2013

Blog # 252 Copyright 2013 7 July 2013

Perspective. ‘Land lease lifestyle communities, a.k.a. manufactured home communities, & earlier, ‘mobile home parks’, are the real estate component of manufactured housing.’
&
Purpose of this blog. ‘To be a national Advocacy voice, statistical Research reporter, & communications Resource for LLLCommunities, of all sizes, throughout North America’

I.

Surprising but Confirming Statistics
from Two Manufactured Housing Reports

II.

‘Contemporary Archetype of Truly Affordable
Housing in the United States!’

III.

A New Book: ‘The First 20 Years;
‘Forging Manufactured Home Community Advocacy & Networking’

IV.

From Blog Floggers (readers)….

***

I.

Surprising but Confirming Statistics
From Two Manufactured Housing Reports

Almost everyone is somewhat familiar with Pareto’s Law (‘that income distribution remains constant, whatever efforts are made to change it’*1), e.g. ‘80% of a country’s wealth is held by 20% of its’ population’. Well, Pareto’s Law, a.k.a. the ‘80/20 Rule’ has long had a place in manufactured housing industry shipment history, but not the manner Vilfredo Pareto articulated it. Goes like this: In the early days (i.e. Heyday of 1970 – 1980) of ‘mobile home’ production, in round numbers, 80+/-% of total annual new home shipments were ‘singlewides’, & 20+/-% ‘doublewides’, by the time of our too brief renascence, between 1995 – 2005, when those percentages reversed, with 20+/-% being (now) ‘single section’ manufactured homes, and 80+/-% being (now) ‘multisection’ homes. Surely you remember the ‘Go Go’ Big Box = Big Bucks! Days, when land – and – home packages, sold and contracted by independent (street) MHRetailers and ‘company stores’, competing for housing market share with production (site) builders throughout the U.S.?

For a variety of reasons, that housing marketing focus didn’t work well for long, and when the HUD – Code manufactured housing industry decisively ‘lost’ its’ ready access to chattel (personal property) capital, early this century, the ‘shipment pendulum’ has been swinging away from multisection homes back toward singlesection homes. An indeterminable part of that swing can be credited to the appearance, in 2008 and thereafter, of specially – designed Community Series Homes or CSH Models, produced by many, but certainly not all, HUD – Code home manufacturers, for siting in mostly portfolio – owned land lease lifestyle communities (a.k.a. manufactured home communities) nationwide.

Now that’s another fascinating tale; but one for another time, when talking
about the return of rental units, the meteoric rise in property owner self – financing (i.e. ‘captive finance’) of home sales transactions on – site, and the just as rapidly occurring negative consequences of onerous state and federal financial regulation of the manufactured housing industry and real estate asset class.

Well, during a chance review of an ‘annual (manufactured housing) shipment chart’ in the 3 December 1212 ‘White Paper: Issues & Opportunities Facing the Illinois Manufactured Housing Industry’, by Dr. Theodore C. Alex, we learned the annual shipment volume of singlesection and multisection manufactured homes reached a point of near equilibrium in 2011, and continued all the way through year 2012 as well!

Specifically; in year 2011, 25,289 new singlesection manufactured homes were shipped, as were 26,317 multisection homes, for an annual shipment total of 51,606. Page # 7. That’s about as close to 50/50% as you’re gonna get in the HUD – code manufactured housing shipment scenario. So, what does this mean? That (some of) the HUD – Code manufactured housing industry is experiencing and dealing with change, as it hunkers down and does what’s necessary to serve those markets (e.g. 50,000+/- land lease lifestyle communities nationwide) open to this unique type of factory – built housing. While further explanation is beyond the scope of the quoted Illinois report, this specific strategy generally means designing, selling, and shipping more CSH Model homes (featuring durability – enhancing features intended to facilitate reconditioning between renters and or contract buyers of said homes), even ‘park model RVs’, into LLLCommunities throughout the U.S.

But wait! There’s a serious caveat to this ‘small ray of shipment hope’ i.e. placing more new homes into LLLCommunities, on the way to filling an estimated 250,000 vacant rental homesites nationwide. And it goes like this: Until EVERY HUD – Code home manufacturer takes this (now) five year new home shipment nadir crisis seriously (i.e. Where we’ve been ‘bouncing along the bottom’ @ 50,000+/- new homes shipped per year during this time) and FINALLY reacquaints themselves with How To Actively Market New Homes to this realty segment of the MHIndustry, the very segment ‘which brought them to this housing dance in the first place during the early 1970s’ – LLLCommunities large and small, nothing much is gonna change anytime soon! And as is oft said, figuratively speaking, ‘You can take that to the bank!’ Why that metaphor? Because, for the past decade, LLLCommunity owners/operators have, by necessity, become their own bank, financing many, if not most, of the (home) deals they sell!

Why am I so sure of this general disconnect? After five years of writing about, aggressively promoting (Often directly to HUD – code manufactured housing producers and their ‘Business Development Managers’ or BDMs), and displaying Community Series Homes, circa 2008, at every annual International Networking Roundtable (The single largest draw of LLLCommunity owners/operators each year!), the income – producing property segment of our industry, especially the 85% of 50,000 LLLCommunities containing fewer than 100 rental homesites apiece, continues to be ‘all but ignored’ by most HUD – Code home producers! There, I’ve said it out loud and in this very public online forum patronized by 1,000+/- readers. Now I’ll wait, along with you, to see ‘if and how many of’, these relatively few remaining home manufacturers take this marketing matter seriously. And as a corollary, you may or may not be aware, that more than 80% of today’s total national market share of HUD – Code manufactured housing is shipped by three ‘Big C firms’, those being Clayton Homes, Inc., at 48+/-%, Cavco Industries, Inc., & Champion Home Builders, Inc. The remaining 20+/-% of national market share is accounted for by mostly regional ‘players’, who should be – but aren’t, taking just as serious an interest in marketing new HUD – Code manufactured homes for siting within LLLCommunities.

An apt, and appropriate ‘closing sidebar’ here, has to do with training aids (the ‘Ah Ha! & Uh Oh! Worksheet’ for estimating ‘affordable’ & ‘risky’ Price Points for new & resale manufactured homes for placement within & outside LLLCommunities; AND the fresh – off – the – press ‘5 – RPs of Marketing & Selling New Homes INTO a LLLCommunity’ plastic wallet card *2) have generated little interest, let alone use, among HUD – Code home manufacturers, while being very popular among LLLCommunity folk marketing and selling homes on – site. Go figure.*3

End Notes

1. Vilfredo Pareto (1848 – 1923), Italian economist and political ph8ilosopher. A vigorous opponent of socialism and liberalism, he justified inequality of income on the grounds of his empirical observations. Webster’s New World Encyclopedia
2. 5 – RPs = Right Product, Right Place, Right Price, Right Promotion, & Right People.
3. FREE copy of the ‘Ah Ha! & Uh Oh! Worksheet’ is available when one phones the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. And the set of ‘5 – RPs of Marketing & Sales of HUD – Code Manufactured Housing & Leasing of Rental Homesites’ will be distributed to all attendees at the 22nd International Networking Roundtable, 18 – 20 September 2013, in Bloomingdale, IL. Ask for agenda and registration form when phoning the HOTLINE.

Now, for that second manufactured housing report….

Have YOU obtained a copy of, and studied, the ‘2012 Mobile Home Market Facts’ report researched and recently distributed by the Foremost Insurance Group? If not, you owe it to yourself to make that effort today! It’s well worth your time and reading. Contact information later in this review.

While I’ve already reviewed some of the seminal statistics, contained in this 13 page report, in ‘the Allen CONFIDENTIAL!’ and the ‘Allen Letter professional journal’, some of the material is worth repeating here.

First off, know that Foremost’s ‘once ever four year’ report, and the annual ALLEN REPORT (a.k.a. ‘Who’s Who Among Portfolio Owners/operators of Land Lease Lifestyle Community Owners/operators Throughout North America!’) continue to be the only two professionally researched, published, and distributed ‘industry & asset class wide’ reports in the entire HUD – Code manufactured housing industry. That’s why you owe it to yourself to get a copy of this edition of Foremost’s research. There won’t be another one now until 2016!

Page # 2 pretty much ‘says it all’! “The Mobile Home market Shifts Toward Older Homes and Lower Income Households’ (e.g. “55% of mobile home owners reported an annual household income less than $30,000, representing a 16% increase from 2008.”) And there’s more….

“Single – section homes represented 59% of all units. Multi – section homes are down 8% since our 2008 study.” What did I tell you in the first half this Part I of this week’s blog posting?

And get this: “68% own or are buying their mobile home; 24% rent.” Now, there’s another ‘late 1970s trend’ – back towards ‘rental units’, that few recognize or write about these days. How come? Frankly, manufactured housing journalism is fast becoming a ‘lost art’ or worse – or so it seems – when one considers how few advertising – supported print trade publications remain (Only one!), and subscriber – supported newsletters (Only two!), along with ‘just a couple’ online ‘general & financial news’ ezines. That’s all there is! (Please excuse the tangential diatribe)

OK, I could go ‘on and on’ here, but I know what you’re most interested in learning: ‘How to get a copy of the 2012 Mobile Home Market Facts report!’ Phone Joe Kaffenberger via (616) 956-2514, and when you call, please tell him, ‘George told me to call!’

Know what I’d like to see happen in the 2016 edition of Foremost’s report? A wholesale switch away from ‘mobile home’ lingo, to ‘manufactured housing’ and ‘land lease lifestyle community’ enlightened verbiage. Will it happen? Guess we’ll have to wait (four years) and see. In the meantime, ‘get your copy’, study it, and make good use of what you learn – especially those reading this who’re HUD – Code manufactured housing producers and marketers (Just maybe someday, we’ll reverse those two function words, and see our industry embrace ‘marketing and then production’!) But don’t hold your breath.

***

II.

‘Contemporary Archetype of Truly Affordable
Housing in the United States!’

OK, this is going to be ‘short & sweet’, as they say in some circles. If you’re an ‘Allen Letter professional journal’ subscriber, you’re already in the cat seat for what I’m about to tell you. If NOT, then you might want to seriously consider subscribing before the August issue of the newsletter goes into the mail. To do so, simply phone the official MHIndustry HOTLINE: (877) MFD-HSNG or 633.4764. Credit card orders welcome; annual subscription is $134.95 for 12 monthly issues and a dozen Signature Series Resource Documents (‘SSRDs’) – including a FREE copy of the annual ALLEN REPORT, and 11 other such seminal documents re ‘RE & chattel lenders, consultants, etc..

‘Contemporary Archetype of Truly Affordable Housing in the United States!’ is the lead feature article in the August issue of the newsletter. Following are the opening paragraph from this opus, a particularly ‘telling’ paragraph incorporating timely statistics form the aforementioned 2012 Foremost report, and concluding paragraph.

Allowing for inevitable and key differences among local housing markets (e.g. demographic statistics, availability of services, & employment opportunities, to name a few), low cost and priced HUD – Code manufactured homes sited in land lease lifestyle communities (a.k.a. manufactured home communities), charging rental homesite rent in sync with other forms of nearby multifamily rental housing (e.g. Usually 1/3rd the monthly rent charged for a 3BR2B conventional apartment or townhouse, assuming utilities are billed in similar fashion), continue to be the contemporary archetype (‘original model or prototype’) of truly affordable housing in the United States! How so?

Mid – article paragraph:

Neither of the two latter ‘affordable’ residual $ amounts are much to work with, in many to most local housing markets; ;but they are indeed ‘doable’ in some, if not many, blue collar, family LLLCommunities! Proof? The recently released (June 2013) ‘2012 Mobile Home Market Facts’ report, researched and published by the Foremost Insurance Group, documents, that during year 2012, 18% of manufactured housing purchase prices ranged between $10,000 & $19,000; 14% between $20,000 & $29,999; and, 13% between $30,000 & $39,999; for a total of 45% of all HUD – Code manufactured homes sold during year 2012 being priced between $10,000 & $40,000. And this 45% total does NOT include yet another 23% of manufactured homes that sold for less than $10,000.! Frankly, housing simply doesn’t get any more affordable than this combined 68% of 2012 manufactured housing purchases priced at less than $40,000 apiece.

Final paragraph:

Finally, when the 50% ‘affordable housing adjustment’, of a local housing market’s AMI (Annual Median Income) is considered, buying an inexpensive resale manufactured home, sited on a rental homesite within a LLLCommunity , is often the ONLY viable alternative an individual or family has in today’s uncertain housing market. That’s why HUD – Code manufactured homes sited in LLLCommunities remain the sole contemporary archetype of truly affordable housing in the United States today!

I’ve been writing for the HUD – Code manufactured housing industry and land lease lifestyle community real estate asset class for more than a quarter century, and at last estimate, have researched and published no fewer than 2,500 articles and newsletters, along with 11 books. Frankly, I’ve been ‘learning & waiting’ most of those 30+/- years to pen the piece I’ve just told you about, and from which I extracted those three paragraphs. My hope is that it becomes the first step, by which all of us in the industry and property type, believe, recognize, and deal with the reality that our homes and multifamily rental property type are indeed the ‘contemporary archetype of truly affordable housing in the United States’ – and that placement of this piece in the hands of politicians and regulators, especially HUD, motivates them to buy into and support this reality as well!
So, make it a point to read the August issue of the Allen Letter professional journal.

***

III.

A New Book: ‘The First 20 Years;
Forging Manufactured Home Community Advocacy & Networking’

The title of this Part III of this week’s blog posting at the community-investor.com website is the ‘working title’ of the book Bruce Savage, CAE., is researching and writing this Summer, for printing and binding in time for distribution at the 22nd annual International Networking Roundtable, 18 – 20 September 2013, in Bloomingdale, IL. Sure hope YOU plan to be there, as we’re expecting more than 250 land lease lifestyle community owners/operators, and their preferred lenders, from throughout the U.S. and Canada. And like subscribing to the ‘Allen Letter professional journal’ in Part II above, simply phone the official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 to request an agenda and registration brochure.

So, what’s this new book about? YOU, if you’re an owner/operator of a LLLCommunity; more specifically though, it’s ‘a little bit of history’, beginning on 31 August 1993, when 19 of your peers met in Indianapolis, IN., to take control of their (our) collective destiny, where national advocacy, representation, communication, and networking is concerned. Yep; it was an exciting, albeit at times scary, beginning of what’s since become a 17 year ‘run’ for the National Communities Council division (‘NCC”) of the Manufactured Housing Institute, or MHI.

Not going to ‘tell the story here’, that’s what the book is for; but thought you’d like to learn how the manuscript is shaping up to date.

Bruce has been interviewing the 13 of 19 LLLCommunity ‘pioneers’ still active in the realty asset class or recently retired. His outline to date covers some of what led up to the 8/31/1993 meeting (Hint. REIT ‘wave’ began in 1994, less than a year following said meeting in IN.), the series of ‘around the U.S.’ meetings that occurred during the next couple years, and how the NCC was birthed 1 January 1996, under the executive guidance of Jim Ayotte (now executive director of Florida’s MHAssociation). And, as you’d expect, there’s a summary of projects, etc., undertaken by the NCC during it’s 1 ½ decades of existence.

Some of you have asked why I didn’t make this book number 12 in my career. Well, it’s fairly simple reasoning. I ‘was present at the birth’ on 31 August, and since 1988, with the publication of ‘Mobile Home Park Management’, since retitled with release of the 6th edition, as ‘Land Lease Community Management’ have authored every other book ‘still in print’ about our industry and realty asset class. It’s time for someone else to shoulder the responsibility of being the ‘scribe of manufactured housing’. My hope, at PMN Publishing, is this historical retrospective by Bruce Savage, will serve as his entrepreneurial debut to this end. I know I’m excited about getting to read the final product; I hope you are too. And know what? Every attendee at this year’s 22nd annual Networking Roundtable will receive a FREE copy of it. Just one more good reason for YOU to be present at this major annual gathering of LLLCommunity owners/operators.

In the meantime; Bruce is recruiting and working for MHIndustry clients with a need for his print and online communication expertise. If you’d like to get in touch with him directly, simply phone (202) 664-4512. He’s also listed in the 14th annual ‘Who Ya Gonna Call in 2013?’ list of MHIndustry & LLLCommunity Freelance Consultants. If you’d like a FREE copy of this directory of 40 national consultants, ask for it when you subscribe to the newsletter and request a Networking Roundtable brochure.

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IV,

From Blog Floggers (readers)….

Two this time around. The first from an old timer in our business, the second from an up and coming young executive in one of the largest fee management firms in the U.S. today.

“Yes, dysfunction seems to reign in Washington, and in some state associations as well. Here we are (manufactured housing), the best buy, period; and we ignore our potential, instead focusing on a desperate attempt to survive? What that Abbott & Costello could grasp ___ & _____, and our suppliers, manufacturers, servicers, and financiers playing with our (business) lives, all separately. And to boot,, we let our interest and need for (land lease lifestyle) communities disappear in a fog of being ignoramuses.” NB (Edited for effect. GFA)

-and this-

“Inspiration can be achieved with a change in public opinion, but not necessarily among those in control. Response to this (article) description of our community, and what we’re doing, has temporarily shut down our incoming phone lines. Imagine that in a (land lease lifestyle) community! Promotion (of this concept) to government officials, must inform them about our unique brand of senior communities, i.e. branding to 55+ Baby Boomers, now turning into Seniors. Our company is moving out of traditional complacency!” SL (Edited for effect. GFA)
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George Allen, CPM & MHM
Box # 47024, Indianapolis, IN. 462437
(317) 346-7156