Archive for February, 2015

30+% of New HUD Homes into LLLCommunities!

Friday, February 27th, 2015

COBA7® via community-investor.com Blog # 338 Copyright @ 1 March 2015

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

This blog posting is the primary national advocacy voice, official ombudsman, research reporter, & online communication media for all LLLCommunities in North America!

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

COBA7® Motto is: ‘U support US & WE serve U’!, and Goal of its’ three print & online publications is: ‘Not only to share information & opinion, but to transform & improve!’

Introduction to this week’s COBA7® blog posting at community-investor.com website:

The Big News in manufactured housing & land-lease-lifestyle community circles is the PROOF an increasing percentage of new HUD-Code homes is going directly into this property type! But will this Big News be sufficient to motivate factories to focus more of their marketing efforts on the ‘New Breed of MHRetailer & Lender’? Let’s hope so!

Everyone knows the Community Owners (7 part) Business Alliance®, or COBA7® was launched in early 2014, to serve the research, resources, communication, networking, deal-making, professional property management, even national advocacy needs (when necessary) of LLLCommunity owners/operators nationwide and throughout Canada. To that end, here’s an array of FREE wallet cards available for the asking. Get yours today!

Have a loved one or acquaintance fighting, suffering from, an illness or disease? Here’s a unique way to show your support and love, & financially contribute towards eradication of said health issue(s), as well. Frankly, I hope everyone gets on this brave bandwagon!

I.

Increasing Percentage of New HUD-Code Homes Going into LLLCommunities…

Actually, we’ve sensed this trend for awhile, just couldn’t ferret out shipment statistics to proof it. Last week’s announcement at this website (Blog 337), made the matter official:

30% of New HUD-Code Homes in 2013 were shipped directly into land-lease-lifestyle communities nationwide! Expect higher %s for 2014 & 2015!

And it turns out ‘blog floggers’ too, are as excited about this newly documented state of affairs, as they responded enthusiastically to last week’s historic announcement:

“Your breakdown of the increase in market share of manufactured home sales going into LLLCommunities is encouraging, and I agree with your contention it is likely understated. COBA7® can take credit and solace from the accomplishment sir!” NB

“Truth be told, this was suspected for quite some time. Thanks for shedding light on the real selling of HUD-Code homes. The LLLCommunity owners should have the right and responsibility to offer the type of new home product available on his/her land.” Independent (street) MHRetailers and ‘company stores’ are being supplanted by LLLCommunity owners/operators who buy new homes for resale on-site, then self-finances or leases them as the local housing market supports. It’ll be interesting to see what happens among what ‘was’ the Big Four + One lenders, ‘now’ the Big Three + One’, eventually (?) the ‘Big Two + One’, or fewer, independent third party chattel capital originators. No wonder we’re calling LLLCommunity owners/operators the ‘New Breed of MHRetailer & Lender’!

As you likely know by now, the Manufactured Housing Association for Regulatory Reform, or MHARR, was equally responsible for ‘breaking this historic news’ to the MHIndustry and LLLCommunity asset class. What will be interesting now, is to see whether either or both national advocacy bodies encourage HUD-Code housing manufacturers to capitalize on this trend, and redouble their efforts to sell more new Community Series Homes into this unique, income-producing property type. Hope so!

In the meantime, ‘where & what’ do we, as LLLCommunity owners/operators, ‘go & do’ from here? There’re a number of helpful possibilities:

• Contact COBA7® for a FREE list of Business Development Managers, or BDMs, adept at selling Community Series Homes, or CSH Models, to LLLCommunities. The list also talks of WOW! Factors, a.k.a. ‘eye candy’, and the many durability features characteristic of CSH Model homes. (317) 346-7156. Call today!

• Attend the Northeast Super Symposium in Albany, NY. @ 24 & 25 March 2015. Why? There’ll be several Community Series Homes on display. Walk and inspect these CSH Models before buying to resell on-site. (518) 867-3242. And this will be your best opportunity all Spring to learn ‘What’s going on’ in the MHIndustry.

• IMPORTANT REMINDER: If a LLLCommunity owner/operator, ensure the HUD-Code manufacturer, from whom you purchase Community Series Homes, clearly cites in their Installation Manual(s), the Frost Free Foundation®, or FFF®, is an approved installation procedure for their product! Otherwise, you run the very real risk of having to replace perfectly good concrete foundations on-site, if they don’t presently extend below the frost line characteristic of your property.

• Need help establishing your compliant home finance source, likely a separate operation from your LLLCommunity? Contact Rishel Consulting for guidance to this end, via (312) 878-2802. Also obtain a copy of the 17th annual National Registry of ALL Lenders, for a comprehensive list of chattel capital sources and servicers. Indispensable. MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764

• Explore lease-option as a viable alternative in your state. In this instance, visit Spencer Roane’s websites: LeaseOptionMHSales.com & http://LeaseOptionMHSales.com

Let’s hope, this time next year, we can report 50 percent of all new HUD-code homes going directly into LLLCommunities nationwide.

II.

Talking About Resources…

“And what cards do you carry in your wallet?”

Have you seen and or used the new plastic COBA7® ELEVEN 3X5 inch wallet card? Didn’t think so. But you’ll surely want to do so! Why? One side contains interesting factoids relating to the number and characteristics of land-lease-lifestyle communities (e.g. inventory #s, OER%, rent $, New Rule of 72, ‘cap rates’ & more). The verso or reverse side lists 11 solid reasons to affiliate with the Community Owners (7 Part) Business Alliance®. How to get your FREE ‘COBA7® ELEVEN’ card? Simply phone the official MHIndustry HOTINE: (877) MFD-HSNG or 633-4764 & leave your postal mailing address.

And hey, while you’re at it, ask for the other FREE ‘tools available to the LLLCommunity ownership/operations trade’:

• The ‘5-RPs of Marketing & Selling New & Resale HOMES within a Land-lease-lifestyle Community’ on one side; and, ‘5-RPs of Marketing & Leasing Rental HOMESITES or sites, within a LLLCommunity’, on the other side of this FREE plastic 3X5 wallet card. Distributed last year yes, but we still have some left.

• ’50 Business Card Design Ideas’ for the reverse, back or verso side of your business card! This invaluable eight panel plastic synopsis of business card wisdom is summarized from the book: Is Your Business Card a Keeper? The 2 ½ X 4” pocket guide is FREE for the asking.

• Not one, but two renditions of the GFA Management, Inc., ‘Number Crunching Cards’. One contains the ‘Cash on Cash Return methodology’, IRV valuation formula, and a loan amortization chart. The second fold over card contains every formula used in LLLCommunity ownership/operations, e.g. physical & economic occupancy, turnover, OER computations, ‘cap rates’, and the Industry Standard Chart of Accounts with characteristic OER percentages.

And, if you’ve not yet seen or read ‘A Toast to the Community Owner!’, by all means ask for it when you request the above-referenced FREE plastic wallet cards and book synopsis. You’ll be glad you did. The ‘toast’, actually a poem, honors the memory of the late LLLCommunity portfolio owner/operator Bud Zeman of Chicago.

III.

Bravelets

A Unique Way to Honor & Support Loved Ones Fighting Illnesses

Our oldest granddaughter has been fighting a difficult and potentially debilitating disease for a few years. Our immediate and extended family are united in efforts to help her through periodic surgeries, recoveries, treatments, and more.

I recently came across a website simply called BRAVELETS; actually, bravelets.com. Anyway, they feature several lines of metal and leather bracelets designed to express support of individuals afflicted with one or more of a dozen or so illnesses. You pick out the bravelet design and illness on your mind, or in your heart, at the time, and purchase for $35.00. The Bravelet folk then contribute $10.00 of your purchase to the foundation or organization most involved in combating ones’ friend or loved one’s illness.

Carolyn and I now both wear bravelets in support of our granddaughter’s fight against her illness. Surely you have someone who deserves your love and support as well.

***

Proof of ‘New Breed of MHRetailer & Lender’!

Saturday, February 21st, 2015

COBA7® via community-investor.com Blog # 337 Copyright @ 22 February 2015

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

This blog posting is the primary national advocacy voice, official ombudsman, research reporter, & online communication media for all LLLCommunities in North America!

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

COBA7® Motto is: ‘U support US & WE serve U’!, and Goal of its’ three print & online publications is: ‘Not only to share information & opinions, but to transform & improve!’

Introduction to this week’s COBA7® blog posting at community-investor.com website:

When was the last time you had, figuratively speaking, a light bulb turn on in one’s brain experience? Well, during the past two weeks I’ve had a pair of enlightening afflatuses!

The first, described in Part I following, has to do with finding U.S. Census Bureau data confirming the long-sensed trend of an annually increasing percentage of new HUD-Code homes being shipped directly from factories into land-lease-lifestyle communities!

The second, has to do with the unvarnished back story regarding the Dodd-Frank Act cum corporatism; what really precipitated the 2008 financial crisis; and, what must yet happen during the years ahead to see this regulatory nightmare repealed.

I.

‘New Breed of MHRetailer & Lender’

U.S. Census Bureau Data Confirms Emerging Support Role of Land-lease-lifestyle Communities (a.k.a. manufactured home communities) in behalf of the Manufactured Housing Industry

Here’s how we got to where we are today…

Easy access to chattel capital, for loans on new manufactured homes going into (then) manufactured home communities, ‘went away’ soon after the turn of the 21st century. As that lifeblood $ dried up, the number of independent (street) MHRetailers – traditional ‘filler’ of vacant rental homesites in 50,000+/- MHCommunities nationwide, waned from thousands to a few hundred retail salescenters in the U.S. At that point, owners/operators of (larger communities or property portfolios) this unique, income-producing realty type, were forced to sell homes on-site, whether ‘repo’ units, good quality resale homes, or (Gasp!) new manufactured homes. For decades earlier, these owners/operators eschewed new home sales, preferring homebuying customers ‘eat the depreciation’ on said transactions; or, pass them onto ‘street dealers’ who owned such properties, and at times engaged in ‘closed park operations’, i.e. ‘buy here, pay here – twice’.

In any event, by 27 February 2009, (then) MHCommunity owners/operators, having already launched their own national advocacy body, the National Communities Council (‘NCC’) division of the Manufactured Housing Institute (‘MHI’), realized, at their first National State of the Asset Class (‘NSAC’) caucus, in Tampa, FL., they must take control of their destiny, or risk being marginalized by similar factors affecting the manufacturing and distribution of HUD-Code manufactured homes. A year later, on 27 February 2009, a mix of home manufacturers and realty investors met at the RV/MH Heritage Foundation’s Hall of Fame facility in Elkhart, IN., to agree, once and for all, ‘What it’d take for MHCommunity owners to buy more new homes; and, what manufacturers needed to do to incentivize the purchase of more new homes?’ Answer? New home design! By year end, Community Series Homes (so-named by industry consultant Don Westphal), or CSH Models: singlesection homes & modest-sized multisection homes with WOW factors and a plethora of durability-enhancing features (to ease the turnaround of such ‘park-owned homes’ between owners or renters) were being marketed by dozens of Business Development Managers (‘BDM’) coast-to-coast. And the process continues; to such an extent, it’s almost standard parlance in the manufactured housing industry today, to refer to (now) land-lease-lifestyle community owners/operators ‘selling & self-financing new homes on-site’ as the New Breed of MHRetailer & Lender.*1

Here’s where we are today.

U.S. Census Bureau data confirms what’s described in the previous paragraph:
the increased sale and placement (i.e. installation) of new HUD-Code manufactured homes on-site within (many but certainly not all) LLLCommunities throughout the U.S.

To mine this data, launch one’s computer browser to ‘Manufactured Homes Survey’. Once there, left click on the ‘Historical Data’ heading. And once on that view, left click on the ‘Selected Characteristics’ label – listed vertically, where statistics are grouped by year, e.g. 2009, 2010, 2011, 2012, & 2013, with a choice of accessing either PDF or XLS. At each of those years, compare the number (thousands) of manufactured homes going ‘Inside MHCommunities’ with total number of homes shipped that year, e.g.

2009 12T into (now) LLLCommunities, divided by 55T = 22 percent
2010 13T ditto 51T = 25.4 percent
2011 12T ditto 48T = 25 percent
2012 15.6T ditto 52.8= 29.5 percent
2013 16.9T ditto 56.3= 30 percent

The Good News, of course, is that the number and percentage of new HUD-Code homes being shipped directly into LLLCommunities, and not necessarily via independent (street) MHRetailers, continues to increase. It will be interesting to see the results for year 2014.

Concerned about the relatively few homes going into ‘subdivisions’ mixed in with the numbers shown above? I’m not. While undefined at the moment, there’s more than one way the demarcation between ‘land lease’ and ‘conveyed fee simple’ might be blurred, e.g. resident-owned communities, etc..

In any event, it’s instructive and encouraging to see, once and for all, clear evidence of the evolving trend so many of us ‘knew’ was occurring, but had little to no empirical data supporting said contention. Bottom line? ‘Long live the New Breed of MHRetailer & Chattel Capital Lender!’

II.

Here’s What I Learned This Past Week About ‘The New Corporatism of Dodd-Frank’, & ‘GSEs, the Federal Reserve, & the Elements of True Financial Reform’

Following quotations are from the book, Dodd-Frank: A Law Like No Other, a collection of writings from seven lecturers sharing their thoughts at Hillsdale College during 2014.

David A. Skeel. “Once every generation or two, after a major financial crisis, Congress redesigns American financial regulation.” P.2

‘The Dodd-Frank Act is Congress’s redesign of financial regulation for our generation. …there are two very odd features of the Dodd-Frank Act.” P.2

‘The first is…built on the premise the same guys who orchestrated all the bailouts that caused so much trouble, should be the ones who decide what to do about it.” P.3 (Specifically, Henry Paulson, Timothy Geithner, & Ben Bernanke)

“The second odd feature…closely related to the first. Traditionally, American debates over how to regulate our major financial institutions, have pitted those who believe the biggest institutions should be broken up if they begin to dominate Amercican finance, against those who believe giant institutions are inevitable and government should simply make sure it has the tools to control them.” p.3

“…key architects of Dodd-Frank hailed from the big-is-okay side of the traditional divide.” P.4

“…the Wall Street reform portion of Dodd-Frank has two very clear objectives: the first is to limit the risk of the so-called shadow banking system by more carefully regulating the key instruments (e.g. derivatives & financial innovations) and institutions (e.g. .J.P. Morgan Chase, Citigroup, or AIG) of contemporary finance.” P.4 Note: “Shadow banking…is the use of nontraditional sources of finance.” P.5

“The second objective is to limit the damage in the event one of these giant institutions fails. The Dodd-Frank Act thus has two simple objectives – limiting risk before the fact and trying to limit the damage if a giant financial institution nevertheless falters.” P.5

“It also has a recurring theme: partnership between the government and the largest banks. This partnership, in which the government locks arms with a small group of dominant institutions, looks a lot like the European style of regulation that is known as corporatism.” P.5

&

Peter J. Wallison. “The 2008 financial crisis was a major event, equivalent in its’ initial scope – if not its duration – to the Great Depression of the 1930s.” p.49

“By 2000, the developing (housing) bubble was already larger than any bubble in U.S. history, and it kept growing until 2007, when – at nine times the size of any previous bubble – it finally topped out and housing prices began to fall.” P.54

“With the largest housing bubble in history deflating in 2007, and more than half of all mortgages made to borrowers who had weak credit or little equity in their homes, the number of delinquencies and defaults in 2008 was unprecedented. One immediate effect was the collapse of the market for mortgage-backed securities that were issue by banks, investment banks, and subprime lenders, and held by banks, financial institutions, and other investors around the world. These were known as private label securities or private mortgage-backed securities, to distinguish them from mortgage-backed securities issued by Fannie and Freddie. Investors, shocked by the sheer number of mortgage defaults that seemed to be underway, fled the market for private label securities; there were now no buyers, causing a sharp drop in market values for these securities.” P.55

“This radical withdrawal of liquidity from the market was the financial crisis.” P.56

(And) “…the crisis was not caused by insufficient regulation, let alone by an inherently unstable financial system. It was caused by government housing policies that forced the dominant factors in the trillion dollar housing market- Fannie Mae and Freddie Mac – to reduce their underwriting standards.” P.56

“What…should have been done? …a thorough reorientation of the U.S>housing finance systems away from the kind of government control that makes it hostage to narrow political imperatives – that is, providing benefits to constituents – rather than responsive to the competition and efficiency imperatives of the market system.” P.56.

“A bubble energizes itself by reducing defaults as prices rise. This sends the wrong signal to investors: Instead of increasing risk, they tend to see increasing opportunity.” P.57

In conclusion, “…Dodd-frank was based on a faulty diagnosis of the financial crisis. Until that diagnosis is corrected – until it is made clear to the American people, the financial crisis was caused by the government rather than by deregulation or insufficient regulation – economic growth will be impeded. It follows that when the true causes of the financial crisis have been made clear, it will become possible to repeal Dodd-Frank.” P.57.

***

End Note.

1. New Breed of MHRetailer & Lender, a.k.a. New Breed of MHRetailer & Chattel Capital Lender. A new moniker for land-lease-lifestyle community; specifically, where the owner/operator routinely engages in the on-site wholesale purchase, retail sale, and when need be, the self-financing or renting of said manufactured homes to prospective homebuyers and renters, mainly to ‘keep the site rent meter running’.

GFA/cc

Responses to ‘Trade Restraint’ & Special Announcements!

Saturday, February 14th, 2015

COBA7® via community-investor.com Blog # 336 Copyright @ 15 February 2015

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

This blog posting is the primary national advocacy voice, official ombudsman, research reporter, & online communication media for all LLLCommunities in North America!

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

COBA7® Motto is: ‘U support US & WE serve U!’, and Goal of its’ three print & online publications is: ‘Not only to share information & opinions, but to transform & improve!’

Introduction to this week’s COBA7® blog posting at community-investor.com website:

I’ve penned thusly before, and will likely do so again in the future. When Monday morning dawns, following the Sunday morning blog posting, I oft wonder: ‘What to cover this week?’ By the time Wednesday arrives, there’s an idea or two in mind, maybe even a few quotes and thoughts on paper. But by Friday, ‘Something noteworthy has occurred somewhere in the MHIndustry & among LLLCommunities nationwide. Hence, Part I following, contains reader commentary on last week’s stimulating topics; & Part II is awash with the most exciting news to ‘splash’ our industry and property type in months – and there’s more a-coming!

I.

‘Simple Statement’ & ‘Trade Restraint or Protectionism’ Blog Postings Last Week Generate Interesting Commentary

In the first instance, “Since their creation more than (a) half-century ago, nearly everything about manufactured housing has improved – except the way they are sold and financed. High-interest loans, shorter loan terms, and sales tactics that turn what could be a good deal into an expensive proposition.”, garnered this pithy reply…(read carefully):

“Strictly chattel loans involve a tough, almost impossible business model; one where lenders have to charge high enough interest to cover their risks and costs – which in turn and time, all but guarantee failure of said loan transaction. Furthermore, the size of the borrower market (i.e. Those who can satisfy the lender’s requirements) is very small – almost too small to be practical. And pre-S.A.F.E. Act lenders could, but generally didn’t, mitigate their risks – hence justifying lower rates, via a partnership/affiliation with LLLCommunity owners, who helped with application processing, underwriting, collections, repossession, rehab, even resale of homes. Today, it’s near impossible for such cooperation without stepping into the crosshairs of regulators.” An MHM®

In the second instance, talk of the pros and cons of continuing under HUD’s regulatory oversight – and enjoying the benefits of a federally preemptive building code; OR, coming out from under said control to enjoy entrepreneur freedom to respond quickly to local housing market needs, generated the usual and expected supportive and contrarian responses:

“Good for you to open that can of worms again. Challenges to the ‘approved everywhere – sorta’ benefit of having HUD regs is certainly real, but the opportunity for renewed (shipment) growth, particularly with lower product costs would likely be greater! The latter is the entrepreneur’s dream of FREEDOM to WIN, instead of restrained freedom to continue being mired in mediocrity. Or, think of this as the opportunity to ‘meet our customer’s needs’, not the ‘requirements of government’.” NB

versus

“Without the protection of federal preemption there would be no manufactured housing. Just look at how stagnant ‘modular housing’ figures are. Why? Because they must meet a myriad of local building codes, always changing, always different. How can anyone think it’d be any different for unfettered manufactured housing?” State MHAssociation exec.

II.

Exciting News to Share with Blog Audience!

I love it when a news story comes together in time to post here, or share via the Allen Letter professional journal and the Allen CONFIDENTIAL! business newsletter. Also get a genuine thrill from knowing beforehand, an upcoming regional or national meeting will serve the education, networking, and deal-making needs of land-lease-lifestyle community owners/operators nationwide! But best of all is the feeling of personal fulfillment, when a whole new aspect of manufactured housing score-keeping (i.e. statistical benchmarking) unfolds before one’s eyes. All such ‘excitements’ are described in the following bullet points:

• 24th annual International Networking Roundtable will occur 9-11 September 2015 at the Hilton San Diego Resort on Mission Bay. That’s right; where we’ve been twice before! And the lineup of 25 topics and presenters? Details to follow, but how ‘bout reps from IREM, MHI, MHARR, maybe GSEs, & COBA7’s national buyers group; plus, all you wanted to know about Frost Free Foundations®, and more, but didn’t know who to ask – since no one else is telling you!

• MHARR will soon (This week?!) make an announcement of significant importance to owners/operators of land-lease-lifestyle communities nationwide. Hint. It has to do with the volume of new HUD-Code homes being shipped directly from factories into LLLCommunities nationwide. We finally know. This is a game-changer!

• Signature Series Resource Document ‘17th National Registry of (all) Manufactured Housing Industry-related Loan Originators’, when distributed on 1 march 2015, as a lagniappe to the Allen Letter professional journal, will be the Biggest & Best such SSRD researched and published to date! Relative to real estate-secured loan (acquisition & refinance mortgage) originators alone, the number of reporting firms (lenders & brokers) has jumped from 18 to 25 since last year! And Rishel Consulting, continuing its’ helpful contribution to last year’s edition, will publicize all known sources and servicers of chattel capital per manufactured homes in LLLCommunities. This is a MUST HAVE document!

• Two more Manufactured Housing Manager® classes have been scheduled this Spring; one in Dixon, IL., on 31 March, and one in East Peoria, IL., on 20 June 2015. If you’re in search of professional property management (‘PM’) education and certification for yourself and or your LLLCommunity managers, this is where to send them! Class is only $250.00/person for the one day class, there’s no testing, and it’s the only PM class in the U.S. taught by a veteran LLLCommunity owner, Certified Property Manager® Emeritus, and RV/MH Hall of Fame member. Get certified and join the other nearly 1,000 MHMs at work in LLLCommunities throughout the U.S. and Canada!

• Double Treat in Albany, New York on 26 March 2015! Pam Danner, esquire, manufactured housing program administrator for HUD will be present to brief owners/operators from NY, PA, NJ, MD, DE, and all of New England. And I’ll deliver the ‘State of the MHIndustry & LLLCommunity Asset Class!’ keynote – with this added feature: ‘Watch Out, Here Comes Another Property Consolidation Wave!’ – based on a feature in the March issue of the Allen Letter professional journal. This NYHA Super Symposium is a ‘can’t miss’ event for MHIndustry folk in the Northeast. Phone Nancy Geer @ (518) 867-3242.

To register for the 24th annual Networking Roundtable, affiliate with COBA7® – to receive a copy of the 17th annual National Registry of (all) Lenders; and, sign-up to attend either of the two Manufactured Housing Manager® classes, simply telephone the Official MHIndustry HOTINE: (877) MFD-HSNG or 633-4764.

***

MH Trade Restraint or Protectionism?

Friday, February 6th, 2015

COBA7® via community-investor.com Blog # 335 Copyright @ 8 February 2015

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

This blog posting is the primary national advocacy voice, official ombudsman, research reporter, & online communication media for all LLLCommunities in North America!

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

COBA7® Motto is: ‘U support US & WE serve U!’, and Goal of its’ three print & online publications is: ‘Not only to share information & opinions, but to transform & improve!’

Introduction to this week’s COBA7® blog posting at community-investor.com website:

Friends in the MHBusiness sometimes oft ask if I tire of ‘challenging & goading the MHIndustry & LLLCommunity realty asset class’ elected & salaried leaders to openly address Ongoing Issues (e.g. lack of easy access to chattel capital), Strategic Matters (e.g. restraint of trade) and Troublesome Barriers (e.g. financial ‘over regulation’) affecting manufactured housing shipments’ (i.e. ‘or lack thereof’); and the answer is YES! But know what? There’re too few businessmen & women afoot today, let alone investigative trade journalists, doing so! Hence; until that markedly changes, if it ever does, my career work path is laid out before me; and to great extent, rejuvenates me week after week, month after month, year after year! All I ask of YOU, is to read & ponder what I pen, then support me as you will – by word, deed, & affiliation with the Community Owners (7 Part) Business Alliance®, or COBA7®! 2015 promises to be one exciting year!

The two following op/ed pieces play to the frustrating yet stirring business scenario just described.

I.

Sometimes, a Simple Statement Says It All!

And this is one of those times! Recently, a short op/ed story titled, ‘The Hidden High Costs of Mobile Homes’ made the rounds among businessmen and women engaged in manufactured housing and land-lease-lifestyle communities. The simple statement, actually a subtitle to that cited in the first sentence, reads thusly:

• “Since their creation more than (a) half-century ago, nearly everything about manufactured housing has improved – except the way they are sold and financed. High-interest loans, shorter loan terms, and sales tactics that turn what could be a good deal into an expensive proposition.”

Stop and read those two sentences again; then, sit back and ponder this question:

• Is it possible to reposition manufactured housing, from being an Expensive Proposition (especially when sited within LLLCommunities), into a Good Deal, featuring 1) low-interest loans, 2) longer term loans, & 3) effected by professional, courteous sales and leasing professionals?

Your answer? Mine is: ‘Why not replace the old business model with a new, fair and attractive one?!

Specifically, replace the half century paradigm, characterized by these negatives, pursuant to increasing number of LLLCommunity owners/operators filling their vacant rental homesites – rather than relying on declining number of independent (street) MHRetailers and ‘company stores’, using low-interest and short term loans, marketed and sold by professionals – with added surety of homes installed on realty controlled by the property owner.

This is already happening in increasing numbers, as enlightened LLLCommunity owners/operators either sell new home inventory ‘close to cost’ (to lowering the sales price) and or meld mortgage terms to fit homebuyer/site lessee’s ability to repay the loan and site rent each month. This is why LLLCommunity owners/operators, in many local housing markets throughout the U.S., are increasingly being referred to as the NEW BREED of MHRetailers & Lenders!

The secondary, but equally compelling challenge is ‘How to involve the owners/operators of single LLLCommunities, and small property portfolios, to embrace this new manufactured housing paradigm?

What say YOU? Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

II.

Trade Restraint or Protectionism?

The Regulatory Control Dilemma Few Talk About Openly,
i.e.
‘Hiding One’s Light Under a Basket, or Protecting it from Wind?’

This subject is difficult to get first hand public information about, from official sources, whether they be government agencies, national advocacy bodies, or corporate executives and related stakeholders. But here’s the historical gist of the matter.

Allegedly, ever since annual shipment numbers of new HUD-Code manufactured homes ‘tanked’ to less than 50,000 per year (down from 372,843 in 1998), by end of year 2009 – and only averaging 54,146/year since then (2009-2014), the federal agency (‘HUD’) tasked with regulating the industry, has supposedly struggled financially (i.e. not enough label license fee income to fully fund the program). In fact, money has been so tight, it’s likely a reason the new manufactured housing installation standards, codified in 2007, have yet to be fully implemented and enforced eight years later.

Then, a couple years ago, effort was made on the federal level, to gauge industry reaction and identify supposed (business) consequences if HUD oversight disappeared from the manufactured housing regulatory scene altogether. While most of the results of this brief field study remain anecdotal, it was easy to see how ‘the industry’ was uncomfortable with even the thought of deregulation. Uncomfortable enough, it turned out, to accept – without protest (that I heard of), a 165 percent increase in label license fees during the Fall of 2014. And now, in early 2015, we learn of a supposedly $-rejuvenated HUD, now intent on enforcing those installation standards of eight years ago!

Why uncomfortable? The HUD-Code manufactured housing industry has learned to live with said national, performance-based building code, one that preempts all local housing codes! And since the code’s implementation in 1976, the manufactured housing industry, to its’ credit, has turned this otherwise regulatory lemon into sweet lemonade – in time, supplying up to 25 percent of the national housing market share of new homes in 1998. Eleven years later, that percentage plummeted to less than 5 percent and has remained there for the past six years.

But here’s ‘the rub’. Is the manufactured housing industry’s supposed reluctance to deregulate, a form of ‘trade restraint’ (i.e. Perpetuating a significant ‘barrier to entry’ for would be new manufacturers, among other factors), or ‘protecting’ it from other (predatory) housing producers, including local zoning boards, who’d likely use deregulation to outlaw manufactured housing altogether? In other words, does HUD regulation also serve as a basket of sorts, dimming our ‘affordable housing’ message to otherwise prospective homebuyers (i.e. When was the last time you saw, read, or heard of any overt, let alone covert, promotion on the part of HUD, encouraging American citizenry to ‘Buy a manufactured home!’? Maybe never, and also our ‘protector’, again, from other types of less affordable shelter who’d be only too happy to see us go away?

All this is the sort of pithy trade conversation, evidently going on behind closed doors in Washington, DC. but certainly not in pubic circles, among – again – government agencies, national advocacy bodies, corporate executives and their stakeholders. Bottom line? Which is indeed Best for the majority of us? Business as usual, at the whiff and whim of HUD-Code home manufacturers; or ‘turn us, as an industry, loose in the housing market place, to create a new business model that works better than the one we suffer today – realizing the significant risks that go with doing so?’ As long as it’s not talked about openly and seriously, it’s doubtful we’ll ever know, let alone see it happen. Just telling you sheep…

Back to the reason we’re, as an industry and realty asset class, way overdue for a National Strategic Planning Meeting, facilitated by the two national advocacy bodies presently representing manufactured housing in Washington, DC.; both effectively controlled by HUD-Code home manufacturers and no one else. So, ‘Yes’ or ‘No’ to the status quo?

When we distributed a DRAFT copy of this week’s blog posting to the dozen MHIndustry businessmen and women I consider to be ‘Serious Thinkers & Contemporary Influencers’, we received this (edited) reply from one of them (a state MHAssociation executive):

IF HUD ‘went away’, what would we lose? Lots!

Local & state building code legislators and enforcers would pressure the MHIndustry into modular housing code construction regulation. Modular home production is a fraction (@50+/-%) of HUD-Code home shipments (e.g. 64,331 manufactured homes in 2014).

In states where RVs & modular homes are banned from LLLCommunities, laws would have to be changed to allow such sitings. Until change is effected, only ‘mobile homes’ & aging ‘manufactured homes’ would be available; no replacement manufactured homes.

State tax codes often provide tax relief for HUD-Code manufactured homes (e.g. sales tax exclusion of 35% in WI). And real estate taxes are oft supplanted by lower personal property or user taxes on HUD-Code manufactured homes. Not available to modulars.

So you see, this is not a simple Yea or Nay issue, for sure. But it certainly is one worth talking about openly – if and when we can get the elected and salaried leaders of manufacturer-controlled national advocacy bodies to arrange for us to do so during year
2015!

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