Haney, Beach, BOFUS & more….

Blog # 242 Copyright 2013 14 April 2013

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

I.

Neal Haney – IMHO, ‘Gets it Really Right!’

II.

Ned Beach Parses the ‘HUD/no HUD’ Issue

III.

Where to Find BOFUS in Vegas this week

IV.

Next Week: ‘New Era Dawns for LLLCommunity Owners’

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I.

Neal Haney, IMHO, ‘Gets it Really Right!’

Manufactured Housing Communities of Arizona’s perennial president, Neal T. Haney (land lease lifestyle community fee – management company executive par excellence), writing in the March – April 2013 issue of Today & Tomorrow takes his readers on a reflective ride 12 years back into manufactured housing/land lease lifestyle community history, with a swift return to the changed present, and his hope for our collective future.

“I recently read an article that appeared in this newsletter 12 years ago. There were two main thoughts. One dealt with the changes taking place in our industry. And since that article, changes have indeed taken place. For example, many (home) manufacturers in business 12 years ago are gone. Those who remain have closed many of their facilities and have the lowest production levels in more than 30 years. LLLCommunities that enjoyed occupancy levels over 95% now struggle to keep occupancies at 80%. The government, both federal and state, continue to impose new regulations and additional costs detrimental to the MHIndustry. It’s been a tough 10 years.”

The other thought? “But the good news is things continue to change. LLLCommunities are more conscientious at providing facilities and services specific to their unique client base. By eliminating unneeded or unwanted facilities and services, operating costs are maintained at a lower level. Home manufacturers now recognize the number of vacant rental homesites needing to be filled. And they’re now working with community owners, to provide homes appropriate to smaller sites, and within a price range that allows us to truly refer to them as ‘affordable housing’.”

“At a national meeting five years ago, I heard a speaker sounding the death knell for our industry and asset class. I think instead, we are actually seeing a rebirth of the industry that’ll take us back to days when we were considered ‘a quality lifestyle at affordable prices’.” NH. (Moderately edited. GFA)

Lest you take Neal’s remarks lightly, know he’s been plying this trade for more than 30 years, as a successful entrepreneur businessman; and frankly, he’s one of but a very few of my ‘go to’ MHIndustry/LLLCommunity professionals in Arizona!

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I.

Ned Beach Parses the ‘HUD/no HUD’ Issue

OK, I’m letting the ‘cat outa the bag a little here’, by introducing you to my long time correspondent, Ned Beach; retired – but – still – knowledgeable & articulate, regarding the HUD – Code manufactured housing industry.

As most blog floggers (readers) of this weekly posting know, I recently introduced the timely and heady topic: ‘What effect would it have on your business interests, model, etc., if HUD was soon and completely removed from federal regulatory oversight of the manufactured housing industry?’ This is not a casual, pipe – dream question! Frankly, it’s being asked of (home) manufacturing executives, suppliers, etc., across the U.S. by a team of interviewers. And here’s ‘the rub’. This question is being asked – and answered – with little to no aforethought, on the part of those being queried and answering. Indeed; at first blush, the ‘question & probable kneejerk answer’ appear a God – send, i.e. ‘Regulatory freedom after 37 years! Yea!’ BUT, is that really the case? Maybe not.

Remember last week’s blog posting on this topic? In it, a sober and reasoned response to said question was offered by Danny Ghorbani of the Manufactured Housing Association for Regulatory Reform or MHARR. He used the simile of a three – legged stool to make his point(s) there’re at least three interrelated reasons why HUD’s disappearance from its’ regulatory role, where manufactured housing is concerned, would be a very bad day for the industry. If you don’t recall why, suggest you reread the earlier blog posting, here at community-investor.com, to learn and understand the reasons.

In the meantime, Ned Beach, a retired manufactured housing executive, who’s long functioned as an informal sounding board for me; and other MHIndustry folk, recently sat back and gave this ‘HUD/no HUD’ issue some reasoned thought, tempered by long experience ‘in the business’. Here’re Ned’s thoughts on the subject:

“The effect(s) of closing the MH/HUD relationship today would be difficult; but would likely turn the fabrication of housing into something akin to what the NAHB has already accomplished relative to pre – fab, modular, and other (factory – built) specialty products. National codes would become the guidelines, to which manufactured housing would be built. For example, years ago, John Slater, an excellent engineer and working member of our industry, developed housing products meeting the ‘real’ building codes, able to be manufactured in plants, and transported to sites to be installed on pillar foundations. As we found out in the modular business, we didn’t need a national code to be able to meet the needs and requirements of towns, cities, counties, and states, in our chosen markets; we simply complied with them.”

“A downside to local code compliance, is not enjoying any, or at least as much, ‘experimental’ methodology, from which new, better and more economical processes, products and methods would or could be developed. This no different from dealing with the inflexible HUD ‘performance’ requirements. For those of us still in touch with the MHIndustry, we know a lumber shortage crisis is upon us. However, the local codes generally do not allow for much economical substitutes.”

“Could the MHIndustry survive and succeed without HUD oversight? Absolutely! But like many others ‘things’ about the leaders of our industry, ‘We don’t like change!’. So, could land lease lifestyle communities develop 30 year leases, with five year rent rate adjustment points, in order to be attractive to long term home financing? Yes. So can MHRetailers adjust and become builder/contractors, accepting responsibility for a new ‘land and home’ project, and derive income from the project at large? (Yes – but beware of repeating errors experienced at the turn of the century when MHRetailers attempted to compete head – to – head with site – builders). So can factories also learn to build to local building codes, homes that can be installed anywhere, and sized and designed for the need, especially where (functionally obsolete) rental homesites in land lease lifestyle communities are concerned. And the last question: Can we be competitive with other types of housing? Yes, if we work at it. And therein lies the show stopper: Do we want to survive and thrive as an industry; or continue to die on the vine, as we have been doing these past five plus years?” Relate that final question to the HUD/no HUD issue of the day!”

“Good post, George, got the juices a – flowing!” (Moderately edited. GFA)

***

III.

Where to Find BOFUS in Vegas this week

To date, more than a dozen of you have inquired as to how we might connect at the MHCongress in Las Vegas this coming week. While I arrive Tuesday afternoon, to attend no fewer than three corporate receptions and Lou Vela’s state dinner, BOFUS will be on the exhibit hall floor most of the day Wednesday – except for two formal ‘State of the MHIndustry & LLLCommunity Asset Class’ presentations I’ll be making, one mid – morning, and one mid – afternoon. And late Wednesday afternoon, two more gala receptions, and Security Mortgage’s ‘by invitation only ‘ special dinner soiree. Flying home early Thursday morning – with lots to write about in the next blog posting!

When we do hook up, probably mid – day Wednesday, before and after the annual Awards Luncheon, REMEMBER to ASK me FOR your TOAST! You’ll be glad you did.

So, what else is going on these days? Well, on 24 & 26 April, I’ll be in Chicago finalizing plans for the 22nd International Networking Roundtable at the Hilton/Chicago Indian Hills Resort, 18 – 20 September. Have you marked this on your planning calendar yet? If you’re a land lease lifestyle community owner/operator, you already know this is the single seminal annual event designed solely for your educational, interpersonal networking, deal – making needs! Themes this year? Two. Celebrating our collective legacy as land lease lifestyle community owners/operators, via special presentation by the staff from the RV/MH Heritage Foundation’s Hall of Fame, Museum & Library, in Elkhart, IN., and, 20 years of national advocacy thru the eyes of one of the 8/31/1993 founders and early chairman of the NCC division, Gary McDaniel. Also, in support of ‘selling & self – financing new & resale homes on – site’, we plan to have Community Home Series or CSH model homes on display again this year. IMPORTANT. To ensure YOU receive an ‘invite’ to this ‘by invitation only’ event for LLLCommunity owners/operators, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or email: gfa7156@aol.com Why is this so important? We promote this event three ways: direct mail to all 500+/- portfolio owners/operators of LLLCommunities, to subscribers to the Allen Letter professional journal, and via names of previous year roundtable registrants. So, if you’re not on one or more of those three lists, you likely won’t receive an invitation to attend. So ‘call or write and let us know of your interest!’

29 & 30 April. As many as 20 land lease lifestyle community owners/operators will convene, in Davenport, Iowa, with Bill Carr of Rainmaker Associates, to spend time working together on this common interest: ‘Selling and self – financing new and resale manufactured homes on – site in this unique, income – producing property type’ – with an emphasis on mortgage financing and being in compliance with all state and federal regulations thereto pertaining. Hey; I’ll certainly be participating; how ‘bout YOU? For more information, contact Bill directly via (800) 336-0339.

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IV.

Next Week: ‘New Era Dawns for LLLCommunity Owners’

Read all about it – if & when the timing is right. Next week? Maybe, maybe not. In any event, I appreciate your continued patience and support!

Interestingly however – and this has been pointed out repeatedly of late, by land lease lifestyle community owner/operator peers; the longer we await the inevitable dawning of a new era for our asset class; obvious clique nepotism and council inactivity effectively sunset the demoralizing ‘business as usual’ catharsis we’ve suffered these past few years.

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

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