Manufactured Housing to the Rescue & a Personal Message

COBA7® via community-investor.com Blog # 330 Copyright @ 4 January 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 63304764

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

I.

Rare have been opportunities, to directly address needs for increased ‘home ownership’ & ‘affordable rental housing’ by a HUD secretary. Well, such an opportunity is now; and hopefully, HUD Secretary Julian Castro will read this blog posting, Believe & Respond!

II.

I’m not good at baring my soul in public, certainly not on the internet. But I was inspired recently, to finally understand the import of ‘WHY I do what I do’, for friends& peers owning/operating LLLCommunities in the U.S. & CN. Hope You Sense the Passion!

I.

Manufactured Housing to the Rescue!

HUD Secretary Julian Castro’s dilemma: How to 1)‘spur homeownership while promoting more 2) affordable rental housing’? The answer is simple: HUD to promote 1) new HUD-Code manufactured housing, sited as ‘rental homes’ &/or ‘contract sale’ units, on 2) rental homesites within 50,000+/- land-lease-lifestyle communities (a.k.a. manufactured home communities) located throughout the U.S. today! Hey, HUD already regulates us!

First, a little background. In a recent feature article, titled FINDING EQUILIBRIUM, in the December 2014 issue of Multifamily Executive magazine, writer Lindsay Machak, describes HUD secretary Julian Castro’s dilemma in this manner:

“…the nation’s homeownership rate continues to decline – from a high of 69.2 percent in 2004 to today’s 64.4 percent. How can he spur homeownership at a time of tight mortgage restrictions while also promoting a more affordable rental market, as he recently discovered, is anything but affordable?” p.27

In the same piece, Stan Humphries, chief economist at Seattle-based Zillow, put this spin on the same matter:

“The fact we’ve ignored affordable rental housing for so long is coming to repercussion now for homeownership. Today’s renters are tomorrow’s buyers. The fact that rents are unaffordable makes it very hard for them to save up and get a down payment.” P.27

Neither writer likely has knowledge of key, timely, multiple, overlapping roles 1) HUD-Code manufactured housing; 2) land-lease-lifestyle communities in general; and 3) rental homes as well as ‘contract sale units’; and 4) rental homesites in particular, already and routinely play in ‘homeownership’ & ‘affordable rental housing’ scenarios! Do you? If you’re a LLLCommunity owner/operator, you almost certainly do, especially if you’re one of 500+/- property portfolio owners/operators, of whom 111 participated in a survey this Fall, to prepare the seminal 26th annual ALLEN REPORT (a.k.a. ‘Who’s Who among LLLCommunity Portfolio Owners/operators Throughout North America!’).

Here’s what we learned about ‘rental homes’ & ‘contract sale homes’ from statistics published in this latest ALLEN REPORT, distributed during January 2015, as a lagniappe in the Allen Letter professional journal.*1

“Slightly more than 40 (that’s 36 percent of the 111 reporting firms) LLLCommunity owners/operators report a total of 35,605 rental (manufactured) homes occupied on-site in their properties. Two mega-portfolio owners/operators alone report more than 10,000 rental units apiece! And when their combined 20,635 rentals are removed from the mix, it leaves an average of 374 rental units per property portfolio among the remaining firms. Then there’s this: virtually the same number of portfolio ‘players’ also report an average of 370 ‘contract sale’ (manufactured housing) units in place among the same properties! Bottom line? Manufactured housing rentals and contract sale units, at least this time around, are equally represented among 40+/- reporting property portfolios comprised of land-lease-lifestyle communities siting manufactured homes!” Quoted from email correspondence between GFA &o Carl Pearse, a Florida-based professional property manager, dated 19 December 2014.

Given HUD’s regulatory oversight of the manufactured housing industry since 1976, secretary Julian Castro probably already knows – or should have at least been informed by his MH administrator, Pam Danner, esquire, (She was emailed a copy of the previous paragraph in mid-December), that

1. On a cost per square foot basis, according to statistics published online by the Manufactured Housing Institute, the cost of HUD-Code manufactured housing, on the average, is at least 40 percent less than site-built housing, not including the value of underlying, improved realty.

2. Where rental homesite rent rates are concerned, many, if not most, land-lease-lifestyle community owners/operators attempt to keep monthly homesite rents at 1/3rd the amount charged by the largest 3BR2B conventional apartment or townhouse communities in the same local housing market, after adjusting for how utility charges are handled.

3. Reappearance, since around year 2005, of ‘rental homes’ and ‘contract sale’ units on-site in land-lease-lifestyle communities. This was a common phenomenon too, during late 1970s & early 1980s, as a means of ‘keeping the site rent meter running’, due to limited access to chattel capital to finance home sales on-site. Such home rental and contract sale arrangements, for the most part, are helpful and affordable states of affair for would be homeowners/site lessees who can’t afford housing elsewhere.

How so? Not only does the new housing product cost considerably less than site-built housing, but LLLCommunity owners/operators often sell new homes at close to the wholesale (plus freight & setup charges) prices they paid the factory, minimizing their profit margin(s). And if rental homesite rents, on occasion, appear to be exorbitant – and they can be, there’re usually other such properties in the same local housing market, charging less. Today, at least four major HUD-Code home manufacturers, including the Big 3-C home manufacturers, controlling 70+/- percent of national market share of factory-built housing, directly or indirectly, offer new home finance packages via LLLCommunity owners/operators. There’s only one thing missing; read on….

A summary of this business model goes as follows: Need affordable rental housing? Go to nearest LLLCommunity, where rental units are in place, and rent a manufactured home. Then, as one’s financial picture improves, convert home ‘renter’ to ‘homeowner/site lessee’, often remaining in the same home! This is happening day in, day out, in this unique, income-producing property type, throughout the U.S. However…

A key piece is missing from this timely and affordable housing business model: ‘Understanding, Backing, & Promotion’, by HUD Secretary Julian Castro – of the very shelter manufacturing program his department has been regulating for 39 years! And not only that, know there’re rumblings in the manufactured housing industry today, for some sort of widespread branding and advertising program, offering the affordable HUD-Code product and LLLCommunity lifestyle, to would be homebuyers/site lessees nationwide!

Secretary Julian Castro, are you listening? We have this multifaceted answer to your ‘homeownership’ & ‘affordable rental housing’ dilemma already in place. Now is the ‘Time to Talk to All of Us about It!’ *2

End Notes.

1. 26th annual ALLEN REPORT is available for purchase @ $544.95. Or, for the same $ amount, affiliate with the Community Owners (7 Part) Business Alliance®, or COBA7®, and receive said report, along with a year long subscription to the Allen Letter professional journal, & a dozen Signature Series Resource Documents, a.k.a. SSRDs: mix of directories, official state of the MHIndustry & LLLCommunity asset class, industry terminology glossary/lexicon, and popular Industry Briefing Sheet…To order, simply phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

2. Manufactured Housing Association for Regulatory Reform, a.k.a. MHARR @ (202) 783-4087 – Mark Weiss, esquire.

Manufactured Housing Institute, a.k.a. MHI @ (703) 558-0678 – Dick Jennison.

Community Owners (7 Part) Business Alliance®, a.k.a. COBA7® @ Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 (not a lobbying entity, but an alliance of land-lease-lifestyle community owners/operators in the U.S. & CN.) – George Allen, CPM®Emeritus, MHM®Master

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II.

A Personal Message from George Allen, to his Friends in the Manufactured Housing Industry

I now understand WHY I’ve been driven, for the past 35 years, to serve your information, resource, communication, networking, and training needs; as fellow LLLCommunity owner, property manager, consultant, author, newsletter writer, book publisher, meeting planner, and professional property management trainer/certifier. I’ve known from ‘day one’, in early 1980, I wanted you to have what was not available to me, as a first time property manager of (then) ‘mobile home parks’.

This realization was confirmed recently, on a couple pages in a book titled LeaderXShift, by Dr. Gary L. Johnson, Moeller Printing, 2013.

My epiphany was inspired by this statement: “Leaders must know their mission, protect their mission, and be willing to pay the price of fulfilling their mission – it’s all about ‘the why’.” My WHY, and Yes, it is!

Johnson goes on to paraphrase from a book written by Simon Sinek, Start With Why (2009), with this summary:

“…most companies and organizations approach business from the outside by first knowing WHAT they do, then knowing HOW they do business, and with only a few of the people knowing WHY they exist. The majority of their constituents (i.e. management, labor, shareholders, members, etc.) know WHAT products or services they provide, and some of the constituents even know HOW they are provided, but very few individual s know WHY they do what they do.” Pp.48 & 49

Sinek continues, “…effective companies and organizations (however), work from the inside out. The majority of their constituents not only know WHAT they do and HOW they do it, but importantly , they know WHY they exist. They know WHY they exist because these businesses and organizations start with why. They thoroughly and repeatedly communicate their why.” P.49

And I’ve tried to do ‘just that’ over the years, now decades. Sure, I could have likely ‘made more money’ concentrating on the real estate investment and fee management sides of our original business model at (the early) GFA Management, Inc., but I didn’t. When offered opportunities, in the mid-1980s, to write columns for The Journal and now defunct Manufactured Home Merchandiser magazines (also Community Management and Modern Home magazines too), I did so, in a sincere effort to share Lessons Learned as a young property manager, eventually as a (then) manufactured home community owner. At all times, ‘My WHY was My GOAL’: to assist peers in the manufactured housing industry, and owners/operators throughout the land-lease-lifestyle community asset class – beginning with the inaugural ALLEN REPORT back in 1988.

It’s now year 2015, and my ardor has not waned. If anything, My WHY has become stronger, now there’s a transition vehicle in place to ensure continued serving of my/our business constituency for years, yes decades, yet to come!

That vehicle? The Community Owners (7 Part) Business Alliance®, or COBA7®. It’s more than a year old now, with 200+ paid affiliates, a.k.a. MHInsiders on board. That number is expected to swell to 400 by year end 2015. Why? Because of ‘My WHY’ has become ‘COBA7®s WHY’ since early 2014, continuing to aptly claim…

U support US & WE serve U!

Already, most LLLCommunity owners/operators throughout the U.S. & Canada know there’s only one entity routinely fulfilling these seven key functions in their behalf:

• Ongoing statistical research, e.g. annual ALLEN REPORT. 26th edition, due out January 2015, is by far, the ‘biggest & best’ ever penned and published!

• Updating and distribution of a dozen Signature Series Resource Documents, one per month all year long; plus, addition of several new SSRD-PLUS resources.

• Weekly and monthly online and print communication keyed to manufactured housing & LLLCommunity professionals via blog posting and two newsletters.

• Superb networking opportunities, via annual international networking roundtable and FOCUS Groups as needed or requested by COBA7® MHInsiders.

• Deal-making opportunities via unique relationships and special meeting venues

• Professional property management training and certification via the Manufactured Housing Manager® or MHM® program, via one day seminars & correspondence

• National advocacy ‘as need be’; to date: Official ombudsman (press) & historian for the manufactured housing industry and LLLCommunity asset class.

Yes, those seven functions comprise ‘My WHY’, now ‘COBA7®s WHY’ for serving YOU going forward into year 2015 and beyond, adding to the 35 years already past! So, if not already affiliated with COBA7®, do so today, by phoning the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

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