Time & Circumstances OK for National Ads & Branding?

Blog # 375 Copyright 2015 COBA7® 29 November 2015; communit-investor.com

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 national advocacy voice, official ombudsman (press), 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 = ‘U Support US & WE Serve U!’, & Goal of its’ print/online media = to ‘Not only inform & opine, but transform & improve MHBusiness Model Performance’

INTRODUCTION. Few manufactured housing-related topics receive ‘more lip service & less action’ than the widely perceived need for improved public image and some sort of brand marketing for our factory-built housing type, nationwide. Once again, some suggest time and circumstances are ‘right’ to revisit and address this dual need. Frankly; I’m not at all sure that’s the case. Hence this exposing of an ongoing selfish streak within one key segment of the MHIndustry, and the inability of another key segment, to support a return to prosperity! And if those two reasons aren’t enough to derail the current notion to advertise and brand nationally, there’s at least a half dozen secondary speed bumps along that rocky way. GFA

Part II is a last minute ‘add on’ to this week’s blog posting. Please read it; and if you can truly help, with suggestions and ideas, please do so by responding via email or the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Thank You Much!

I.

Timing & Circumstances Finally Right for MHIndustry’s 1st National Brand Ad Campaign. (! or ?) Depends on One’s Focus, Perspective & Resources…

It’s difficult to find even one agreed upon focus or perspective among many or most major stakeholders involved in the manufactured housing industry and land-lease-lifestyle community asset class. For example, here’s a perspective where one expects to find universal agreement, but doesn’t, and likely won’t, anytime soon:

• Observe who’s making the most noise, of late, in support of crafting, funding and launching a national (brand) advertising campaign. Who? Just about everyone that’s left (a.k.a. ‘survivors’) in the industry’s print and online trade press (Read November 2015 issue of The Journal); and, Oh yes, along with a few vocal state MHAssociation executives. Then look who’s NOT making any noise to this end – the very folk who’d likely benefit most: HUD-Code home manufacturers in general, the Big 3-C firms in particular: Clayton, Champion & Cavco. Surprised? You shouldn’t be. Historically, the latter group, controlling 70+/- percent of national market share, have long feared smaller, regional home manufacturers would benefit, ‘Hop on the bandwagon-wise’, from their largesse in supplying beaucoup advertising dollars. And to the best of my knowledge, that short-sighted perspective has not changed since Kevin Clayton made a futile attempt to ‘carry those coals to New Castle’ (i.e. MHI’s annual meeting in Texas), back in maybe 2008, following the Networking Roundtable in Mystic, CT., where nearly 200 (then) MHCommunity owners/operators pledged their $$$ support to him!.

There’s another perspective, which likely has tacit (‘understood but not spoken’) agreement among all segments of the manufactured housing industry; that being…

• Not much point in mounting a national (brand) advertising campaign in behalf of manufactured housing until ‘easy access to chattel capital’ returns to the industry and land-lease-lifestyle community asset class! That is, unless there’s widespread agreement to compete solely with traditional stick builders for realty market share, where ‘scattered building sites conveyed fee simple’, are concerned. Gasp! I don’t see that happening anytime soon. Why? The last time ‘manufactured housing’ tried that strategy with Developer Series Homes, circa 1998, via Land & Home packaging, we – figuratively speaking – got our nose well bloodied! The sad and lasting results? Today there’re at least 10,000 fewer independent (street) MHRetailers in business, and the number of new home shipments plunged to a 60 year nadir between 1998 & 2009. However, Community Series Homes, since 2009, have picked up some of the slack (i.e. Annual plunge in home shipment volume from 372,843 in 1998, to only 49,789 in 2009; has rebounded slightly to 64,331 by year end 2014), increasing the percentage of new HUD-Code homes shipped directly into LLLCommunities for ‘sale’: from 25% in 2009 to more than 33% by year end 2014, with 40+% expected by year end 2015. *1 And we continue to await the return of chattel capital to the manufactured housing industry.

Other foci and perspectives? Beyond the internecine (‘mutual slaughter’) squabbling among home manufacturers (…& two national advocacy entities…), and ongoing lack of chattel capital for in-community lending perspectives just cited, there’s a plethora of fad, trendy, and otherwise (often) short-lived foci and perspectives that garner attention one moment, sometimes disappearing from view the next, some maybe to return, others maybe not; for example:

• The Tiny House Movement is manifested ‘within & outside’ LLLCommunities as ‘park model RVs’, RVs for a season, even ‘single module’ modular homes.*2 Frankly, they’re needed NOW, to fill ‘functionally obsolete rental homesites’ among the estimated 250,000 vacant rental homesites in LLLCommunities throughout the U.S. today! What’s aggravating, in this instance, is the value and utility of ‘granny flats’ has long been recognized – but not encouraged – by our industry’s federal regulator, HUD; to the point that agency long ago dubbed them Accessory Dwelling Units, or ADUs in short. Another example of government unnecessary overreach?

• Heavy (financial) regulation of new and resale transactions ‘within & outside’ LLLCommunities via S.A.F.E. Act, Dodd-Frank legislation, CFPB, & more. Many, if not most deep-pocketed property portfolio firms have learned to live with these onerous $ regulations in one manner or another; the smaller property owners/operators? Rarely sell and or seller-finance new and resale homes, if at all; or ignore the consequences of being non-compliant; creating a classic ‘Damned if you do & damned if you don’t’ business conundrum.

• Intermittent volume of ‘park closures’, on one hand; ‘raw land development’ & ‘existing LLLCommunity expansion’ on the other. The last blip in development of new LLLCommunities occurred circa 1998 when average national physical occupancy, according to that year’s ALLEN REPORT, was 95%. Peak year for ‘park closures’ was circa 2007, just as the commercial property development overheated, and the realty finance bubble burst, ushering in the Great Regression.

• Too high wholesale price of new HUD-Code homes; that when combined with escalating freight charges (‘Notice how they rise with the price of fuel, but rarely trend downward?’), home setup expenses (Beware enforcement of 2007 Federal Installation Standards during 2016), mandated landscaping package costs within LLLCommunities, and type/amount/terms of seller-financing (if) available on-site, effectively price many prospective homebuyers/site lessees ‘out of the market’. Bottom line? Whose ox is to be gored? The home manufacturer or LLLCommunity owner/operator? In the latter case; an increasing number of LLLCommunity owners/operators, local housing market permitting, reduce or ignore home sale profit margins, ‘to make the deal work’, counting on annuity type income from ground rent over the years and decades to come. Manufacturers now negotiate bulk purchase agreements, for new homes, with larger property portfolio folk; but this does little to nothing, cost-wise, to help the smaller LLLCommunity owner/operator, who’ paying full price for his/her new home(s).

• Persistent resistance to needed change, by independent, ‘company stores’ & in-community home sales operations, away from effecting homebuyer- ‘risky’ transactions to homebuyer – ‘affordable’ ones; e.g. Reduction from 50 to 30% of AGI to pay PITI, site rent, & household utilities! *3 This is a difficult change to effect, as it’s often counter to decades of (oft predatory) corporate practice. Best resource for understanding the difference between ‘risky’ & ‘affordable’ home buying transactions – calculating the appropriate housing ‘price point’ along the way, is the ‘Ah Ha! & Uh Oh! Worksheet! – available FREE from COBA7®. *4 If you don’t have this tool, or aren’t using it, you need it!

• Rumored conversion from ‘vehicle titling’ for homes in LLLCommunities – as proof of home ownership, to a realty-financing-friendly form of ownership yet to be articulated and codified. Some believe the day will come when all housing within a LLLCommunity will benefit from realty-type vs. chattel capital type financing. Downside? Likely higher ad valorem realty type taxes, for starters.

And there’re even more foci and perspectives to identify and parse. But the point being, right now in manufactured housing history, we don’t yet have ‘our collective act together’ enough to plow new marketing (image) (brand) ground via print and online media coverage and paid advertising!

This industry direly needs 1) unity (among all segments of the industry – not just the ‘largest of players’, as well as between national advocates); 2) leadership that talks with and among the national platforms already in place (e.g. MHI, MHARR, COBA7®, & AHA, for starters); and, 3) an independent Think Tank worthy of the support of, and participation by, capable, experienced, motivated business stakeholders with the Best Interests of the industry & realty asset class in heart and mind! Similar to what the Urban Land Institute’s now defunct Manufactured Housing Communities Council started to do five years ago, but never really accomplished. So there you have it, in this final paragraph, the 1, 2, 3 punch needed to eventually position manufactured housing for its’ first National (Brand) Advertising Campaign: Unity + Leadership + Think Tank participation!

End Notes

1. These statistics, accumulated from a variety of sources (e.g. IBTS, MHI, U.S. Census Bureau, etc.) are compiled by the Community Owners (7 Part) Business Alliance® to benefit manufactured housing aficionados & LLLCommunity owners/operators nationwide. To affiliate with COBA7®, phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

2. The presence of no fewer than six different types of shelter, within LLLCommunities, vs. just pre-HUD ‘mobile homes’ & post-HUD manufactured homes, to include: ‘park model RVs’, RVs for a season, modular homes, and site-built homes constructed to look like HUD-Code homes, has given rise to the moniker land-lease-lifestyle communities, or LLLCommunities, in short.

3. AGI = Annual Gross Income; PITI = loan principal, interest, taxes, insurance.

4. ‘Ah Ha! & Uh Oh! Worksheet!’ Available FREE, by phoning the Official MHIndustry HOTLINE listed in End Note # 1 above. This is the sort of hands-on, time-proven professional property management tool available to LLLCommunity owners/operators only from the Community Owners (7 Part) Business Alliance®.

II.
COBA7®, in 2016, to FOCUS on Helping HUD-Code Home Manufacturers Sell More ‘Community Series Homes’ into LLLCommunities Nationwide!

During December, the Community Owners (7 Part) Business Alliance® is sending correspondence, an Action Plan & Time Line, to a half dozen Midwest-based HUD-Code home manufacturers, as many state MHAssociation execs & board chairmen, and select owners/operators of land-lease-lifestyle communities, describing…

‘Two Days of Manufactured Housing Plant Tours & New Home Sales & Financing Seminars Targeting Owners/operators of LLLCommunities, large & small, throughout the Midwest’

This ‘first time ever’ program, designed to facilitate the ‘selling of more Community Series Homes into LLLCommunities’, has been materializing during 2015. Now, as COBA7® begins its’ third year of operations, it kicks into high gear – as correspondence recipients complete enclosed survey forms and return them before month end, December.

Why is this blog posting talking of this emerging marketing plan here and now? Because it’s hoped the innovative program ‘goes national’ by this time next year. So we’re inviting ‘interested parties’, from all segments of the MHIndustry, to ‘get on board’ NOW, to help plan and facilitate the Midwest debut, then carry successful aspects of ‘Sell more new homes into LLLCommunities’, large & small, to other regions of the U.S.

So, if these four paragraphs have caught your attention and passion for manufactured housing, and you want to stay abreast of what’s going on – and help, during the months ahead, please let me know ASAP, via email, correspondence, or phoning the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

You don’t have to be an affiliate of COBA7® to participate; but, if you manufacture HUD-Code homes, and or own/operate one or more land-lease-lifestyle communities (a.k.a. manufactured home communities) in the U.S. and or Canada, you should want to support the only international advocate for our industry and realty asset class! Request a COBA7® brochure and decide. NOTE: Option II affiliation, gets you a copy of the 27th ALLEN REPORT in January. And the way the ‘Who’s Who’ is shaping up already, you’ll want a copy for sure!

Finally. I’ll be team-teaching the popular Manufactured Housing Manager® professional property management (‘PM’) certification class with Katie Hauck, MHM®, on 19 January, in Louisville, KY. ‘Come on down & get PM trained & certified!’ Then, stay over for the Louisville MHShow on 20 & 21 January. And, while you’re in Louisville, we can talk about the ‘Two Days of Plant Tours & New Home Sales & Financing Seminars’ in person and at length! See you in Louisville!

George Allen, CPM & MHM

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