Interesting MH $$$ NEWS (&) New Face of MHI in Year 2020

September 26th, 2019

September 2019; Copyright 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for land lease communities.

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764. Also email gfa7156@aol.com & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U! Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable attainable housing! Next MHM class 10/7/2019

INTRODUCTION: Yes, we are in the midst of the Fall meeting season. So far, the 28th Networking Roundtable and MHI’s annual meeting are behind us. Yet to come? The rapidly growing and highly popular SECO Conference in Atlanta, GA., @ 8-10 October 2019. Will I see you there? Sure hope so. This is the only regional cum national venue, attracting 500+/- attendees, that’s ‘planned & hosted BY land lease community owners/operators FOR land lease community owners/operators’! For more information, visit 2019 SECO Conference

I.

INTERESTING MH $$$ NEWS

CFPB’s recently-released HMDA Summary tells us: During year 2018, 99,200 manufactured housing loans were secured by ‘home & land’, while 51,000 chattel loans were secured by ‘home only’. And median interest rate for chattel loans was 8.29%, while median rate for non-chattel loans was 5.125%. Also during this time frame, 39.47% of manufactured housing owners were younger than 25 years, and 25.47% were older than 75 years. This is the first HMDA file to distinguish between chattel and real estate-secured manufactured housing loans. Section 6.8, beginning on page # 63, of said report, covers these new data points and more.

Visit: https://files.consumerfinance.gov/f/documents/cfpb-new-revised-data-p;oints-inhmda-report-pdf

II.

MHI’s Annual Meeting in Savannah, GA

Preview: ‘Good-bye’ leaders Stegmayer & Jennison, and ‘Hello’ Berkshire-Hathaway; no name yet for ‘new type’ manufactured homes; research aims to head off national rent control; &, ‘affluence gerrymandering’ alive & well at this national MH venue.

Manufactured housing says affectionate ‘good-byes’ to elected leader, Joe Stegmayer, as his second term as MHI chairman ends; and, salaried MHI exec Richard Jennison, as he retires at year end. No named successor to Dick Jennison at this time.

Three Berkshire-Hathaway-related corporate executives to lead new Manufactured Housing Institute (‘MHI’) board in year 2020: Tom Hodges, esquire, of Clayton Homes as board chairman; Eric Hamilton of Vanderbilt Mortgage Finance as treasurer, and Tim Williams of 21st Mortgage as board member. Leo Poggione of Craftsman Homes, and recent RV/MH Hall of Fame inductee, becomes vice chairman of the board, and Patrick Waite of Equity Lifestyle Properties (‘ELS, Inc.’ – world’s largest owner/operator of land lease communities) will serve as board secretary. Curious. Was there a formal nominating committee this time around?

Good News/Bad News. Bad News, is the ‘new type’ manufactured home, after several years in production and distribution, continues to be formally unnamed. The Good News, is the ‘next gen’, choice, millennial manufactured housing design is close to formal naming by MHI manufacturer members. Let’s hope they ‘get it right’ the first time around! In today’s world of social and political sensitivity that might be more difficult than expected.

National Communities Council (‘NCC’) division is well aware of negative PR and social, business, political turmoil foisted on the land lease community realty asset class, by private equity firms acquiring such properties, and portfolios thereof, then – in too many instances – ‘jacking’ rental homesite rates to generate income needed to satisfy high debt service (mortgage) and investor ROI (‘returns on & of investment’) demands. Their answer? To research the matter during months ahead, then decide if and how to take action.

I’ve been complaining about affluence gerrymandering (‘National trade advocacy entities patronizing high-priced resort venues, discouraging small-size business owners/operators from participating on a level playing field with larger firms intent on dominating a particular industry’), relative to manufactured housing, for decades! Still no change. In this instance, we have a national advocate boasting more than 600 members (some say 800), with only 135 showing up for this annual meeting. Might be because the hotel room rate was $219/night; guest services @ $25 (shuttle to airport); mandatory resort service fee of $28.25 (For what?); and array of state & city taxes & occupancy fees of $35.97; all for a grand total of $308.22/day (less the $25 shuttle fee). How many more would likely attend if the daily total was closer to $208.22 or less? Just saying….

Did You Know? (&) Finally, a Campaign! (&) Clayton to Dominate MHI?

September 19th, 2019

September 2019; Copyright 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for all land lease communities.

To input this blog &/or affiliate with EducateMHC, telephone Official MHindustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email gfa7156@aol.com & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U! Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable attainable housing! Next MHM class 10/7/19

INTRODUCTION: Part I, a potpourri of interesting MHIndustry information. Part II, preliminary thoughts pursuant to planning, financing, and effecting a national advertising and image improvement campaign, via the land lease community segment of the manufactured housing industry. All that’s needed now is a LEADDER. Manufacturers. You paying attention? And Part III. One might say I know ‘just enough’ to be dangerous, where this succession matter is concerned. My hope is, ‘voting members’ of MHI, which I am not, are paying attention to what’s being done (to them), where salaried and volunteer leadership are concerned.

I.

Did You Know?

The U.S. Median Household Income during Year 2018, was $63,179. How ‘bout your county? Visit www.Zipwho.com And, for a copy of ‘Ah Ha! & Uh Oh! Worksheet for calculating new & resale housing values based on Area Median Income (‘AMI’), request it via gfa7156@aol.com

“Treasury Secretary Steven Mnuchin told a Senate committee on Tuesday (10/10/19) he wants to reach an agreement quickly with the regulator (Affordable Housing Finance Agency or AHFA) of Fannie Mae & Freddie Mac, to allow the companies to keep their profits to rebuild capital – a first step in privatizing the nation’s largest sources of mortgage financing.” Quoted from the DAILY; source for mortgage & housing industry news.

According to HUD Secretary Carson, “HUD…elevate the Office of Manufactured Housing Programs within HUD and appoint a Deputy Assistant Secretary to lead it.” Something that’s been a (too) longtime coming!

The 28th Networking Roundtable was a complete success, from beginning to end. Highlights? Stirring keynote presentation by Congressman Trey Hollingsworth, who exhibited a deep knowledge of manufactured housing and land lease communities – and the role they should be filling relative to this nation’s affordable housing crisis. Just as illuminating, were very open ‘Here’s how we did it’ presentations by portfolio owners/operators Mike Callaghan (Four Leaf Properties), Jeff Davidson (Meritus Corporation), and Julio Jaramillo of Evergreen Communities)
During the wrap-up session at this year’s Networking Roundtable, a dozen concerned businessmen and women spent 1 ½ hours ‘talking through’ the continuing need for a nationwide marketing and image improvement program for the manufactured housing industry and or the land lease community real estate asset class.*1 A summary of said proceedings, along with questions begging answers, comprise Part II of this blog. This group pretty much decided to focus their attention on the property type rather than entire industry.

End Note.
1. Such initiatives have started and failed over the years. A decade ago, at a Networking Roundtable in Mystic, CT., Kevin Clayton of Clayton Homes was encouraged by community owners – willing to donate funds, to take a similar idea to an MHI annual meeting occurring in TX during the next few weeks. When the HUD-Code housing manufacturers caucused in private, they nixed the idea, concerned that non-member firms would benefit from their, and community owners/operators, largesse funding such a marketing and image-improvement campaign.

II.

Community & Lifestyle Campaign

What follows are six foci areas – and there could well be others, for consideration before launching any major campaign to market and improve image of communities & lifestyle:

1. What is nexus of the campaign? The land lease community (or whatever it’s to be labeled) and or the multifamily rental community lifestyle, where everyone lives in and cares for their own home.

2. The scope of this campaign? National or regional, with appropriate characteristics/ foci

3. The cost of such a campaign? To be funded by communities.

4. What are unique selling propositions (‘USP’) associated with communities and or lifestyle, and where/how to best get this message out effectively? What platforms?

5. Who to lead this major effort? A national MH advocacy entity, or a capable, experienced, motivated independent third party.

6. Timeline, budget, performance benchmarks along the way

There was much more discussed, than ‘just this’, at the aforementioned informal meeting.

If you agree this is a serious enough matter to be pursued, let me know ASAP, via gfa7156@aol.com. There are individuals waiting to get started on such a campaign. That’s the ‘first acid test’. Another? MHI’s annual meeting, including its’ National Communities Council division occurs next week (22-24 September) in Savannah, GA. Whether this matter is brought up (not by me) and seriously considered, during the NCC meeting, will be a ‘second acid test’!

Whether this community campaign idea flies or dies, will likely be decided by early October.

So, will manufactured housing history, once again, repeat itself – to no end; or, will our salaried and elected national leaders finally recognize the need, catch this vision, and make plans to nationally/regionally promote manufactured housing &/or land lease communities & lifestyle during year 2020 and beyond? It will be interesting and ‘telling’ to watch and see!

III.

MHI Annual Meeting 2019

Smart Succession or Leadership Swamp?

Was there a nominating committee in place, recommending individuals to fill vacancies on MHI’s executive committee, at the annual meeting next week (23 & 24 September)?

Will there be balance among board members, relative to all ‘Big Three C’ firms (i.e. Clayton Homes, Skyline-Champion, & Cavco Industries), represented on the new board?

Will the new executive director of MHI be selected from within present day staff, or from candidates recruited outside the Washington beltway, maybe even outside the industry?

These are a few of the questions coming across my PC in the form of emails this past week. Certainly not much information forthcoming from MHI about any of these matters. That’s ‘lack of communication’ with members, from my perspective.

Best Kept Secrets…Calm Before the Storm (&) Here Comes Preemption Again!

September 12th, 2019

2019; Copyright 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for all land lease communities!

To input this blog &/or affiliate with EducateMHC, telephone Official MHindustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U! Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable attainable housing! Next MHM class @ 9/11/19

INTRODUCTION: Consider reading this week’s blog posting in reverse order, i.e. Part III, then II, and finally, # I. Why? Because Part III talks of important ‘breaking affordable housing news’ on the national level! Part II is your ‘heads up’ WARNING of MH political and leadership maneuverings in Washington, DC. Part I is important in its’ own right: Trade secrets ready for Change, Embrace, & Practice! Next week? Have already started it, describing the Housing Finance Reform Plan, relative to GSEs, released 5 September 2019.

I.

Best Kept Secrets of Manufactured Housing

As one frequently called upon to introduce individuals and firms to the manufactured housing industry and its’ realty segment, land lease communities, there are perennial anomalies (‘something abnormal or irregular’) ever- clouding our otherwise good affordable housing presence! These are two trade secrets that besmirch us, and two underutilized tools of the trade.

1. Secret sin. Manufactured housing industry reports monthly shipments of new HUD-Code homes as two different totals. For example, last week MHI reported 7,131 new homes shipped during July, while MHARR, HUD, NAMHCO & EducateMHC each reported 7,135 units. The source of this data, the Institute for Building Technology & Safety (‘IBTS’), reported to all subscribers, 7,135 new HUD-Code homes had been shipped during July. So, how the difference? MHI takes IBTS’ official tally of 7,135 units, and subtracts 9 Destination Pending (‘DP’) units from it, then adds back 5 DP units deducted from IBTS’ June tally. Did you follow that? Meanwhile, MHARR, HUD, NAMHCO & EducateMHC make no adjustments to IBTS published data. And the secret sin continues. WHY?

2. Secret sin. Manufactured housing industry, in my opinion and in many instances, routinely sets home-buying customers up for potential failure (loan default)! The most widely used of six measures of affordable housing, the Housing Expense Factor (‘HEF’), suggests no more than 30 percent of one’s annual gross income (‘AGI’) be used to pay for total housing costs. With a home sited on a scattered building site conveyed fee simple, this means 30% HEF should include PITI (loan principal, interest, taxes, insurance) and household (utility) expenses. With a home sited in a land lease community the 30% HEF should include PITI, household expenses, and homesite rent. But that’s NOT the way it often works in manufactured housing circles. Rather, the 30% HEF, in both instances, includes PITI, and in the case of the land lease community, site rent. However, household expenses are rarely included! This means a prospective homebuyer, and homeowner/site lessee, can afford to ‘buy more house’ with the 30% HEF allowance, taking on more risk, as household expenses must to be paid ‘in addition to’ the 30% HEF set aside for PITI (& site rent). Consequence? Homeowner winds up paying between 30 & 40% or more HEF for the life of the home loan. So, the secret sin continues. WHY? In this instance, borrower & lender reasons are easy to see….

3. Not a secret sin, but secret nonetheless. How many of you, reading these lines, have heard a ‘State of the Manufactured Housing Industry’ presentation? Most of us have. But how many of you know there’s a more comprehensive alternative ‘State of the MHIndustry’ presentation that includes statistics and trends characteristic of 50,000 land lease communities spread across this country? The ‘secret’ is well enough known, for this ‘more comprehensive lecture’ to be shared annually at the SECO Conference in Atlanta, sometimes at the annual Networking Roundtable, and almost monthly at one or another state MH association gathering. But never has sit been featured at any MHI or MHARR-hosted national event! WHY? Guess you’ll have to ask them. My guess is, they’re manufacturer-dominated organizations, and land lease communities are little more than a tolerated adjunct.

4. New Rule of 72. This unique mathematical formula has been around for awhile, but is still new – a secret? – to many. What is it? Well, first, understand the original Rule of 72. ‘How long will it take to double one’s income at a set ROI (return on investment)’? E.g. ’72 divided by, say, 20% (or .2) ROI = 3.6 years’. Now, the New Rule of 72. ‘How to estimate the capitalized income value of an ‘average’ land lease community, at 100% and 80% occupancy levels?’ E.g. ’72 X 200 occupied sites X $200/month site rent = $2,880,000.’ & ’72 X 160 occupied sites X $200/month site rent = $2,304,000. These are identical values obtained when using the IRV investment formula, where V = I divided by R or Value = NOI divided by cap rate, e.g. 200 sites X $200 X 12 months X .6 (reciprocal value of 40% industry average Operating Expense Ratio) divided by .1 (10% cap rate for an ‘average’ LLCommunity) = $2,880,000. A useful tool, but only for ‘average’ land lease communities, i.e. using 10 percent income capitalization or ‘cap’ rate.

Know what? There are even more ‘secrets’ not described here. Perhaps in a future blog posting.

II.

A Calm Before The Storm, or Worse?

In the words of Bob Dylan, “The times they are a-changin.” During 2017 and 2018, the Manufactured Housing Association for Regulatory Reform (‘MHARR’) encouraged anyone who’d listen, or read their press releases, to form a new national advocacy entity to represent ALL non-manufacturing segments of the manufactured housing industry – even though Manufactured Housing Institute (‘MHI’) claimed to be doing so at the time. Well, by year end 2018, the National Association of Manufactured Housing Community Owners (‘NAMHCO’), was formed in Arizona, with tacit support from Nevada and encouragement from many property owners around the U.S. And in early 2019, the five year old Community Owners (7 Part) Business Alliance (‘COBA7’) was reconfigured as EducateMHC, to be the primary, if not only, for-profit source for all land lease community-focused products (i.e. newsletters, books, forms) and services (e.g. professional property management training & certification, property Performance Evaluations and more).

And now, as year 2020 looms on the industry and real estate asset class’ business horizon, there’s growing concern and rumors about changes in top leadership at one of the forenamed national manufactured housing advocacy entities. At this point in time, details are sketchy, as comments fly and individuals jockey to fill these leadership positions. So, for the time being, the only things penned here are these thoughts:

• Since the manufactured housing industry, and two of its’ national advocacy entities, are dominated financially and leadership-wise by HUD-Code housing manufacturers; and in one case, the three firms controlling 80+/-% of national market (housing shipment) share, is there valid concern said organization might become dominated by one, or another, of the Big Three C firms?*1 Especially, if thru some turn of events, one or another or both other mega-firms no longer sit on the entity’s board of directors?

• It’s well known one national advocacy entity will be in need of a new salaried top executive by year end. What isn’t known, outside the official search committee, is whether this search will extend beyond MHI staff, to the industry at large, or not. There are pros & cons to hiring within either sphere, as well as value of searching for new leadership talent experience, and motivation untainted by past interpersonal relationships. Another concern is whether the new ‘leader’ will continue past practice of parroting board directives, or be strong enough lead in his or her own right?

Enjoy the relative organizational calm in place right now. But know there’re already maneuverings, behind the Washington, DC scene, to fill board seats as well as top salaried and volunteer leadership positions. If you have particular insights into this matter, and are willing to share them with me, in confidence or not, do so via gfa7156@aol.com or phone, the Official MHIndustry hotline: (:877) MFD-HSNG or 633-4764.
End Note: 1. Big Three C firms: Clayton Homes, Skyline-Champion, & Cavco Industries

IV.

Preemption, again?

In the August 2019 report titled ‘Eliminating Exclusionary Land Use Regulations Should be the Civil Rights Issue of Our Time’, author Michael A. Stegman, on pages # 11 & 12, includes this bold, and surely controversial, solution to solving the title issue:

“A state’s failure to (remove local barriers to affordable housing), or make an inadequate effort (to do so), would result in…loss of its ability to issue tax-exempt bonds for housing and of its authority to allocate housing tax credits.” Goes on to say, how “…preemption is a more direct alternative to conditioning federal grants in aid.” And how Congress might “…act directly to eliminate restrictive suburban land use practices by exercising its own constitutional power to regulate commerce.”

Whew! Did you read what I just read, and reprinted here for you? Manufactured ‘housers’ know all ‘bout preemption, and how this industry made that 1974-76 regulatory ‘lemon’ into sweet lemonade. Will same will occur working with local land planners & zoning boards?

This report is chock full of helpful background information on the timely and troubling topic. It documents five presidential commissions and federal initiatives of the past 50 years. Also lists five bullet points describing how regulatory barriers raise housing prices; plus, how barriers reduce and delay housing development; and finally, how barriers increase income inequality and reduce economic growth. These will be detailed in the October Allen Letter.

This report also, to my surprise, details nearly 40 specific measures designed to address the exclusionary land use problem. The list begins with measures proposed during the Obama administration (a.k.a. Development Toolkit 2016) and going forward to today. These aggressive measures will be replicated in the October’s the Allen CONFIDENTIAL! business newsletter.

Both newsletters available, via subscription, at www.educatemhc.com

And there’s so much more ‘new news’ coming down the pike, so to speak, about changes to the federal housing scene, e.g. ‘Housing Finance Reform Plan’ for GSEs, pursuant to the Presidential Memorandum Issues March 27, 2019 – and released on 5 September 2019. More on this heady topic, likely in blog posting # 552 next week.

Good Enough for IHS, but NOT Good Enough for BSHS

September 4th, 2019

2019; Copyright 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for all land lease communities!

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email gfa71546@aol.com & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U! Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable attainable housing! Next MHM class @ 9/11/19

INTRODUCTION: Over the decades, many have likened manufactured housing to be the Rodney Dangerfield of factory-built housing. Part I is a clear example of that metaphor. Part II? A timely but sad example of what greed can do to otherwise ‘affordable housing’ and its lifestyle. And Part III? Simply a WARNING! Does ‘the shoe fit’ your present day on-site new home sales and seller-financing experience? If so, then ‘being forewarned is being forearmed!’

I.

Good Enough For IHS, but NOT Good Enough For BSHS

Specifically,

‘HUD-Code manufactured housing was good enough, as centerpiece, of the HUD & NAHB-hosted Innovative Housing Showcase, on the National Mall during June of this year, but is NOT good enough to be featured, or invited to appear, at NAHB’s Building Systems Housing Summit, 6-8 October, in Pittsburgh, PA.!’

In the August issue of BUILDER magazine, NAHB chairman Greg Ugalde, in ‘Spotlight on Affordable Housing’, identified “…lack of skilled labor, excessive regulatory costs, and an increase in materials prices…” as being main factors that drive up the cost of building a home. He then writes glowingly of the aforementioned Innovative Housing Showcase, “…which included full-sized homes and new building techniques….” Page # 57. Note the lack of mention, that all three full-sized homes, from steel undercarriages to roof peaks, were HUD-Code manufactured homes! So, HUD-Code manufactured housing was good enough for the HIS.

In the August issue of BUILDER magazine, on page # 18, there’s a full page ad inviting readers to attend the Building Systems Housing Summit, 6-8 October, in Pittsburgh, PA. The event is described as being “…the industry’s premier conference dedicated to off-site construction.” – a euphemism, in site-built builder circles, for ‘factory-built housing’. The ad goes on to say “…builders, manufacturers and suppliers of modular, panelized, concrete, log and timber frame homes…” will discover emerging systems-built housing trends and more. Do you see HUD-Code manufactured housing – again, the star of the Innovative Housing Showcase, mentioned anywhere in that verbiage ballyhooing the Building Systems Housing Summit? Me neither. So, HUD-Code manufactured housing is evidently NOT good enough for the BSHS.

Point to all this? Should be patently obvious. It’s OK to showcase manufactured housing to a public who doesn’t know any better (Anecdotally; a builder of site-built homes toured one of the three MHs on display at the National Mall, thinking it was a site-built home, until he was informed otherwise.); but do NOT welcome them (except for Clayton Homes, as that firm was featured in an earlier BUILDER issue) into the inner (political) workings of the NAHB, lest more builders climb aboard the HUD-Code housing train. Somehow, that simply does not make any sense, but that’s certainly the way it is.

Know what? I’d attend the Building Systems Housing Summit in Pittsburgh in October, except I’m committed to speak at the 10th anniversary SECO Conference in Atlanta that week. And know what my topic will be? ‘State of the Manufactured Housing Industry & Land Lease Community Real Estate Asset Class!’ Hmm. Perhaps NAHB folk traveling to Pittsburgh would learn more about factory-built housing reality by patronizing the SECO Conference instead. For more info, visit www.seco.com

Sidebar bottom line? One more example of internecine squabbling and lack of political and advocacy cooperation, i.e. site-builders versus manufactured housing; MHI versus MHARR

II.

Don’t Be ‘Woke’, Then Broke, in 2020!

So, as a land lease community owner/operator, did you heed the advice in blog # 549 bearing this same title: ‘Don’t Be ‘Woke’, Then Broke, in 2020!’? If so, you’ve now read, or are about to read, the September issue of the Allen Letter, learning the full story behind the pernicious (‘highly destructive, ruinous’) threat of national rent control – that could sweep up land lease communities in its’ wake! If you haven’t taken steps to get on board with the Allen Letter, visit www.educatemhc.com

What’s the latest? Well, we’ll know more next week when the 28th annual Networking Roundtable convenes. So far, only NAMHCO, as national advocate for manufactured housing and land lease communities will be represented. That’s short for National Association of Manufactured Housing Community Owners (national lobbyist for the realty asset class). We know already there’ll be owners/operators of some of the largest and most influential land lease community portfolios in North America.

Maybe at the last minute, an executive from MHI will register to attend, but I’m not counting on it. No matter really, as I’ll be traveling to Savannah, GA., on 23 September, to attend MHI’s annual meeting in general, the National Communities Council division session in particular. Will be interesting to see if this timely, nefarious topic (i.e. national rent control) is even on the agenda; brought up during said meeting; or as is most oft the case, left for me to introduce.

MHARR input? Ask them why they promote a new national advocacy entity for post-production segments of the manufactured housing industry, but never patronize the only annual national event focused solely on land lease community owners/operators – the supposed core cohort for any such new group. It’s a mystery.

Finally. ‘Don’t wait for the other shoe (legislation) to drop!’ Exercise care in adjusting your rental homesite rates; encourage your peers – even competitors, to be mindful of applying the traditional 3:1 Rule of Thumb when estimating appropriate rental homesite rates for every market in which land lease communities are owned/operated.*1

Note.
1. 3:1 Rule of Thumb. Conventional apartment unit (3BR2B) rent rates are oft three times the amount charged for land lease community rental homesites in the same local housing market, e.g. $900/month = apartment; $300+/-/month = LLCommunity.

III.

WARNING!

If you’re a land lease community owner guaranteeing home loans underwritten and serviced by an independent third party lender, have you taken contractual steps to ensure complete and accurate disclosure, to you as guarantor, and in writing, of the unpaid balance, including default-related charges added to mortgagor’s account, if and when a homeowner/site lessee defaults on his/her home loan?

If not, do so ASAP! Stories are circulating around the manufactured housing industry, of lenders stating unpaid balances sans documentati

Don’t Be ‘Woke’, Then Broke, in 2020!

August 28th, 2019

2019; Copyright 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for all land lease communities!

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email gfa7156@aol.com & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U! Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable attainable housing! Next MHM class @ 9/11/19

INTRODUCTION: Short and (not so) sweet this week! All kinds of interesting – and at times important, ‘breaking news’ around manufactured housing and land lease communities! This week however, just telling you one thing – the risk some, if not many, property portfolio firms are taking, for themselves (i.e. overreaching profit ploys) and the rest of us (stimulating potentially troublesome regulatory legislation). Not enough space to tell you the whole tale here; you’ll have to read, as Paul Harvey was wont to say, ‘the rest of the story’ in the next issue of the Allen Letter. Not a subscriber? Visit www.educatemhc.com to do so!

I.

Don’t Be ‘Woke’, Then Broke, in 2020!

(‘woke’ = ‘aware of social injustice’, e.g. site rent surfeit)

Caution: Year 2000 MH$ Debacle to Maybe Repeat During Year 2020

To understand what follows, you either had to have been active in manufactured housing between years 1998 & 2002, or have read ‘Upside Down in a Mobile Home Park’, circa 2000. In the latter instance, the muckraking classic can be found in an old issue of Manufactured Home Merchandiser magazine (a casualty of MH$ debacle), or as Figure G, in Chapter 1, of SWAN SONG – available via www.educatemhc.com.

Gist of being ‘upside down’? How deep discounting of housing down payments (e.g. $5500 reduced to $500), then added to loan balance; deceptively generous but short term adjustable rate (‘A/R’) mortgages; and one year of deferred homesite rent, combined to bring about more than 300,000 ‘repo’ manufactured homes valued at more than $1.3 billion by year 2002, according to a CFPB ‘white paper’. Consequences? Loss of easy access to chattel capital going forward – nary to return, even by year 2019; and, plummeting of new home shipment volume from 372,943+/- in 1998 to only 49,789+/- during industry’s nadir year 2009.*1

Now, looking ahead to year 2020. How do some, if not many of us, see this sorry history maybe repeating itself going forward? Simple. This time around land lease communities, as a real estate asset class, are frequently dealing with rental homesite rates being increased quickly and greatly within recently acquired standalone land lease communities, and within property portfolios, often owned/operated by private equity firms outside the manufactured housing industry.

So, like the ‘upside down’ expose’ tale of two decades past, how do today’s inordinate rental homesite rates affect homeowners/site lessees, on one hand; and the owners/operators of subject land lease communities, on the other? That’s more than can be covered here, but will be fully told, in first person fashion, as a feature in an upcoming issue of the Allen Letter.

Two hints. The ability to buy the house needed, and ability to pay PITI (loan principal, interest, taxes, insurance) and household utilities, is severely impaired when rental homesite rates exceed the 3:1 Rule of Thumb guideline widely used since the 1970s.*2 And, the unexpected ‘woke’ effect on land lease community owners/operators who’ve never been through a site rent juggernaut before. It’s not a pretty picture. So, as an owner/operator you owe it to yourself to read and learn from this new expose’!

FYI. This is the fifth time since 1970, the manufactured housing industry has unintentionally set itself up for a major shakeout! And all the while, we continue our slow paradigm shift/recovery from the last MH$ debacle, our loss of easy access to chattel capital for new home loans!

To subscribe to the Allen Letter, simply visit www.educatemhc.com You’ll be glad you did! The story will appear nowhere else….

End Notes

1. Until year 2013, monthly manufactured housing shipment totals reported by HUD’s contractor, the Institute for Building Technology & Safety (‘IBTS’), were reported differently by MHI & MHARR. Since then however, HUD, MHARR, NAMHCO, & EducateMHC have reported said totals similarly, so official record of shipment totals is now consistent among those four industry advocates, negating the need for a +/- qualifier.

2. 3:1 Rule of Thumb. Rental homsite rates, in general, are one third the monthly rent charged in a like-sized (e.g. 3BR2B) conventional apartment in the same local housing market as the subject land lease community; e.g. $900/month apartment rent = $300/month approximate land lease community rental homsite rate. Today however, an increasing number of markets are experiencing a 2:1 ratio; e.g. $900/month apartment rent = $450/month approximate land lease community homesite rate.

Pass This Blog Onto Land Lease Community Owners/operators Nationwide!

August 21st, 2019

August 2019; Copyright 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for all land lease communities!

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email gfa7156@aol.com & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U! Goal: promote HUD-Code manufactured housing & land lease communities as U.S. Source of affordable attainable housing! Next MHM class @ 9/11/19

INTRODUCTION: One important topic today! Yes, it’s that important. Period. And, as Part I of this week’s blog posting asks…

I.

Please Pass This Blog Onto Land Lease Community Owners/operators Nationwide

This year is the 28th consecutive year Carolyn & I have hosted the International Networking Roundtable. And it’s the first time, since years 2008 & 2009, this popular land lease community owner/operator-focused event, is timed and positioned to play a key role influencing the fate of the manufactured housing industry going forward!

How so? Well, if you’ve been following weekly blog postings, at this website during the past month (blogs # 544, 546, & 547), you know of the homeowner/site lessee (a.k.a. ‘residents’) unrest within institutional investment grade land lease communities owned by some – but certainly not all, property portfolios controlled by fewer than a dozen private equity fund managers. Oft at issue, is the immediacy, size, and or frequency of rental homesite rate increases, upon acquisition of land lease communities.

Two recent indicators of present and future, impending concern:

‘Legalized Looting: Mobile Home Rent Increases Require Wall Street Reforms’. Headline; U.S. Senator Elizabeth Warren’s guest opinion piece dated 26 July 2019. Quoted from blog # 544.

‘The (manufactured housing) industry needed a regulatory framework on construction in 1976, and it needs a new framework for community ownership & operation in 2019. House Bill HR 2832 is a start!’ Quoted from Doug Ryan’s op/ed piece in Prosperity Now press. Blog # 547.

So, what to do about this troublesome matter? Discuss it at the 28th Networking Roundtable, 8-10 September in Indianapolis, IN. Already, several open forums are scheduled:

• Spencer Roane, MHM, from 3-4PM, 8 September, will host an open discussion about ‘financing homebuyers/site lessees who can’t qualify for conventional chattel loans’.

• From 4-5PM, I’ll host a ‘fireside chat’ type discussion ‘on topics of choice’ by individuals so-gathered. Can be ‘evergreen issues’*1, or otherwise*2. Or not here listed.

• And during the Roundtable proper, either 9 or 10 September, time will be set aside for the overarching topic described earlier in this blog – IF there’s interest in doing so. You?

A caveat (‘warning’). Should there be no group meeting/discussion, among private equity fund managers and or their land lease community portfolio owners/operators, with industry and realty asset class leaders – and the aforesaid national legislative regulatory threat continiues to grow, expect a clarion (‘obtrusively clear’) call for the first National State of the Asset Class (‘NSAC’) caucus in a decade*3! So, let’s get this conversation started in early September. If not already registered for the Networking Roundtable event, visit www.educatemhc.com or phone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

End Notes.

1. Evergreen (i.e. ‘always relevant’) Issues: 1) responsibility for proper, safe & secure installation of HUD-Code homes; 2) HUD declares manufactured housing ‘affordable’ but refuses to overtly promote same; 3) present MH stock is aging faster than new homes are being fabricated & shipped; 4) continuing lack of reasonable access to chattel capital & disparate loan percentages between chattel capital & real estate-secured rates – even with property owner guarantee; 5) propensity to sell homebuyers more house than they can truly afford, by not including utility expenses in PITI & site rent $ total; 6) negative symbiotic comparing of new HUD-Code homes going onto private sites conveyed fee simple, with those going onto rental homesites within land lease communities; and, 7) lack of two secondary markets: one to value and sell resale homes, and marketing of seasoned chattel capital loans.

2. Otherwise issues: 1) ‘New Type’ HUD-Code manufactured home for underserved markets (e.g. millennials & retirees); 2) GSEs ‘slow walk’ DTS (Duty to Serve) programs for chattel capital, & parallel efforts to serve realty-secured loans via Choice & MH Advantage programs; 3) local housing market intransigence relative to zoning & rezoning in behalf of manufactured housing & land lease community development; 4) national advocacy overlap diluting lobbying effort on national stage; 5) lack of state MH association support by many property portfolio firms; 6) Big Three MH manufacturers (i.e. Clayton, Cavco, Skyline-Champion) garnering 80+/-% of national market share of HUD-Code homes; and, 7) growing evidence of near-predatory site rent increases.

3. As described in blog # 544, two National State of the Asset Class caucuses were held; one on 2/28/2008 & another, 2/28/2009. In the first instance, more than 100 (then) manufactured home community owners/operators gathered at a community in Tampa, FL. Result? Five Strategies & Action Areas designed to preserve their collective business model. A year later, to the day, a second NSAC caucus was hosted by the RV/MH Hall of Fame in Elkhart, IN. This too was attended by 100+, a mix of HUD-Code housing manufacturers & land lease community owners/operators from throughout the U.S. Result? New HUD-Code housing design friendly for community placement, featuring WOW! Factors and durability-enhancing features intended to reduce turnaround time and cost expenditure, between home buyers and or renters. Later labeled, by Don Westphal, landscape consultant, as Community Series Homes – to, in part, differentiate from ‘big box = big bucks’ Developer Series Homes of the late 1990s.

***

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

Told you so! (&) What’s the $ margin?

August 17th, 2019

Blog # 547 @ 15 August 2019; Copyright 2019; www.educatemhc.com
Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for all land lease communities!

To input this blog &U/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email gfa7156@aol.com & visit www.eduatemhc.com

Motto: ‘U Support Us & WE Serve U!’ Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable obtainable housing! Next MHM class @ 9/11/19

INTRODUCTION: Three widely disparate topics today: threat of national rent control – a fact or fiction? How ‘bout the $ difference between production value of a new HUD-Code home and its’ retail sale value? And five things many might want to see occur inside our nation’s capitol beltway, but don’t hold your breath! If you enjoy these blogs, you’d really appreciate the Allen Letter each month! Just go to www.educatemhc.com to subscribe.

I.

TOLD YOU SO!

This from Doug Ryan’s recent article in Prosperity Now publication: “The (manufactured housing) industry needed a regulatory framework on construction in 1976, and it needs a new framework for community ownership and operation in 2019. (S0) house bill HR 2832 is a start!”

If Doug is right about this second historic ‘start’, what do you, as a land lease community owner/operator, suppose the ‘finish’ or regulatory legislation will be like if/when passed?

Remember now, we’re talking about the consequence, in large part, due to flagrant site rent increases by some property portfolio firms owned, in some cases, by private equity management firms.

If somehow this is ‘new news’ to you, take time NOW, to scroll back through blog postings # 543 thru 546 on this website.

Where do we go from here? Well that’s up to you. As host, along with EducateMHC, of the upcoming 28th annual Networking Roundtable (8-10 September in Indianapolis, IN.), I’ve been asked ‘time & again already’ to arrange private and public meetings among concerned parties, concerning this threat of national rent control. Registered attendees already represent a broad spectrum of land lease community owners/operators, from small Mom & Pop owners to several of the 500 known portfolio ‘players’. Will you be present for this year’s event? Not too late to register. Simply go to www.educatemhc.com right away.

II.

$44K Margin Between Production & Sales Value?

You tell me. Some statisticians say the 96,555 new HUD-Code homes shipped during year 2018 sold for $6.4 billion in retail value, or an average of $66,200 per manufactured home, all configurations. AND, the estimated ‘production value’ of those 96,555 new HUD-Code homes was $4.2 billion or $43,126 per manufactured home, using Dr. Stephen C. Cooke’s 2013 base year data. This calculates to a $2.2 billion margin between the two values, or $23,074 per HUD-Code manufactured home.

OK ‘out there’ anyone else have a better handle on this elusive subject? Personally, given the increases in manufactured housing product cost between years 2013 & 2018, the $43,126 production value is probably too low to be accurate today. But hey, what else do we have to work with at this point in time? I keep hearing rumors: ‘We’re working on an update’, but we continue to wait.

Let me know your thoughts on this matter via gfa7156@aol.com or (317) 346-7156

III.

On a Purely Political Note…

When I first read Mark G. Brennan’s ‘Five Modest swamp-Draining Proposals’, in CHRONICLES, a magazine of American culture, I just knew I had to prepare and share a digest of the author’s points with you:

• “Remove all air conditioners (and fans) within the geographic limits of Washington, D.C.” Some want a Green New Deal? “…what a better way to kick it off than to eradicate unnecessary energy use?”

• “All congressmen, senators, and federal employees must prepare their own taxes with no help from anyone, either their accountants nor their spouses.”

• “Congressional representatives and senators will serve as Casualty Notification Officers (‘CNOs’) for the deaths of all military personnel in their districts.”

• ‘All congressmen, senators, and federal employees will be paid the lesser of their current salary or the median national income. According to the U.S. Census Bureau, the median household income for 2017 was $61,372.”

• “All congressmen, senators, and federal employees must send their children to the Washington, D.C., public schools.”

Just saying….

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

Beware Site Rent Regulatory Reform! (&) Rule of Thumb Bastardization

August 9th, 2019

2019; Copyright 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for all land lease communities!

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com & visit www.eduatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable obtainable housing! Next MHM class @ 9/11/19

INTRODUCTION: We’re revisiting, from two perspectives, private equity firms acquisition of land lease communities nationwide, and proposed private equity reform legislation. And what the realty asset class can do to influence both matters. Response & participation requested.

And then there’s the perennial issue of how manufactured housing and land lease communities might be better represented (i.e. lobbied in behalf of), in legislative and regulatory matters, in our nation’s capitol.

I.

‘STOP WALL STREET LOOTING ACT’

Yes, that’s the title of Democratic presidential candidate Elizabeth Warren’s – & 13 other Democratic members of Congress – private equity reform legislation. It’s far-reaching, and if land lease community portfolio owners/operators don’t ameliorate rental homesite rate increases going forward, they run the very real risk of being swept up in this turmoil.

If what you read in the previous paragraph is ‘new to you’, scroll back to blog posting # 544/5 for background information, in Part II, titled:’ Legalized Looting: Mobile Home Rent Increases Require Wall Street Reforms’.

Now, here’s what Washington advocacy group, Americans for Financial Reform (‘AFR’), has to say about Warren’s proposed legislation: “It is not anti-private equity, but more about making sure private equity managers have skin in the game”. Contrast that statement with this from private equity advocacy group, American Investment Council (‘AIC’), also in Washington, claims this legislation is simply ‘about politics going into the 2020 election season’, i.e. “When there is no crisis, you have to invent it.”*1

The AIC spokesperson goes on to describe how “…public pension funds are private equity’s biggest investors, where over the last 10 years, it has outperformed other asset classes, returning a 10 year median annualized return of 10.2% in 2018.” *2

Do you see irony (i.e. ‘frustration of hopes’) playing out here; where and how pension funds, private equity firms, and homeowners/site lessees living in land lease communities, are intertwined? Result is a classic ‘rob Peter to pay Paul’ scenario! Specifically, pension funds provide investment capital to private equity firms who oft acquire land lease communities frequently populated by retirees. Who are, in turn, dependent on pension funds for income from which they pay site rent. And within this cycle, private equity firm managers increase rental homesite rates to ensure annualized returns of at least 10 percent per annum.*3 And the beat goes on….

So, where do we, as manufactured housing aficionados and land lease community owners/operators go from here? To date, no national advocacy group affiliated with our industry or realty asset class has stepped forward to address these matters: profuse rental homesite rate increases, and now, private equity reform legislation. As I suggested in the previously referenced blog posting, private equity firms owning land lease communities, and portfolios thereof, should attend one or more of three following events, encouraging discussion of this timely and potentially business – restricting private equity reform legislation:

• 28th Networking Roundtable, 8-10 September, Indianapolis, IN. Register via www.educatemhc.com & I will set aside time to meet privately & productively.

• MHI’s annual meeting in Savannah, GA, 22-24 September. Phone (703) 558-0400

• SECO Conference in Atlanta, 8-10 October. Spencer Roane, via (678) 478-0212

Frankly, if this national ‘rent increase’ imbroglio continues, even worsens, and there are no informal meetings, on this subject, at any of the three venues, a National State of the Asset Class (‘NSAC’) caucus will be scheduled, in November or December, likely (again) at the RV/MH Hall of Fame in Elkhart, IN.*4 Will you be part of the solution or continuing problem?

Your thoughts on this serious matter? So far, every email and telephone message, received here, has been positive and encouraging. Email: gfa7156@aol.com or phone using the Official MHIndustry hotline: (877) MFD-HSNG or 633-4764. At that time, let me know if you’re a private equity fund-owned land lease community portfolio owner/operator and plan to attend the Networking Roundtable. Several firms have already registered for this event.

End Notes:

1. Pensions & Investments, ‘the International Newspaper of Money Management’, 5 August 2019, pp. 1 & 25.

2. Ibid.

3. Traditional market(s) for land lease communities = ‘newlyweds & nearly dead’

4. This is the first time in a decade we face business model challenges serious enough to warrant national attention and action. Veterans of the realty asset class will recall previous NSAC caucuses: On 2/28/2008 in Tampa, where we agreed on Five Action Areas to preserve our business model going forward; and, 2/28/2009 when 100 HUD-Code manufacturers and community owners met and agreed on a new housing design suitable for in-community placement. This was the birth of the Community Series Home. And with it, the realty asset class became HUD manufacturers’ new ‘big’ customer, increasing the percentage of new HUD-Code homes going onto rental homesites in communities, from only 25% in 2009, to more than 40% by year end 2015! Now we need answer(s) to this regulator reform challenge.

II.

Rule of Thumb
‘Is a time-proven site rent guideline morphing into a measure that will sink us all?’

To begin with, a Rule of Thumb is an informal means of estimation that’s made according to a ‘rough & ready’ practical rule, not anchored in science or some exact measurement. With that said…

The Rule of Thumb referenced here, has been commonly referred to in manufactured housing circles, since the early 1970s, as the 3:1 Rule. Simply put, conventional apartment rent, for a 3BR2B unit, in a given local housing market, is generally three times larger than the amount of site rent charged in a land lease community located in the same local housing market. For example: apartment rent @ $900/month; suggests site rent to be near $300/month.

Since 1994, when the REIT (real estate investment trust) wavelet, comprised of four privately-owned portfolio firms, consolidated 88,450 rental homesites in (then) manufactured home communities, the unique income-producing property type has seen rental homesite rents increase moderately at first, then profusely, as Wall Street analysts pressed for ‘ever increasing’ financial gains. This rental increase trend continued, some say worsened, as we entered the new millennium, and private equity firms joined in the consolidation of privately-owned properties and portfolios thereof, into new and larger collections of land lease communities.*1

Results? By year end, 2018, the three remaining public REITs (ELS, Inc., SUN Communities, Inc., and UMH Properties) owned/operated 300,566 rental homesites throughout the U.S. and Canada. And overall, there are 500+/- known land lease community portfolio owners/operators in North America, with an average of 43 properties per portfolio and average size community with 211 rental homesites – based on data provided by 100 respondents to the ALLEN REPORT questionnaire circulated during Fall 2018.*2

Another, more difficult to ascertain result, has been the morphing – among larger communities – of the 3:1 Rule into a 2:1 Rule. Meaning, if apartment unit (3BR2B) rent in a given local housing market is $900/year; expect rental homesite rent for larger properties to be close to $450/month. Consequences? Homeowners/site lessees, coming into the land lease community, spend $450/month in site rent, and have $150/month less to invest in the new or resale home they’re buying there.

A sidebar issue is published market surveys purporting to show average adjusted site rent rates for metro areas throughout the U.S… Generally speaking, these surveys include only ‘institutional investment grade’ properties located in said SMSA. and not ‘all’ such properties, especially smaller ones. Result? A convenient ‘excuse’ for owners/operators of larger communities to justify site rent increases based on ‘studies’, rather than on operational needs of the property per se, and ability of homeowner/site lessees to pay.

Bottom line? As the subtitle of this part (I) of blog # 546 questions: ‘Is a time-proven site rent guideline morphing into a measure that will sink us all?’ If we’re not careful, that’s precisely what will happen!

End Notes:

1. 30th anniversary ALLEN REPORT, EducateMHC, IN., 2019
2. Ibid

III.

Has Anyone Else Noticed?

On 6 August 2019, MHARR’s ‘Exclusive Report & Analysis’, featured the headline: MHCC Regulatory Enforcement Subcommittee Advances MHARR Regulatory Reform Proposals.
&
On 7 August 2019, MHI’s ‘News & Update’ Press Release featured this headline: MHI Proposals Serve as Guide for MHCC Regulatory Enforcement Subcommittee Actions.

Reading through both Press Releases, one wonders: These proposals are so similar, ‘Why does it take two national manufactured housing industry advocates to tell the same story?’ Answer? It doesn’t! That’s just how we’ve been relating to the HUD-Code, and other regulatory reform measures since 1985. And now, with the debut of the National Association of Manufactured Housing Community Owners, during late 2018, we have a third hand in the mix. Don’t you think, after 35 long years, it’s time for a sweeping change in how the manufactured housing and land lease community realty asset class lobbies in Washington, DC? I certainly do!

At this point (and this is not the first time this issue has surfaced), the question that begs answering is always: ‘How to accomplish this needed and widely desired consolidation of political presence ‘inside the beltway’ at our nation’s capitol?’

Hint. In my opinion, and to begin with, it’s going to take a charismatic, capable, experienced, motivated ‘leader of men & women’ who has manufactured housing in his/her blood, and is capable of communicating well online, in print, and in person. Does such a person exist? Yes.

The 2X factors.

1) As you may or may not know, MHI will be changing top salaried leadership the first of year 2020. Some opine that’s a good time to effect this needed industry consolidation.
Will it happen? Only if you’re reading this and are an active, dues-paying member of one or more of the present national advocacy entities and make your views well known!

2) Narrow the focus of MHI’s activities, going forward, to lobbying and regulatory reform. This could mean, no more national social meeting venues and leadership forums; leaving those to rapidly growing regional (e.g. SECO Conference in Atlanta, Louisville MHShow, Tunica MHShow, and Western Summit), and the nearly three decades old educational, social event, like the annual Networking Roundtable.

Yes, this is a tall tall order for any industry entrenched in its’ ways for more than a half century. But if we’re going to continue recovering from our industry’s shipment nadir year 2009, of only 48,789 new HUD-Code homes shipped, to beyond where we are today (96,555 units in 2018), then we have to be prepared to do something different, something better than has been done to date. And this is certainly one of those possible, albeit difficult, alternatives leaning forward.

The purpose of this blog posting is to get you to thinking about the matter, and exerting influence where you may.
***

George Allen, CPM, MHM
EducateMHC
(317) 346-7156

If not yet registered to attend the upcoming (8-10 September) 28th Networking Roundtable, visit www.educatemhc.com today! And MHM professional property management training & certification class (one day, no tests) will als

MH Dejavu? Today’s Site Rent Levels Akin to Early 1970s, When MH Quality Facilitated Federal (HUD) Regulation? (&) More…

August 1st, 2019

2019; Copyright 2019; www.educatemhc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for all land lease communities!

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U! Goal: Promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable obtainable housing! Next MHM class @ 9/11

INITRODUCTION: Two key and timely parts to this week’s blog posting. One describes a dozen opportunities for YOU to improve job skills, engage in interpersonal networking, and ensure your voice and opinions are made known to industry and realty asset class’ salaried and elected leaders of all three national advocacy entities! AND, don’t for a minute, think the ‘private equity consolidation/profiteering storm’ has passed. It hasn’t. In fact, where land lease communities are concerned, the whole sorry affair now runs the risk of becoming a national debate issue during the upcoming presidential campaign. Be sure to read Part II following – and take action!

I.

A MHIndustry & LLCommunity Potpourri of Opportunities

No particularly hot issue(s) taking place this last week of July & first of August. So, how ‘bout a potpourri of matters and opportunities on immediate and interim horizons. No busy businessperson is going to be able to avail themselves of all that follows here, just be aware of events and circumstances potentially influencing one’s workaday world. Here goes:

• the Allen CONFIDENTIAL! business newsletter distributed this week! Contains the sole published summary of ‘State of Nation’s Housing Report’ per JCHS at Harvard University; correspondence with Drs. Carson at HUD & Calabria at FHFA; and, update re New Type (HUD-Code) housing per MHI versus MHARR. To subscribe: www.educatemhc.com

• RV/MH Hall of Fame on Monday, 5 August, in Elkhart, IN. During day, meet with Spencer Roane, MHM & me at the Hilton Garden Inn, or board room or library at the museum. Banquet that eve. Tickets: (574) 293-2344. Daytime meeting details: (317) 346-7156

• ‘Using AMI to quantify local housing market housing affordability; & AGI, with Housing Expense Factor (‘HEF’), to calculate ‘risky’ & ‘affordable housing’ price points’ at Wisconsin Housing Alliance on 14 August. To participate, phone (608) 255-3131

• As you know, MHI has begun its’ search for a new salaried executive director, as Richard Jennison retires at the end of this year. And HUD continues to limp along without a non-career leader for its’ manufactured housing program. I’ve taken myself out of consideration both places, but am collecting names to submit. You? Gfa7156@aol.com

• New edition of MHInsider magazine to be distributed this week and next. You in line to receive a copy? If so, be sure to read the Allen Legacy column near the back of the publication. If not, reach out to Darren Krolewsky to subscribe: Darren@mhvillage.com

• MHI’s National Communities Council (‘NCC’) division to hold its’ ‘first ever’ Western Summit in Phoenix, AZ., 14-16 August. For info, phone (703) 558-0400. And visit National Association of Manufactured Housing Community Owners: (480) 96-2446

• Almost finished a new (4th edition) of Chapbook of Business & Management Wisdom, ‘What I Know Now I Wish I’d Known 50 Years Ago!’ Want a copy? (317) 346-7156

• 28th Networking Roundtable, 8-10 September, at The Alexander Hotel in Indianapolis. Last week’s blog posting listed most of this year’s presenters. Why don’t other national venues do likewise? Anyway, still room for more registrants: www.educatemhc.com

• And yet another one day Manufactured Housing Manager professional property management training/certification class! This one 11 September following the Networking Roundtable. Nearly 1,500 MHMs managing today! www.educatemhc.com

• MHI’s annual meeting will occur 22-24 September in Savannah, GA. This is MHI’s most important meeting all year; and in my opinion, is often ‘management by committee’ at its’ worst, but at least there’re opportunities to air one’s news & views. (703) 558-0400

• SECO conference 2019 in Atlanta. Similar to Networking Roundtable, and unlike every other national MH venue! It’s is a large homegrown annual event facilitated ‘by & for’ land lease community owners/operators in the Southeast! spencer@roane.com

• Another Manufactured Housing Manager professional property management training/certification class! This one, 11 October following SECO Conference in GA. Text? Community Management in the Manufactured Housing Industry. www.educatemhc.com

• Speaking of the Community Management in the Manufactured Housing Industry text, this 8th edition of Mobile Home Park Management (1988), is now 202 pages, and belongs in every land lease community in the U.S. and Canada! www.educatemhc.com

• MHI’s NCC division’s Fall Leadership Forum, 13-15 November in downtown Chicago, IL. (703) 558-0400

• National Housing Conference in Washington, DC, 3 & 4 December. NHC expressing interest in ‘things manufactured housing’, including land lease communities. Core group of MHIndustry businessmen and women participate in NHC events. (202) 466-2121

• MHI’s Winter Meeting, 16-18 February 2020 in Nashville, TN. (703) 558-=0400

• Next book update by EducateMHC? J. Wiley & Sons’ How to Find, Buy, Manage & Sell a Manufactured Home Community. Published in 1996, the case bound ‘bible of LLCommunity investment’ is long out of print but still sought! www.educatemhc.com

II.

‘Legalized Looting: Mobile Home Rent Increases Require Wall Street Reforms’

So reads the headline from U.S. Senator Elizabeth Warren’s guest opinion piece dated 26 July 2019. Here’s what she goes on to say…

“The greed of Wall Street and private equity firms…affects more than just mobile home residents….Thousands of workers have been laid off from jobs at retailers, after private equity firms took over, drained their assets, slashed their jobs, and left them bankrupt.”

“Let’s call their actions what they are: legalized looting to make a handful of Wall Street managers rich while costing thousands of people their homes and jobs, bankrupting viable businesses and damaging communities across the country.”

“That’s why I’ve announced a new plan to rein in Wall Street firms engaged in unproductive and predatory behavior. Under my plan, private equity firms…won’t be able to buy companies, goose short-term profits by jacking up prices, and then walk away rich even if the company goes bankrupt. Instead, these firms would be required to align their interests with the long-term sustainability of the companies they buy – and the people those companies affect.”

Senator Warren concludes: “We need bold action if we’re going to deal with the excesses of private equity firms and their attack on American families.”

OK, so what’s the manufactured housing industry and land lease community real estate asset class to do? Here’s one possible, sequential course of action:

• Identify predatory private equity firms of which Senator Warren speaks. (Actually, that’s been done. There’s more than a dozen acquiring land lease communities today).

• Invite these private equity firms to attend upcoming industry forums (e.g. MHI’s NCC Western Summit in mid-August in AZ; Networking Roundtable in early September in IN; MHI’s annual meeting in late September in GA; and, annual SECO Conference in mid-October, also in GA).

• During said meetings, set aside time for open discussion of this volatile matter. If we don’t do so, we’ll have no one to blame but ourselves if/when onerous business- restricting national regulation of land lease communities comes our way!

Lest you think I jest. Remember this: 50 years ago, federal legislators offered the mobile home industry an opportunity to police itself, where ensuring housing product quality was concerned. We did not do so! Result? 1974 passage of the infamous HUD-Code by which we live and work today. Yes, to some extent, the manufactured housing industry turned this ‘legislative lemon’ into ‘lemonade’, benefitting from federal preemption of our factory-built housing product relative to state and local building codes. But are we willing to risk the future of our unique, income-producing property type this time around? Methinks not – and I trust YOU feel the same way. SO, contact our three national MH advocacy entities and tell them YOU want them to be a key part of the Solution to this trending challenge, not part of the continuing problem!

Me? I’ve already invited these land lease community portfolio owners/operators to the upcoming 28th Networking Roundtable, 8-10 September, at The Alexander Hotel, in Indianapolis, IN. Will they come? Some have already registered. How ‘bout you? For information, go to www.educatemhc.com

What might happen if above course of action does not materialize? Some reading these paragraphs will recall two National State of the Asset Class caucuses, 2/28/2008 in FL & 2/28/2009 in IN, when, in the first instance, and under the leadership of Randy Rowe, community owners agreed to Five Strategies & Action Areas ensuring continuing business viability. A year later, another hundred community owners and HUD-Code manufacturers convened to create the Community Series Home, stimulating new housing placement on rental homesites! Both venues = positive results! Point? Come November, and if no progress relative to this troubling matter, it’ll be time for a third National State of the Asset Class caucus. Have questions or comments to this end? Let me know via gfa7156@aol.com

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George Allen, CPM, MHM
EducateMHC

State of Nation’s Housing & Much Much More….

July 24th, 2019

2019; Copyright 2019; www.educatemhnc.com

Perspective. ‘Land lease communities, previously manufactured home communities, and earlier, ‘mobile home parks’, comprise the real estate component of manufactured housing.’

This blog is sole online national advocate, official ombudsman, asset class historian, research reporter, PM education resource & communication media for all land lease communities!

To input this blog &/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email: gfa7156@aol.com & visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U!’ Goal: Promote HUD-Code manufactured housing & land lease communities as U.S. source of affordable obtainable housing! Next MHM class @ 9/11

INTRODUCTION: This week’s blog posting ‘opens strong’ & ‘saves the best for last’, or so it seems. Everyone knows about the RV/MH Hall of Fame, but how many of you know what it takes to be considered for induction? Well, here’s how you do it!

Then here’re 20 good reasons (i.e. top notch speakers named) to attend the 28th Networking Roundtable scheduled for 8-10 September, in Indianapolis, IN. Hope you’ll be there with us!

One more pass, for now, at the idea or concept of ‘leveling the manufactured housing finance playing field’, when it comes to having similar loan terms for RE-secured & chattel capital loans.

Finally, and you might want to read Part IV first: The Joint Center for Housing Studies at Harvard University recently, in Atlanta, GA., briefed the nation as to what is really happening throughout the housing industry these days! This is a MUST READ for every ‘houser’ active in the HUD-Code manufactured housing business and land lease community real estate asset class. NO ONE ELSE is going to share these ‘stats’, trends, and issues with you! GFA

I.

You Eligible for Induction into the RV/MH Hall of Fame? Probably….

If you’ve been “…an active participant in any segment of the recreation vehicle or manufactured housing industries for a minimum of 25 years…”, you are eligible for consideration when a RV/MH Hall of Fame nomination form has been properly completed, by you or someone who knows you well, and believes you deserve this singular honor!

Furthermore, the completed nomination form, when sent to the RV/MH Hall of Fame in Elkhart, IN. (2156 Executive Blvd., 46514) “…must be accompanied by three supporting letters (no more, no less) that meet the Hall’s guidelines for these letters.” before 31 October of any year. “The nominee will (then) be in the pool of candidates considered for (induction) the following year and for five years beyond that.” Specific guidelines? Read next short paragraph.

For more information, and to download the nomination form (MS Word Format) and support letters form (PDF format), visit www.rvmhheritagefoundation.org

In closing, here are a couple personal tips you may, or may not, want to factor into your plans to become eligible for nomination and induction into the prestigious RV/MH Hall of Fame.

• Familiarize yourself with protocols, pomp and circumstance, that make this honor event unique to both industries, by attending the annual RV/MH Hall of Fame induction banquet and ceremony (Monday, 5 August, 2019). Expect to rub shoulders with 500-700 Hall of Fame members, guests, families, friends, and business associates from throughout the U.S. and Canada. Phone (574) 293-2344 for tickets!

• While certainly not a requirement, add a measure of credibility and personal support, by asking a present RV/MH Hall of Fame member, who is a friend or colleague, to prepare one of the letters penned in your behalf.

To learn more about the RV/MH Hall of Fame, and read stories about a few inductees from the manufactured housing industry and land lease community real estate asset class, peruse the soon to be distributed (July-August-September) issue of MHInsider magazine, especially the Allen Legacy column at the very end of the publication. To ensure receiving a copy, email: Darren@datacomp.com

And finally, a dozen or more land lease community owners/operators often convene, during the daytime before the (5 August) evening (6-9:30PM) banquet and induction ceremony, to identify emerging industry/asset class trends (e.g. two decades long MH paradigm shift since year 2000), ‘evergreen MH issues’ of note (e.g. pro & con of GSE’s DTS programs in 2019), and Lessons Learned from our business models during the past year. This August, while there’s no formal agenda yet, Spencer Roane, MHM, will be on hand to describe and ‘splain’ the new E-HOP chattel capital program for financing new HUD-Code homes in land lease communities! And I’d like to hear your views on the concept of ‘leveling the manufactured housing finance ‘playing field’ (i.e. lessening % spread between RE-secured and personal property loan terms via property owner recourse). Read blog postings # 541 & 542. PLUS, I’ll be handing out FREE copies of the popular booklet: Who Will Preserve Your Legacy? Answer: You!

So, if the content of the previous paragraph truly interests you, let me know ASAP via gfa7156@aol.com or via (317) 346-7156, if you plan to participate! At that time, I’ll tell you when and where we’ll be convening. There’s no $ charge to participate, nor are you expected to attend the banquet! But know, this day and evening together, makes for the most energizing, memorable, ‘feel good’ RV/MH events to occur all year long! GFA

II.

20 Good Reasons to Attend Networking Roundtable, 8-10 September, in Indianapolis

Keynote presenters, featured speakers, and businessmen and women of renown headline this year’s 28th annual Networking Roundtable. Run your eyes down this august list and be surprised how many of them you know, and how they’ll all be in Indianapolis with us on 8-10 September:

U.S. Senator TODD YOUNG, with 13 other senators, has sponsored an affordable housing bill

JEFF DAVIDSON, Meritus MHCommunities & MIKE CALLAGHAN, Four Leaf Properties sharing!

MIKE NIEBAUER of Rent Manager (firm debuted at 1989 Roundtable!) to explain automation

Both GSEs, & possibly FHFA, to be on hand to walk everyone thru Duty to Serve (DTS programs)

JULIO JARAMILLO of Evergreen Communities to share his secrets to property portfolio success!

DON WESTPHAL, who everyone knows & likes, will hold forth on LLCommunity rehabilitation

DARREN KROLEWSKY of DATACOMP will describe ‘better online digital footprints’ via MHVillage

NANCY CAROL from Universal Utilities will address the Roundtable family for the first time ever

SPENCERE ROANE to update us as to what’s happening with seller-finance in LLCommunities

TODD NEWBY’S firm introduced resident relations to LLCommunities in 1990s – an update!

PAUL BRADLEY of ROC USA will share winning videos from Noble Home Video Contest

DAVE REYNOLDS of IMPACTMHC will share videos taken on-site during fix ups at his properties

GEORGE ALLEN to ‘open’ & ‘close’ the 2 ½ days event, probing issues & trends in MH

And expect to enjoy two MH & LLCommunity ‘no holds barred’ financial panels Tuesday AM

Well, there’re 13 of the 20+ committed presenters for this year’s Roundtable event. Bet you’d like to hear each and every one of them! Do so, by visiting wwweducatemhc.com & register

In closing, allow me to point up something I think is telling. Can you think of any other national MH & LLCommunity meeting venue, other than this Roundtable event and the SECO Conference that informs you (all of us) ahead of time who the presenters are going to be?

III.

Leveling the MH$ Playing Field Discussion Continues…

Not going to delve into this heady, timely, controversial topic in toto in this blog posting. Rather, just sharing a thought-provoking communique we received from one of the MH Industry’s most knowledgeable chattel capital originators/servers, who’s no longer active in the business:

‘Part of the problem with this (i.e. leveling the $ playing field) is a lack of understanding of the increased risks that come with chattel lending, and lack of understanding of how a lower amount to (be) financed does not change the costs of originating and servicing MH chattel loans. The interest rates need to be higher to cover those costs, (as well as) the incentive for greater profits motivating lenders to make these loans in the first place.” (lightly edited)

Points taken. However, securing the realty property owner’s guarantee (i.e. recourse agreement) is intended to mitigate the added risk associated with personal property loans not secured by underlying real estate. Now, costs to originate and service said loans are indeed an important matter, as is the motivation (greed?) factor.

Like with the past couple blog postings (i.e. #s 541 & 542), we’re desirous of your ‘take’ on this matter. So far it’s not gained traction among independent chattel capital lenders serving the manufactured housing industry. Is that because everyone hopes the concept (of leveling the playing field) will go away?

Respond, if you will, via gfa7156@aol.com or (317) 346-7156.

IV.

‘The State of the Nation’s Housing’

Spencer Roane, MHM, of Pentagon Properties in Atlanta, GA., recently represented the manufactured housing industry and land lease community real estate asset class at a program presented by the Joint Center for Housing Studies of Harvard University (‘JCHS’), titled:
‘The State of the Nation’s Housing’. Spencer obtained an extra copy of the 42 page 2019 research document referred to by the presenters throughout their program. And upon reading, it provides very interesting information on this sweeping and timely subject. You ready?

“The shortfall in new homes is keeping pressure on house prices and rents, eroding affordability – particularly for modest-income households in high-cost markets.” P.1 Specifically, “…reaching bottom in 2011 at just 633,000 new units, additions to the housing stock have grown at an average annual rate of just 10 percent.” How ‘bout manufactured housing? ‘Reaching bottom in 2009 at just 48,789 new units, additions to manufactured housing stock have grown at an average rate of just 10.8 percent.’ Now you know.

“Sluggish construction recovery is in part a response to persistently weak household growth after the recession….”p.1, PLUS, “builders & lenders alike are wary of speculative development that would expand the housing supply too rapidly.”p.2, (&) “…rising costs of labor, land and materials…restricting the supply of land available for higher-density development”p.3, (&) “…ability to purchase a home depends largely on access to mortgage financing.”p.19, (&) “real home prices are approaching pre-crisis levels…eroding affordability for first-time homebuyers….”p.19, (&) “renter protection laws have gained some traction.”p.35 Now, ask yourself? How many of these reasons for this nation’s ‘sluggish construction recovery’ also apply to the manufactured housing production and land lease community infill scenarios as well? Just about every one of them!

Now, for factors favoring growth of manufactured housing, without saying so specifically:

• “…housing being built is intended primarily for the higher end of the market.” P.2

• Labor shortages. “…competition for workers has intensified, limiting the ability of the construction sector to ramp up quickly.” P.2

• Household growth has stabilized at early 2000s levels. P.14

• Number of young-adult households is increasing in line with population growth. P.14

• High rents delay ability of younger adults to form independent households. P.15

And, as if to underscore some points made in previous paragraphs, here are some particularly salient quotes:

• “…a rise in interest rates and home prices plus a tightening of credit, on top of the limited supply of entry-level housing, could put homeownership out of reach for many more households.” – unless manufactured housing industry ‘steps up to the plate’ too loudly and nationally advertise its’ brand of factory-built housing!

• “Housing markets lost steam at the end of 2018, as interest rates rose and new construction, home sales, and price appreciation all slowed. But even as rates came back down in early 2019, and helped stabilize markets, the national housing supply remained constrained by more than 10 years of historically low production levels. The tight supply of homes for sale is keeping the pressure on prices in much of the country, while high land prices, labor shortages, and restrictive land use policies limit development of moderate-cost housing.” P.7 – unless manufactured housing ‘steps up to the plate’ to loudly and nationally advertise its’ brand of factory-built housing!

• “…the next decade, the fastest-growing household types will be younger families and older empty-nesters – households with very different housing needs. The growing share of foreign-born households will also add to the increasing diversity of demand.” P.13 – markets semi-traditional for manufactured housing, just needing revisiting and massive advertising!

• “According to the 2017 American Community Survey, the typical household earning less than $15,000 per year, spent 17.5 percent of that income on energy costs, with shares slightly higher for homeowners (20.6 percent) than for renters (15.3 percent).” P.36 Keep this in mind as you manipulate the Housing Expense Factor (‘HEF’) of 30 percent, usually set aside for PITI (principal, interest, taxes, insurance) and rental homesite rent.

• Median sized house in 2018? 2,386 square feet. Median sale price of single-family homes in 2018? $326,400. P.38. HUD-Code manufactured housing is certainly ‘the right size’ and ‘right price’ to market to today’s prospective homebuyer/site lessee!

Lot of interesting and helpful information in this JCHS booklet, quoted in the previous paragraphs. Surprising and disappointing no one else in the manufactured housing industry and land lease community rental asset class attended this national briefing. So, pick and choose here, what helps you the most, as you fabricate, sell, and finance new HUD-Code manufactured homes, especially those installed on rental homesites within land lease communities, large and small, nationwide.

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POSTSCRIPT.

Have you purchased your copy of Community Management in the Manufactured Housing Industry? You really should. It’s that good! To do so, visit www.educatemhc.com

George Allen, CPM, MHM; c/o Educate