George Allen / EducateMHC Blog Mobile Home & Land Lease Community Advocate & Expert

April 2, 2021

‘Where There’s Smoke There’s Fire’ – & Now, for Part II

Filed under: Uncategorized — George Allen @ 8:08 am

Blog Posting # 632 @ 2 April 2021: EducateMHC

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

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INTRODUCTION: Few of the more than 600 blogs I’ve penned during the past dozen years have elicited as much reader response as #632, ‘Where There’s Smoke There’s Fire’. Had no idea so many manufactured housing and land lease community businessmen and women had so much pent-up emotion, angst, and opinions about matters such as CONSOLIDATION and consequences thereof…GFA

‘Where There’s Smoke There’s Fire’ –

& Now, for Part II:

‘Where There’s Fire There’s Ire!’

Last week’s blog posting (#631) identified manufactured housing smoke, described plenty of fire, and elicited long-suppressed ire from businesspersons active in the industry and among land lease communities nationwide. Let’s begin with a sample lament from both sides of the manufactured housing coin.

A HUD-Code Housing Manufacturer’s Lament. ‘Federal government stimulus checks and unemployment supplements have made it far too easy for our employees not to work. In turn these $ handouts have affected saw mills, making them unable to ship cut and ship lumber, forcing housing manufacturing plants to raise unit prices and delay promised deliveries!’

A Land Lease Community Owner’s Lament. “I ordered a new (manufactured) home five months ago and agreed to pay $39,000 for it. There’s been one price increase in the interim, and I learned yesterday it’s ‘on its way’ – with a new (final?) price of $45,800. Ouch! That’s a 36 percent price increase in just five months!”

While these laments likely have more to do with the 2020 pandemic than CONSOLIDATION per se, rest assured the latter’s influence is indeed present. What follows here are observations and remarks from veteran manufactured housing and land lease community businessmen and women, as well as trade association executives.

But first, here’s six encouraging remarks submitted by blog floggers (readers) last week:

‘Nice Piece’. PM

“This is a good read George, and I compliment your attempt to ‘awaken’ those still involved and those whose future is tied to MH’s success in the factory and on the ground. Monopoly is accurate.” NB

‘Good for you for addressing this’. PB

‘Your blog is right on point’. RR

And finally, “That took courage; but it needed to be said, and it needed to be said by a credible person like you!” BB

So, what do these and other folk have to say about our industry and realty asset class today, relative to CONSOLIDATION and related matters? It’s not a pretty picture. All that follows is lightly edited. GFA

“Our previous discussions centered around associations and manufacturers investing ($) in positively marketing and promoting our industry. However, the tide started turning in 2015 as more institutional investors took notice of our industry, especially when they saw how our asset class was not affected in 2020 (by the pandemic), turning that tide into a tidal wave.”

And, “With the growth of REITs, and investors with no skin in the game, community ownership has dramatically changed. I am not saying all the above are lousy owners or poor operators. But, their company structure, lack of personal investment of capital or guarantees, complete lack of knowledge about community management and home sales, has created a monster.*1 State by state we see these companies buy up communities at ridiculous prices due to low mortgage interest rates, then raise the rents and terribly mistreat their residents. They have now brought the wrath of state and national regulatory agencies upon themselves, and other private property owners!”

“The actions of these companies will, in the end, cause greater regulation to take place on our industry. In my opinion, we do not have the political clout and money to get out of this impending disaster.”

“With CONSOLIDATION we have lost so many good individuals (sole proprietors) who were very active both locally and nationally. Look at how the Industry Steering Committee (‘ISC’) began (in 1993) and ultimately became the platform for the National Communities Council division of MHI. How many of the original participants are still active?” Answer? Out of 19, only six.

Summary. “It’s the new pyramid scheme, with institutional investors raping the industry, and (they) will benefit the most financially – initially due to their aggressive tactics. There are two opposing camps: 1) investors like myself who follow the ‘old industry rules’ of give and receive.*2 And, 2) investors who are accountable only to the bottom line, irrespective of the people being affected. (HUD-Code) manufacturers are also part of this problem, as they are salivating from the demand (for housing to fill vacant rental homesites), and are pushing the cost of ‘affordable housing’ closer to traditional housing cost.”*3

Possible solutions. “There are only two ways to solve the current situation. First; the easy way would be by legislation and rent control; which initially looks good to voters (i.e. homeowners/site lessees), but in the long term, stifles investment in communities in which they live – turning them back into ‘trailer parks’. Second; a more difficult path – of getting industry advocates, like you and me – not the institutional investment property lobbyists, together with decision makers (i.e. regulators) to chart out reward and punishment for good and bad actors. Ready to explain if asked.”

We’re still, at this point, merely scratching the ‘smoke, fire & ire’ issues aggravated by COVID-19 in the short run (year 2020) and CONSOLIDATION consequences in the long run (1994-2021).

End Notes.

1. Community Management. New to the industry and asset class? Learn and earn certification in professional property management via the one day Manufactured Housing Manager class offered by EducateMHC (visit www.educatemhc.com) If unable to attend, purchase the MHM textbook: Community Management in the Manufactured Housing Industry; Also available from EducateMHC

2. Home Sales. Best training? Offered periodically by the IMHA/RVIC (Indiana MH association): ‘Two Days of Plant Tours & Home Sales Seminars’ (317) 247-6258

3. New Home Shipments & Stock Market Performance. To stay abreast of these seminal data points, read and study the monthly ‘MHShipment & Stock Market Report’, available only from EducateMHC (visit www.educatemhc.com)

George Allen, CPM, MHM
EducateMHC

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