You Won’t Read Any of What Follows, Anywhere Else in the MHIndustry!

You Won’t Read Any of What Follows, Anywhere Else in the MHIndustry!

I.

No NSAC – III next month in Florida! Despite an announcement in the 22nd annual ALLEN REPORT – first distributed at the rejuvenated Louisville MHShow in Kentucky last week, the ‘National State of the Asset Class caucus III, (will not meet) to refine the 2nd of Randy Rowe’s Five Points’: Need for more chattel financing sources!

Why not? Sent a ‘test the waters’ mailing to 50 landlease community owners/operators actively engaged in seller – financing of new and resale home transactions on – site, who also happen to be on the asset class’ Exclusive 200 name ‘Insiders List’ – and received but five responses, or 10%. When I phone – polled them, and others, identified two reasons for NOT convening YET: First, the largest portfolio ‘players’ have programs in place and eschew distraction, for the time being. Second, Thanks to the federal S.A.F.E. Act and variegated state implementation thereof, ‘most everyone else’ favor Wait & See attitudes, before doing anything. So, we’ll wait awhile.

Interestingly however, every sole proprietor and small portfolio owner/operator I polled, made it a point to say they support a separate NSAC caucus, that’d elevate the earlier stated secondary focus of ‘too high homesite rent rates’- on the part of some mega portfolio firms, to primary focus! Now, that was a surprise – or was it?

In the meantime, if you can’t or don’t want to wait for the ‘chattel finance regulatory debris to settle’, before moving ahead with a self – finance program of your own, here’re the only five MHIndustry resources available to you today:

• Buy a copy of Manufactured Housing $$$ Primer for $25.00, via (317) 346-7156

• Attend Ken Rishel’s Chattel Finance Workshop (217) 971-3968 & read newsletter

• Ask Dick Ernst about CU Factory – Built Housing’s new program (972) 503-3201

• See Matt Kerlin (800) 955-0021 for info on 21st Mortgage Corporation’s program

• Use ‘Ah Ha! & Uh Oh! worksheet to calculate ‘affordable’ & ‘risky’ housing ‘price points’ in any local U.S. housing market. (317) 346-7156.

Furthermore, plan to attend the Manufactured Housing Institute’s (‘MHI’) National Communities Council FORUM, the day before this year’s MHCongress, in Las Vegas. Why? Entire program focus, this time around – in April 2011, is on property owner self – finance of new and resale home sales transactions within LLCommunities! For information, contact Thayer Long @ (703) 558-0678.

II.

An Intellectually Honest Debate, within and throughout the manufactured housing industry. There’s no way this is going to play out in the online communication blogosphere. Oh, it’s tempting to try, for sure….just read the quoted blog responses following. No, intellectually honest debate occurs best, when and where primary parties are face – to – face, then properly schooled and guided throughout the debate process. Such a timely and much needed forum could occur at a future meeting of the industry’s de facto Think Tank (i.e. Urban Land Institute’s MHCC) – if that wasn’t such a ‘closed society’ forum. Another possibility would be a One Hour Open Discussion, during a future Manufactured Housing Institute meeting – if internal and industry segment power politics could be kept at bay. The MHCongress is ‘out of the question’, as it’s more a trade show than ‘guiding light’; and, the International Networking Roundtable plays only to the landlease (nee manufactured home) community asset class needs. Would YOU patronize a national intellectually honest debate if one was planned this Summer? To express your opinion(s), respond directly to this blog posting or via the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

Here’re recent responses to previous blog postings on this and related topics:

“Too bad, too sad for (home) manufacturers. So many are already gone, and those left need to awaken their imaginations and intelligence. Yes, I know, that assumes (the survivors) have the intelligence and willingness to identify and get out into the (local housing) markets.” N
versus

“…I think it’s unfair to say ‘We (HUD Code home manufacturers) Don’t Get It!’, because not all the houses at the (Louisville) show were low end models built for communities. That is clearly an important market we are working to better serve, with low price points. But it isn’t only about communities.” K (lightly edited for length)

See what I mean? This is an honest intellectual debate waiting to happen! And most likely, it will not occur! For example; here’re just a couple debate parameters:

• All housing is local housing market specific, per climate, demographics, zoning, & LLCommunity occupancy. What will sell in one locale, won’t sell elsewhere!

• Which point(s) of view to embrace? Be an affordable housing purveyor advocate or ‘Bigger Box = Bigger Bucks!’? Housing contractor or street MHRetailer only?

What can YOU DO, if YOU AGREE the manufactured housing industry, and it’s elected leaders, should be engaging in honest intellectual debate regarding our collective future as this nation’s premier source of affordable, non – subsidized, quality, energy efficient, transportable, attractive, quality housing? Whether you’re an active dues – paying member of one or both national advocacy bodies, and or one or more state associations, let them know how YOU FEEL about this timely, increasingly strategic (Because the future of our industry and asset class may indeed be ‘on the line here!’) matter. Will YOU PARTICIPATE if a national honest intellectual debate occurs? Thought so….

III.

Affordable housing & housing affordability still a bugaboo almost everywhere one looks and reads these days. What follows is quoted from the January/February issue of the Institute of Real Estate Management’s prestigious Journal of Property Management, page # 8:

“Affordable housing in Florida is going green…and gold. The $33 million townhouse development called East Village will target very low and low – income families earning between $15,000 and $49,500 annually in Davie, Florida. Monthly rents at the 155 unit complex will start at $416. Average unit size will be more than 1,000 square feet. Amenities will include a community lake surrounded by walking paths, a swimming pool, children’s splash fountain, exercise facility, playground/tot lot, library and computer lab.” Whew! Who wouldn’t want to live there?

OK, here’s ‘the rub #1’. While there are several formulae and measures of housing affordability*1, the most commonly recognized ones include:

• 30% Housing Expense Factor or HEF
• Housing Opportunity Index or HOI
• Housing Wage or HW

In the HEF instance, this means folk who’re earning $15,000/year annual gross income or AGI, will be expected to pay no more than $375.00/month rent – for their rental housing to be considered ‘affordable’. Well, that’s $41.00/month less than the ‘starting rent’ of $416.00, or a net difference (shortfall – unless subsidized) of $492.00/year. Who’s making up that difference? And while it’s unlikely all 155 units will be rented by $15,000/year AGI folk; if that was the case, it’d be a $56,580 annual shortfall in overall rental income. However, mix in some – or many, $49,500/year AGI folk, paying 30% HEF @ $1,238.00/month, as the appropriately compensating balancing factor. Wonder what happens if and when these ‘opposite ends of the affordability extreme’ get to talking to one another about their respective ‘affordable’ monthly rent rates or $375.00 and $1,238.00, for the same sized apartment unit? And then there’s the question as to who’s really footing the bill to make all this happen.

Hence, in this tight raw land development finance market, here’s ‘the rub # 2’. This 155 unit, $33,000,000.00 townhouse development, pencils out to $212,903.00 per ‘affordable’ unit! Wanna know where all this ‘affordable housing’ money comes from? “Funding for the project stems from federal stimulus funds, Low Income Housing Tax Credit (LIHTC) equity, a Town of Davie SHIP Loan, a Broward County HOME Loan and conventional financing from Citi Community Capital.”

Bottom line? Affordable housing and or housing affordability can, and oft does, mean whatever one wants it to mean! ‘Affordable’ has become the hackneyed catchall term of choice throughout the housing industry; brashly preempted on one hand, by the low income housing folk; and, irretrievably fuzzied by land and housing developers looking to curry favor with political shelterforce activists, on their way to securing quasi – public funding their next project.

***

End Note.

1. HOUSING AFFORDOGRAPHY, ‘Study of Affordable Housing Formulae & Measures of Housing Affordability’, George Allen, Realtor®, CPM®Emeritus, MHM., PMN Publishing, Franklin, IN., June 2008.

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

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