Archive for April, 2021

Manufactured Housing to Recover from Black Swan Event?

Friday, April 30th, 2021

Blog Posting # 636 @ 30 April 2021: EducateMHC

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource & communication media for all land lease communities throughout North America!

To input this blog and 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: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: OK blog floggers (‘readers’), we’re well into the new year (2021). Hardly anyone I’ve seen, read, or talked to is willing to describe how they think business consequences and results of the coronavirus pandemic will pan out during the months ahead. So, I’ll go out on a limb here, and share my thoughts on the timely and troubling topic. GFA

Manufactured Housing to Recover from Black Swan Event?

First off; what is a ‘black swan’ event? It’s an unpredictable or unforeseen event, typically with extreme consequences. The coronavirus pandemic of year 2020 certainly fits that two part description, being unexpected and worldwide, then resulting in more than 300,000,000 deaths – that’s only 31 ½ million less than the entire estimated population of the U.S. – at 331,449,281! Reflect on that!

So, where does that leave us today? Personally? Well that’s your perspective based on individual and familial consequences good and bad. In our case, Carolyn and I ended our voluntary self-quarantine at 400 consecutive days, slowly dining out again and mingling with immediate family members and close friends, but not much more – yet. Corporately? For many reading these lines, that’s where the proverbial rubber of decision-making meets the road of ‘where do we go from here’? To some degree or another, every business model, except home repairs and remodeling, has diminished during the past 13 months. What to do today?

Before getting into that (practical plans for the future), this has to be said: the public and political nature of contemporary social discourse are unfortunately lumped together in today’s 24 hours/day new cycle and rabidly partisan civic arena. Know that almost whatever you do or say is going to be evaluated not necessarily ‘how you mean for it to be received’, but rather, through the shifting lenses of race, sexism, and entitlement.

Now, let’s take a look at HUD-Code manufactured housing, land lease communities, and related business sectors.

HUD-Code housing manufacturers. Fewer new HUD-Code homes were shipped during all of 2020 (i.e. 94,390 per IBTS*1) than the previous year @ 94,615.*2 And frankly, 2021, year to date, isn’t looking any better – yet. Why? We await exorbitant lumber prices to ameliorate, federally-incentivized employees to return to work, and reasonable access to chattel capital to return for home-only loans.

Land lease communities. Right now they’re the hottest of all investment (i.e. income-producing) property types, as sub-5 ‘cap rates’ and acquisition overpricing are commonplace, even among smaller, older properties awash with functionally obsolete (i.e. unable to site today’s 16X80 new singlesection homes) rental homesites, crumbling infrastructure and deferred maintenance challenges. Sad to say, but the day will likely come when naïve ‘outside the industry’ investors rue the day they paid near six figures per homesite when they should have paid a modest four figures. In the meantime, there are tens of thousands of vacant rental homsites to fill and not enough reasonably accessible chattel capital to effect home-only loans.*3 Furthermore, land lease community owners/operators continue to weather the storm of federal and state rental assistance and eviction moratoriums.

State manufactured housing trade and advocacy associations. Land lease community consolidation has affected this segment of the manufactured housing industry big time. Membership rolls have diminished year after year, as sole proprietor-owned communities are acquired by one or another of the 500+/- known portfolio ‘players’ throughout North America.*4 A strong membership base, besides providing an operating income base, is (used to be, anyway) necessary for effective legislative lobbying and stopping regulatory overreach. A half dozen land lease communities absorbed into one portfolio does not necessarily result in a half dozen new members; but rather, just one – the corporate headquarters. What to do? Establish the practical worth of the association and aggressively recruit new members!

Independent (street) MHRetailers.*5 Here, present and future profitable performance has everything to do with whether the MHRetialer is indeed an independent ‘player’ (i.e. in search of chattel capital for home-only loans) or a ‘company store’ financially nourished at the teat of one or another public/private corporation. We lost an estimated (by MHI) 10,000 independent (street) MHRetailers shortly after the turn of the century. Some say the number is now, once again, increasing in several local housing markets across the U.S.

The perennial conundrum (‘a hard question’), still in play here, has to do with the proven ability of HUD-Code housing manufacturers to fabricate new, spacious, energy-efficient factory-built housing at half the ‘square foot price’ of traditional site-built housing VERSUS the inability of ‘anyone’ to persuade local land planners and zoning boards to approve tracts of raw land for development into new land lease communities, even subdivisions. Oh sure, this happens from time to time (Rumors are of it increasing a little now), but what is needed is a continuing gusher of affordable, attainable housing!

So, are we, in manufactured housing and land lease communities, the only ones reflecting on recovery from the COVIC 19 Black Swan Event of 2020? No, here’s just one brief reflection on the matter, quoted from ‘Leading in a Black Swan Event’: “Everyone is going to have a pantry with canned goods and a box of masks, a bunch of gloves, and a lot of alcohol wipes.” & “But how does this relate to commercial real estate? There are a lot of guesses, but only time will tell.”*6

Yes, the year 2021 clock is ticking. What will you be doing to restore business and profitability to the manufactured housing industry and land lease communities nationwide? As usual, I’m open to hearing/reading your recommended measures; via gfa7156@aaol.com

End Notes.
1. Institute for Building Safety & Technology (‘IBTS’) is HUD’s contractor tasked with ‘keeping score’ by way of tracking new home shipments monthly.
2. Stay abreast of monthly and annual new home shipment statistics by reading EducateMHC’s monthly ‘MH Shipment & Public Company Stock Market Report’ as part of The Allen Confidential business newsletter each month. Visit www.educatemhc.com
3. There’s only one book describing the professional property management of land lease communities: Community Management in the Manufactured Housing Industry. Available for purchase, again, via www.educatemhc.com
4. This total is up from 25 known portfolio firms in 1987. For more information, read SWAN SONG and latest (32nd) annual ALLEN REPORT. Both via www.educatemhc.com
5. A trade term coined two decades ago by industry consultant William Carr of Rainmaker.
6. Quoted from GlobeSt. Real Estate Forum Management, March/April 2021, page # 54

George Allen, CPM, MHM

A Few (Sales) Oldies But Goodies!

Thursday, April 22nd, 2021

Blog Posting # 635 @ 23 April 2021: EducateMHC

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource & communication media for all land lease communities throughout North America!

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

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: a true potpourri of manufactured housing and land lease community gems, some contemporary statistics, and review of a new historic novel authored by Oliver North.

I.

A Few (Sales) Oldies But Goodies!

You a Luddite or futurist? I suppose I’m more the former than the latter, but I do have occasional moments of inspiration and creativity. And in today’s world, there’s something to be said for ‘looking back’ to see how certain things were done in the past. That’s the gist of what follows here. Simple measures I saw and experienced way back in the 1970s (that’s 50+ years ago!), when I was cherry to the manufactured housing business model and land lease community real estate asset class.

Did you know some state manufactured housing associations created ‘mobile home living’ education packages designed to be taught to ‘home ed’ classes? They did, and in many instances, provided trained instructors to present the material to high school students (i.e. soon to be, would-be homebuyers).

Education packages were often comprised of 5 ½ X 8” booklets on various salient topics. One was titled ‘What you should know about Manufactured Home Safety’. In 15 pages, students were taught how to protect their home against fire, how to safely handle electricity, heat one’s home safely, and protect the home from wind and burglars. Where are those pamphlets today? And we wonder why more folk don’t come our way to buy our homes….

At one time, 8 ½ X 11’ coloring books could be found in sales offices of most ‘mobile home’ dealerships everywhere. The coloring books, featuring various configurations of manufactured homes were popular with children, and kept them occupied while their parents shopped for a home. And there were always copies of various MHIndustry trade publications to read and enjoy.

Did you know it was once commonplace for local community owners/operators to visit independent (street) MHRetailers on a regular basis, leaving behind custom property brochures, business cards, even mounted photographs; all for educating would be homebuyers. Oh, and want to be a real hit with the sales staff? Bring along some fresh-baked cookies!

Today, many of the ‘old ways of doing things’ have passed from the active business scene. As many, if not more, new HUD-Code homes are sold on-site in land lease communities than via independent (street) MHRetail sales outlets and company stores. And as long as the industry doesn’t enjoy ‘easy access to chattel capital’ (per pre year 2000), this paradigm shift will remain intact.

But that doesn’t mean that some, if not all, the measures just described, can’t be applied today. Even more! For instance, rarely in the past, have ‘dealerships’, even communities, been routinely Mystery Shopped, to observe and document on the job performance by home sales and site leasing staffers – on the telephone and in person. This happens all the time within the conventional apartment property type, department stores, fast food stores, and more. Know there’s a (reproduce able) standard property management Mystery Shopping form in the text, Community Management in the Manufactured Housing Industry, Appendix # 15. Available for purchase via www.educatemhc.com

One final oldies tip. Savvy owners/operators of land lease communities have long known it’s a good idea to be a member of the local Chamber of Commerce for at least two good reasons: first, the property gets to display their brochure in the chamber’s literature rack at their office (no ‘nonmember community gets to do this); and, just as important – attending periodic chamber luncheons and events positions the owner and or on-site manager as respectable businesspersons in the local housing market.

II.

SALMAGUNDI

Now, long ago readers of the (now defunct) Allen Letter (rebranded as The Allen Confidential) will recognize the title – SALMAGUNDI, for what it is, the ‘little of this, a little of that’ column that ran for years. But know what? It accurately describes what’s to follow here for at least a few lines: again, ‘a little of this & a little of that’, as gleaned from various news sources of late.

From Residential Update, published by the Appraisal Institute, in early April 2021:

“46 percent of Americans missed at least one mortgage or rent payment since the beginning of the coronavirus pandemic, and 25 percent missed more than one payment, according to survey results released on 11 March by personal finance website GOBankingRates.”

“More than 11 million families are behind on their mortgage or rent payments, and widespread foreclosures and evictions could occur when federal, state and local pandemic protections stop, according to a report released on 1 march by the Consumer Financial Protection Bureau (‘CFPB’).”

A recent Facebook posting claimed knowledge of 103 million votes cast for President Trump and 37 million cast for President Biden.

Something else longtime readers of my writing will recall, is the annual list of abbreviations published in the (also now defunct) Manufactured Housing Merchandiser magazine.

Remember NIMBY, LULU & BANANA? In land planning and rezoning matters, these are ‘Not in my back yard!’, ‘Locally unwanted land use!’, and ‘Build Absolutely Nothing Anywhere Near Anybody!’ Remember now? Well, here’re two more to add to this list: NUTS and YIMBY. The first = ‘Not under this sun!’ And in enlightened circles of late, YIMBY has made its debut: “YES, in my back yard!’ Now you’ve got the whole repertoire of land planning acronyms and abbreviations.

Here are a few relatively new abbreviations I’ve come across and use upon occasion:

Develop one’s creativity by using SCAMPER: ‘substitute, combine, adapt, magnify, put to other use, eliminate, and rearrange!

How ‘bout MMFI: ‘Make me feel important!’ If not, paint yourself as being CRSU: crude, rude, and socially unacceptable! Bottom line? KWITCHYERBELLYAKIN

And finally, for you stock market investment types, you likely know all about EBITDA; which is to say, ‘earnings before interest, taxes, depreciation & amortization’, as a way to measure a firm’s earnings performance.

III.

‘The Rifleman’

Does the name Oliver North ‘ring a bell’ in your memory bank? It likely does. He’s a Vietnam vet (Silver Star, Bronze Star & two Purple Hearts), worked for President Ronald Reagan, and was the 66th president of the NRA. He’s also founder of the Freedom Alliance.

What I didn’t know about Lt.Col. Oliver North, is that he’s the author of new fewer than seven non-fiction books (e.g. American Heroes in Special Operations) and six fictional novels – including the newest, The Rifleman.

I ordered and received the novel, and then read it in two days – it was that riveting for me. How so? Well, the dust cover summarizes the tale this way:

“On 14 June 1775, the Continental Congress appointed George Washington Commander-in-Chief of the Continental Army and granted his request for ‘ten companies of expert Riflemen.’ Daniel Morgan’s Rifle Company was the first to arrive in Boston to confront the British troops.

They wore hunting shirts, linsey-woolsey leggin’s and moccasins. Each had a tomahawk and a scalping knife in their belts and carried ‘long rifles’ in their hands. Every rifleman was a Patriot volunteer, a tracker, and a hunter. And they could kill a Redcoat at 250 yards.

Morgan chooses young Nathanael Newman as his adjutant – forefather of Peter Newman, the protagonist of Oliver north’s other bestselling novels.

Then the action begins. Reading this book was as much a history lesson for me as it was a Revolutionary War adventure. I could easily imagine their long march, from Virginia up to Massachusetts, dealing with all sorts of combat-related issues of food, clothing, health, and weather. There’s even a love story, of sorts, near the end of the book.

Bottom line for me? One very good, educational, adventuresome ‘read’.

George Allen, CPM, MHM

Responses to ‘Where There’s Smoke There’s Fire & Ire!’

Friday, April 16th, 2021

Blog Posting # 634 @ 16 April 2021: EducateMHC

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource & communication media for all land lease communities throughout North America!

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

Motto: ‘U Support US & WE Serve U!’ Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: Here follows an interesting mix of an Evergreen Issue (i.e. CONSOLIDATION), sad but needed expose’ of the plight of home-only loans, and a rare look back (60 years) into the early history of land lease communities.

I.
Responses to
‘Where There’s Smoke There’s Fire & Ire!’

Commentary continues to arrive from blog readers responding to this hot CONSOLIDATION topic from two and three weeks ago. Here’s a sampling of the responses – lightly edited:

“I appreciate this strong reinforcement of the previous blog message. Furthermore, I recommend walking away from the HUD-Code, and use local building codes already in place. They’re honestly not that much more costly than what we’re enduring now.”

“This blog message hits home. It is all too true. Someone overpaid for a park near me and now their site rent is $155.00/month higher than mine – with no amenities!”

“Ata Boy! Now places like California have made long term leases illegal and subject to rent control wherever enacted, and as of 1/1/25, even overriding existing leases.”

“Thank you for not whitewashing the truth about some of today’s land lease community (large property portfolio) ownership firms. This era of ‘get rich quick’ investment strategies is destined for doom, as real estate investments are cyclical. Why not invest for the long term? Ten years goes by very fast. If the acquisition is properly structured, and capital investments are made within the community, over time everyone will prosper.”

So, where do we go from here? Probably nowhere. Why? Ask yourself: ‘Who’s going to lead efforts to ‘right the wrongs’ of CONSOLIDATION – and other aberrations, among market-dominating HUD-Code housing manufacturers, and some of the largest owners of land lease community property portfolios?’ There’s your answer. No one! And as is oft the case, disparaging remarks will wend themselves my way for even bringing up these timely and troublesome topics.

So very frustrating!

II.
Home-only Loans Not a Priority
with FHFA, Fannie Mae & Freddie Mac

The following salient remarks are quoted directly from a communique distributed by the Manufactured Housing Association for Regulatory Reform (‘MHARR’), dated 25 March 2021:

“…an ongoing scheme by Fannie Mae, Freddie Mac, and FHFA, to exclude the vast bulk of the mainstream manufactured housing consumer financing market from the securitization and secondary market support mandated by Congress through the Duty to Serve Underserved markets 9’DTS’) provision of the Housing and Economic Recovery Act of 2008 (‘HERA’).”

“…FHFA deleted manufactured homes from its’ Enterprise Housing Goals (‘EHG’) for Fannie Mae & Freddie Mac….” relative to “…any DTS-based support for the nearly 80% of affordable mainstream manufactured housing consumer finance market represented by personal property (or ‘chattel’ loans).” – a.k.a. ‘home-only loans’

III.

Saving the Best for Last?

Here follows are promised “…excerpts from the transcript of a talk given by a pioneer park manager at a trade meeting in 1960….” Pp. 30 & 31 in Spencer MacCallum’s The Art of Community. Reproduced here as printed, except for parenthetical remarks for added clarity.

“Not only are many home owners unable, because of the shortage of lots (i.e. rental homesites), to relocate their homes when moving to another city, but they find many parks will only admit homes which have been purchased from them. The desirability of ‘closed’ versus ‘open’ parks is being debated in the industry. Certainly there is more architectural and planning control possible in the closed parks.” Note. In future years, after 1960, ‘closed parks’ will be outlawed as ‘restraint of trade’ measures, tying one arm’s length transaction to another.’ GFA

“You will find that the attitude of the people in a (mobile home) park is very different from that of people who live in apartments or subdivisions. You can move new guests into the park and the next morning when they walk down the street without having been formally introduced, they say good morning, just like on an ocean liner. There is a kind of spirit in a park that is different, and you must (as manager) maintain that.”

Now if you have an old grouch or crab, simply chase him out. Fortunately, under the laws of Florida, I can put anyone out of my park within two hours, and I tell my tenants that if they do not comply, I will hook their trailer (home) and set it out on a federal highway and let them do with it what they want.” Note. This sort of landlord freedom occurred well before enactment of Chapter 723 in the state of Florida. GFA

‘Tenants all respect their neighbors. You do not see any speed limit signs or humps in the road because I tell them when they come in that I am doing them a favor to let them live in my park and they must live like ladies and gentlemen. They must not create a nuisance.”

“I discovered you cannot operate a trailer (mobile home) park with more than one entrance. You must know everybody who comes into your park. You have a big responsibility. In my park I have 12 widows, and I am responsible for them. I have to know who comes into that park. You do not permit any solicitors or tradesmen who are unknown to you or who break your roads down.”

So, there you have it. How at least one on-site property manager viewed his mobile home park management responsibilities 60 years ago! (I was just entering high school at the time; how ‘bout you?)

George Allen, CPM, MHM
EducateMHC

A Brief History of the Mobile Home Park

Friday, April 9th, 2021

Blog Posting # 633 @ 9 April 2021: EducateMHC

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

EducateMHC is the online national advocate, asset class historian, data researcher, education resource & communication media for all land lease communities throughout North America!

To input this blog and/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: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

INTRODUCTION: How ‘bout something different for a change? If you read MHInsider magazine – and you should, you know my Allen Legacy column covers a variety of manufactured housing-related topics from an historical perspective. Well, that’s what follows here today. Specifically, how ‘mobile home parks’ were described by practitioners in 1970 – that’s 51 years ago – well before many of us were even involved in the realty asset class (I started in 1978) we know as land lease communities today! Expect to be entertained.

Had no intention of adding a Part II this week. However, given ‘breaking news’ from MHI and other sources, YOU need to know what’s going on, on the national scene, that could very well affect your business decisions and actions during the months and years ahead.

I.
A Brief History of the Mobile Home Park

What follows here, and in next week’s blog posting, are thumbnail sketches of the history and nature of land lease communities (a.k.a. manufactured home communities, and before that’ mobile home parks’) 51 years ago, described in Spencer Heath MacCallum’s 1970 book, The Art of Community. Next week, we’ll quote “…from the transcript of a talk given by a pioneer park manager at a trade meeting in 1960….”

“The mobile home park represents the first substantial use of ground lease for single-family homes. Its history commenced in the late 1940s, when a few automobile travel trailers began to be manufactured large enough for permanent living. The resulting mobile home was the first successful factory-constructed house. Because it resembled a trailer more than a house, however, and was unfashionable, the significance of this technological accomplishment was overlooked.

From the beginning, mobile homes were distinguished from (travel) trailers by their greater size. The majority of trailers today measure eight feet wide by 20 to 29 feet long, which approaches the maximum load that can be towed behind the family car. Three-fifths of the (housing) units manufactured in 1969 were over 60 feet long, and virtually all were 12 or 14 feet wide.

The trailer and mobile home each gave rise to a distinctive form of proprietary community. Trailering parks trace descent from the early automobile campgrounds, especially in California, of the 1920s.

The mobile home park…is ‘a parcel of land under single ownership which has been planned and improved for placement of mobile homes for non-transient use’. The fact that it (mobile home) is relocatable apparently has psychological appeal. For an increasingly mobile population, it is attractive to think of moving across the country by sending the house ahead and having it ready to step into and prepare a meal on arrival.

In 1969, more than a third of the single-family housing starts in the United States were mobile homes.

Today’s new mobile home parks feature such tangible amenities as sodded and landscaped sites with two-car, off-street parking, underground utilities with central TV antenna system; neighborhood laundry, car wash, and recreational areas; community clubhouse with meeting rooms, dining rooms, exercise and sauna rooms, heated swimming pool, and golf course. A few parks even boast ‘equestrian centers’ and ocean-view lots. But unquestionably, the single major determinant of the quality of life in a park is an intangible, namely, management.” Pp28-30

And this. “Mobile home parks in the United States are estimated at more than 16,000, of which less than 12,000 in 1970 met the minimum standards for listing by Woodall’s, the established directory service in the mobile home park field. The fact that the number of Woodall’s listings has declined by an average of four per cent each year since 1962, despite the construction of new parks, reflects the rapid upgrading of standards required to keep abreast of the changing industry. Only 3,000 parks in 1970 were rated ‘three stars’ or better, the classification which Woodall’s considers to be truly in the housing field and competitive with new parks being built.”*1 P.32 Commentary. That’s 12,000 in 1970 (assuming author’s accuracy), compared to several times that many by 1990 – by dint of the ‘park building boom’ pre-1976, prior to debut of the HUD-Code. And by 1976, the Woodall directory of mobile home parks had ceased publication.*2

End Notes.

1. Text footnote # 31. The Mobile Homes Manufacturers’ Association in 1968 counted 22,000 sanitary district permits for mobile home parks nationwide. However, this figure is known to contain many uses which are not properly parks. Woodall’s Directory of Mobile Home Parks in 1962 contained 16,179 listings.” P.108
2. For a more complete and very interesting history of the Woodall Directory, read George Goldman’s autobiography The Road Less Traveled. Available for purchase via amazon.com
II.
Be Careful What You Wish For…

Manufactured housing’s perennial WISH: Elimination of exclusionary zoning and harmful land use policies nationwide.

WISHFULFILLMENT. “President Biden’s ‘American Jobs Plan’, a $2 trillion spending package….” Specifically, in part, “Eliminate exclusionary zoning and harmful land use policies by establishing a new competitive grant program to award funding to jurisdictions that ‘take concrete steps to eliminate such needless barriers to producing affordable housing’.”*1 In other words, ‘throw money at the problem.’

Unintended Consequence(s). Those akin to what has occurred on college and university campuses across the country; those who routinely accept various forms of federal government fiscal incentives, and those who don’t. In my opinion; in the first instance, we see institutions of heretofore ‘higher learning’ denigrated into campuses where freedom of speech and sharing of ideas are limited to radicals espousing views that oft are, at their best, anti-American. On campuses where this ‘pay-off‘ does not happen, e.g. Hillsdale College in MI. and Liberty University in VA., for starters, where freedom of speech and sharing of ideas is encouraged.

Unintended Consequence for Manufactured Housing? Only the future will tell, if this national debt-growing $2 trillion spending package becomes law. Perhaps land lease communities will be outlawed altogether! And new subdivided parcels of raw land developed into high density communities featuring low price singlesection manufactured homes. That might please some in the industry, but not all. Or perhaps, newly developed land lease communities approved only with rent control provisions, to protect homeowners/site lessees and limit profitability! I can think of other additional aberrations (e.g. plethora of business limiting rules and regulations) resulting from financial incentive boondoggles to local planning and zoning authorities.

Your thoughts on the subject? Send them to gfa7156@aol.com

End Note.
1. Quoted from MHI’s HOUSING ALERT dated 1 April 2021.

III.
NEXT WEEK…
We’ll likely return to the popular subject of ‘Where There’s Smoke There’s Fire & Ire’!

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

Friday, April 2nd, 2021

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!’

EducateMHC is the online national advocate, asset class historian, data researcher, education resource & communication media for all land lease communities throughout North America!

To input this blog and/or affiliate with EducateMHC, telephone Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Also email gfa7156@aol.com 7 visit www.educatemhc.com

Motto: ‘U Support US & WE Serve U! Goal: to promote HUD-Code manufactured housing & land lease communities as U.S. # 1 source of affordable attainable housing! Attend MHM class!

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