A Clayton Homes Reveal, FOCUS Groups Return, & Wealth Redistribution
; 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 posting is sole national advocate, official ombudsman, historian, research reporter, education resource & online communication media for North American land lease communities
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INTRODUCTION: Almost everything you’ve wanted to know about Kevin Clayton, Clayton Homes, and Berkshire-Hathaway, but didn’t know who to ask. It’s coming your way soon!
And FOCUS Groups – a popular land lease community owner education resource of the past being resurrected this Summer? Also, U.S. Senator Elizabeth Warren throws her political influence into aggressive rent increase fray in Iowa. All three excitingeveents in this week’s blog
An Insider Look at the Allen CONFIDENTIAL! Newsletter
‘Dark colored sports jackets, open-neck blue sports shirts & blue jeans’…the corporate uniform at Clayton Homes, when Kevin & his three top execs gather for a two page photo spread in the May 2019 issue of Builder magazine.’ That’s how the one of ten strategic news stories, in the June issue of TAC! begins.
Then follows five news bytes every one of you reading this should want to know: ‘Mr. Buffett’s dream scenario for a family….’, specific counts relative to Clayton’s corporate infrastructure, the firm’s five essential checkpoints for potential acquisition targets, Clayton’s nexus to success, and ‘new class’ of homes.
But don’t fret. While the June TAC! will be distributed next week, the same story will likely be featured in the July issue of the Allen Letter. So, three ways for you to learn things about Clayton Homes you never knew before: TAC!, Allen Letter, and your own copy of Builder magazine.
‘Land Lease Community Lifestyle Done Well’ REVISITED!
In last week’s blog posting (#534) we revisited the once very popular FOCUS Group concept, long in play among (then) manufactured home community owners/operators several years ago. While I certainly hoped for response to the idea, I was SURPRISED at the number – and nature of, positive responses, from contemporary land lease community owners/operators interested in getting together, once again, in these small group 1 ½ day sessions!
By way of review; what we’re talking about here, is where/when community owners, including small to mid-sized portfolio ‘players’, recommend topics of active interest, to the FOCUS Group meeting organizer. Who, in turn, arranges for a come together of a dozen owners/operators, preferably on-site in an easily accessed land lease community with a suitable clubhouse (O perhaps, in this case, at the RV/MH Hall of Fame in Elkhart, IN., on 5 August 2019). The organizer narrows the topic list down to four, maybe five – doable in a day’s time; then informs interested parties as to the date and location of a host hotel and specific meeting location.
The usual sequence. Networking dinner together the first night. Meet on-site the next morning. Work thru the agreed upon agenda, starting no later than 9AM. Work thru lunch, ending with a new topic in the early afternoon. Conclude by 2PM or thereabouts, for those needing to head home. Others oft stay for more conversation, tour of the property, etc… Meeting costs? Shared pro rata by attendees; usually honorarium for meeting organizer and facility rental. Also food and beverage unless meeting location host sponsors same. When topics are announced, ahead of time, participants are expected to come prepared to discuss, even have handout material to share with peers.
So, if seriously interested in participating in a FOCUS Group meeting on 5 August 2019 either at a local hotel or the RV/MH Hall of Fame, in Elkhart, IN. (Same day as this year’s annual RV/MH Hall of Fame Induction Banquet…call 574/293-2344 for tickets), let me know ASAP via email: email@example.com or Official MHIndustry HOTLINE: (877)MFD-HSNG or 633-4764. Willing to plan this FOCUS Group meeting if a minimum of ten individuals commit to attend.
FOCUS Groups have been and continue to be an excellent way for owners/operators to ensure Land Lease Community(ies) Lifestyle is Done Well Going Forward! So consider this opportunity!
Wealth Redistribution in Year 2020 & Beyond?
Expect to hear more about this contentious topic as socialist-leaning politicians strive to gain electoral traction with the American citizenry. A recent article in Bloomburg Businessweek was titled, The Wealth Detective’, with the subtitle: ‘The rich know how to keep their money secret. Economist Gabriel Zucman knows how to find it.’ Here are a couple gems contained therein:
• “Minimum amount Zucman calculated wealthy stash in offshore accounts = $7.6 trillion” – “accounting for 8% of global household financial wealth; 80% of those assets were hidden from governments, resulting in about @200 billion in lost tax revenue per year.”
• “Zucman & Saez’s latest estimates show the top 0.1% of taxpayers – about 170,000 families in a country of 330 million people – control 20% of American wealth, the highest share since 1929. The top 1% control 39% of U.S. wealth, and the bottom 90% have only 26%. The bottom half of Americans combined, have a negative net worth.”
Let’s bring this high-flying projection of unbalanced financial gain home to roost. Recall how we’ve been talking, of late in this blog, about the private equity wave of land lease community consolidation? And how aggressive rental homesite rate increases appear to be the common characteristic of the movement? Well, ‘proof of this’ is playing out in the state of Iowa. There, U.S. Senator Elizabeth Warren and Iowa representative Dave Loebsack recently wrote directly to private equity firm Havenspark Capital, of Utah, about the firm’s 58 percent ‘rent increase’ at Golfview MH Court, where site rent jumped from $315 to $490 when the firm acquired the land lease community.
While this incident can be viewed as a ‘shot across the bow’ of predatory landlording, it does have serious implication for any land lease community owner/operator, not just the private equity wave folk, who’re tempted to raise rental homesite rates beyond the traditional 3:1 ratio (i.e. 3BR2B apartments at $900/month? Then LLCommunity site rent maybe at $300/month+/-).
Besides, if HUD-Code manufactured housing AND land lease communities really want to continue being considered a key part of the solution to this nation’s ongoing affordable housing crisis; well, they need to keep housing prices AND rental homesite rates ‘together’ within the 30 percent Housing Expense Factor (‘HEF’), i.e. Area Median Income (‘AMI’) = $36,000, then 30% HEF suggests $10,800/year, or $900/month is available for PITI (principal, interest, taxes, insurance) AND site rent together! The wildcard factor here, though, is whether annual household utility expenses are paid as part of the 30% HEF – leaving less $ available for house & rent; or, paid ‘in addition to’ the 30% HEF, making the transaction ‘risky’ as the homeowner/site lessee now pays a Household Expense Factor (‘HEF’) greater than the affordable 30 percent. Think about it. How are your in-community deals structured? To put your customers ‘at risk’ or keep them in ‘affordable housing’? How the utility bill question is answered does make a difference;!
George Allen, CPM, MHM
Box # 47024, Indianapolis, IN. 46247