Did You Know?
Blog # 589 @ 12 June 2020; Copyright 2020. Educatemhc.com
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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New Dates for 29th Networking Roundtable: 7-9 July 2021; Nashville, TN.
Already we are planning something special, out of the ordinary where manufactured housing & land lease community trade gatherings are concerned. Details to follow when timing is right!
Did You Know?
May 2020 jobs report forecasted a LOSS of 9 million employment opportunities; but when actual performance numbers became available, everyone was shocked to see an INCREASE of 2.5 million jobs – making this the largest one month employment gain in U.S. history! Yes, this is the ‘makings’ of a V-shaped, rather than U-shaped economic recovery curve. So, everyone, let’s do our part to sustain this forward and upward momentum going into the summer months!
42 Year Comparison of MH; Then & Now!
How Things Were in 1978, & Now, During Year 2020
This interesting topic better fits my ALLEN LEGACY column in the back end of every issue of MHInsider magazine. After all, that’s where I get to write freely about various historic aspects of manufactured housing and land lease communities. And who knows? Maybe this blog posting will be expanded upon, during the months ahead, and wind up there for even broader readership.
For now, let’s go with 1978 – 2020 comparisons relative to trade terminology, rent collection, rules & regulations, resident relations, new housing sales, rental units, consolidation of the realty asset class, REITs, professional property management, utilities, and housing finance. to name a few categories.
In 1978, even though the new HUD-Code had been enacted, during 1976, it was commonplace to hear talk of trailers, mobile homes, singlewides & doublewides, tenants & toters; also trailer park & mobile home park. Today, none of those terms are in everyday use among savvy businessmen and women. Instead, we commonly hear, write, and talk about manufactured housing & housing, singlesection & multisection homes, residents or homeowner/site lessees, and transporters; also, land lease community. And of course there’re more examples, e.g. no longer plot, lot, pad, or stall; but rather rental homesite, or simply site.
How ‘bout rent collection? Back in 1978, it was commonplace to accept cash for monthly site rent payment. And due date could well be any date during the month – usually the anniversary date of when a ‘tenant’ moved his/her home into the ‘park’. Also back then, refuse removal and water expense was included, rather than submetered and billed separately, in the monthly rental bill; but not anymore, in most portfolio owned/operated communities. Today, rent collection is via personal check or electronic means (even debit payment), and based on the same ‘due date’ each month for everyone.
Rules & Regulations were also commonplace ‘back in the day’, usually required by licensing states, to be in writing and publicly posted. Not in a licensure state? Then not something that had to be done. During the 1990s there was a push, initiated and popularized by semi-retired freelance consultant Chrissy Jackson, ACM, to refer to ‘rules & regs’ as ‘Guidelines for Living’! Better sounding moniker, for sure, but maybe not carrying the potential disciplinary weight of the perennial ‘rules & regs’ term. Today? One hears and uses both alternatives.
Then there’s resident relations. Believe it or not, this was not a widely practiced concept in the ‘manufactured home community’ business prior to the 1990s. Seriously. It wasn’t until then, that now retired Martin Newby, of Newby Management in FL., encouraged the fledgling National Communities Council (before it was a division of MHI) to embrace this resident-focused concept. Today, enlightened land lease community owners/operators speak of the 6-Rs of Resident Relation, as being Good Resident Relations = More Resident Referrals = Max Resident Retention! Not a bad rule of thumb for professional property management of this unique type income-producing realty!
Speaking of professional property management; do you realize this is the most serious shortfall of all, where land lease community management is concerned? Back in the 1970s, one could take the Certified Apartment Manager (‘CAM’) course via National Apartment Association, or Approved Resident Manager (‘ARM’) course via Institute of Real Estate Management, and ‘hope’ some of what one learned would apply to managing one’s mobile home park. Today, however, conscientious community owners/operators utilize either the Manufactured Housing Manager (‘MHM’) program available via EducateMHC.com, or MHI’s MHEI program: Accredited Community Manager (‘ACM’). The sole common denominator, re professional property management, is IREM’s Certified Property Manager (‘CPM’) program. Today, there’re only about 125 CPMs who’ve declared an affinity for this realty asset class.
New HUD-Code home sales. Now here’s where there’s been a sea change in the way we do MHBusiness! Back in the heyday of manufactured housing (i.e. 1970s) the vast majority of new housing infill within communities occurred via ‘street dealers’ & ‘company stores’ – today, collectively referred to as Independent (street) MHRetailers – a trade moniker suggested by veteran freelance consultant William Carr of Iowa. However, today, up to 50 percent of new HUD-Code homes are sold and shipped directly into land lease communities for marketing, sale, and seller-financing there! This has to do with the loss of easy access to chattel capital, by MHRetailers, at the turn of the 21st century. Today’s land lease community owners/operators well know, they have to handle new home sales and financing on their own, if they’re to survive, let alone thrive, in this business model.
A vestigial occupancy-enhancing practice of the 1970s, that all but disappeared during the next 30 years – only to return a decade or so ago, is the rental of HUD-Code homes installed on-site! Major difference? ‘Back then’, rentals were often resale and reconditioned mobile homes; today they’re almost always new HUD-Code homes. ‘Back then’, some if not many, owners/operators collected ‘unit rent’ weekly rather than monthly like site rent. Today? They go with monthly collections, but also ensure a corporate rep (maintenance man?) visits every home regularly, ‘inspecting for vermin’ and changing filters in heaters, etc. (i.e. ensuring rental unit is kept in good condition).
Consolidation. During 1970s, thru 1987, there were but 25 known portfolio owners/operators of mobile home parks/manufactured home communities across the U.S. Then the realty asset class ‘consolidated’ as syndicators (1970s & 80s), then REITs & REIT imitators (mid-1990s), Resolution Trust Corporation (‘RTC’) deals, ‘equity play’ transactions, and now hedge funds, acquired, it seems, every land lease community containing more than 100 rental homesites! Today, there are easily 500+ land lease community portfolios domiciled throughout North America. For more information, read the 31st ALLEN REPORT, available via educatemhc.com. A sidebar consequence of consolidation, among land lease communities, has to do with the wholesale negative effect the practice has had on state manufactured housing trade body membership and influence.
On-site utilities. During the 1970s, investors, for the most part, preferred to acquire mobile home parks that featured self-contained water wells/pressure tanks, and wastewater treatment facilities. Why? Put them into excellent operating condition and run them far less expensively than buying those services from local municipalities – if even available. However, all that changed, as EPA regs tightened, and effluent reporting standards made it all but impossible for small businesses to afford to operate with such close tolerances.
Sure, there are additional areas of comparison – then and now, but you surely get the idea that ‘much has indeed changed’ during the past four plus decades. What are some of the topics to maybe be covered in future blog postings, or the Allen Legacy column in MHInsider magazine?
• Unique design homes to test various markets, over time; for example, developer series homes (1990s), community series homes (2009), and now, CrossMod (2020) homes to appeal to underserved markets. Also the discussion regarding ‘big box = big bucks’ homes versus role of ADUs (Accessory Dwelling Units), and RVs as ‘homes on-site’, especially on functionally-obsolete rental homesites.
• Change from reliance, among land lease community owners/operators, on HUD-Code housing manufacturer ‘reps’ for specifying new home brand, size, features, and more. Today? Use of the do-it-yourself ‘Ah Ha! & Uh Oh! Worksheet’ to calculate ‘risky’ and ‘affordable’ price points on any home.
• Uncertain attempts, over the decades, to transition the manufactured housing industry from its historic D&R Delivery reputation (i.e. ‘Drop & Run’), relative to new home delivery, to tacit responsibility for the safe and secure installation of said homes.
• Lack of manufactured housing sales training, outside MHRetail sales centers, ‘back in the day’ versus, since year 2016, special training via factory tours and classroom instruction for land lease community owners/operators. This alone has spawned an entire array of training aids, e.g. ‘Six Right Ps of Marketing’ = Product, Place, Price, Promotion, People, Process.
• Grading and valuation of land lease communities too, has come a long long way. The Woodall System hasn’t been updated since 1976; now replaced with the ABClassification System. And would be buyers of smaller, average condition communities now routinely use the New Rule of 72, to estimate capitalized income value of such properties.
And the list goes on. Continue to read this blog posting every week, to stay ‘in the know’ about manufactured housing and land lease community operations.
George Allen, CPM, MHM. c/o EducateMHC.com