Fight, Flight or Freeze?

Fight, Flight or Freeze?

+ more on, ‘better to lease than be S.A.F.E.d’; MHImage & YOU; Tony’s Musings; CHURN; &, ‘Four 7 Year Cycles for Your Landlease Community!


My late foundryman Dad was wont to say, “Learn something new every day!” Well, today is one of those days. Heretofore, when teaching Manufactured Housing Manager (‘MHM’) certification candidates the finer points of Developing Good Resident Relations, in general; and, ‘conflict resolution’ in particular, I’d advise: “When having to be involved, get feuding parties seated, eliminating the fight and flight alternatives.” Well, recently read where those two ‘Fs’ are parts of a triad known as the ‘fight-flight-freeze response’ to perceived threats. I guess knowing two out of three wasn’t all that bad. Anyway, our personal – and perhaps by extension, the manufactured housing industry’s response, during the past decade, to its’ perceived threat of annihilation, has been what? Fight it off, run from it, or freeze until deciding the nature of the threat?

Perhaps all three! How so? At the turn of the century, MHIndustry’s perceived threat had to do with loss of national housing market share to the site – built housing folk. At which time, one can make a pretty good case that HUD Code housing manufacturers, for awhile, successfully ‘fought the competition’ by aggressively entering the land/home (package) market, via local housing market MHRetailers, selling and siting our unique, affordable, very homelike housing product. Remember the huge multisection homes (We called them ‘doublewides’ in the 1970s & 80s.) and 80’ long singlesection homes of the time?

But then, self – interest in keeping manufactured housing’s ‘372,843 unit shipments per year’ production lines humming, motivated collaboration with third party sources of chattel (personal property) lending, and owners/operators of newly developed/expanded landlease (nee manufactured home) communities, to offer ‘no money down’ deals, adjustable rate and ‘teaser rate’ mortgages, as well as reduced or ‘free site rent’, soon turning our customers upside down financially. At that point the ‘fight’ went out of our game, and the housing finance segment of our industry took ‘flight’ – yet to return, ten years later! WE became the perceived threat (i.e. Our own worst enemy!); soon prompting the tongue in cheek motto, ‘Be a stud! Sell a HUD!’

By the time year 2008 rolled around, another housing bubble (site – built) burst. And since third party chattel finance hadn’t returned to the HUD Code housing industry, the manufacturing segment ‘froze in place’, due to lack of these options (i.e. Few land/home opportunities & minimal chattel loans for homes in LLCommunities), forced to await eventual amelioration of these perceived ‘lack of financing’ threats. And frankly, that’s where we continue to be today, ‘frozen in place’; but with one notable exception: (property) owner financing of new and resale homes on – site in landlease communities (‘LLCommunities’). This contemporary reality has been the subject of several recent blog postings at this website; so, if you want to learn more, scroll back through the archived blogs to detail the word picture just painted. You’ll learn enough to fill several days with fresh knowledge….


Last week’s blog posting, also Part II, introduced the MHIndustry and LLCommunity’s new bromide: “Better to lease than be S.A.F.E.d!” This new truism was reinforced in Ken Rishel’s latest Chattel Finance Newsletter, when he answered a query about implementing ‘rent to buy’ and ‘lease to own’ programs, to avoid regulatory issues of the S.A.F.E. Act. Ken writes: “…these are still credit transactions and…subject to the S.A.F.E. Act.” (+) “There could even be criminal charges brought under the RICO statutes, given the theory (a business enterprise) is engaging in an ongoing conspiracy to evade the law.” P.2. (lightly edited. GFA) Reach Rishel via (217) 971-3968.

For some, looks like now might be time to, pull out those dusty old rental homesite leases of the late 1970s and early 80s, update them, and use to fill vacant LLCommunity sites with leased homes!


I call this, ‘a LLCommunity owner’s lament’. It was sent to this blogger in response to an earlier posting at this website, regarding ‘everyone’s role’ in working to improve the pubic image of our affordable housing product and community lifestyle.

“I’ve spent lots of money over the years upgrading my properties, only to wind up selling them to buyers who let them quickly fall into disrepair. I worked diligently to improve the image of these properties in their local housing markets. Appears the majority of my efforts and investment have been for nothing! When others (i.e. new LLCommunity owners/operators) don’t follow the good precedent set for them, it’s not only discouraging, but soon contributes to our ongoing public image challenge. Just needed to vent!”

How many others feel the same way? Maybe too many times we boast about ‘taking over troubled properties’, turning them around, effecting improved curb appeal and enhanced profitability, without realizing there’s a too frequent down side to some realty transactions. What to do? It’s pretty obvious. Whether a present day owner/operator, or a new, would – be investor in the asset class, each of us has a day – by – day responsibility to ‘do our part’ to enhance the public image of HUD Code manufactured housing and LLCommunities! Are you doing your important part?


Call this retro (i.e. back; backward; behind) manufactured housing! It’s not going to recur, but interesting nonetheless, for a blog responder to recall, in “…1970, my first full year in this business, there were no national floor plan lenders, and personal (chattel) financing was at high rates, for a seven year term. Home manufacturers collected a 10% down payment when home was ordered, then freight charges and a trust agreement given to the ‘toter’ (a.k.a. transporter) upon delivery of the new home, to be taken to the bank to collect a check. Back then, the only place to put ‘dem mobile homes’ was in ‘dem parks’, of course. And by 1972 we were shipping 500,000 homes. No HUD, some state regs, and MHMI tags. Even then, those (dealers) committed to serving the customer with a quality product and great service, won big time. What are we missing? There’s no single reason for us to fail, except us. Hmm.” N


Even Tony Kovach, publisher of ezine Manufactured Home Marketing Sales Management got into the act this past week, with some pretty salient observations as to what’s ‘going on’ and ‘not going on’, relative to manufactured housing, on the national scene. Here’re his four points: 1) Obama staff points out past administration favored home ownership, this one promotes rental housing; 2) FHFA/GSE’s have been, and continue to work mightily, Not to Lend to effect housing purchases; 3) FHA Title I’s new stringent financial guarantee guidelines, for lenders, keeps many lenders away; and, 4) now appears to be ‘safer & easier’ to lease homes in LLCommunities than having to comply with the sifting sands of the S.A.F.E. Act, when selling and financing. Appears our federal government has switched 180 degrees away from home ownership, to strong emphasis on leasehold interests. (847) 730-3692


Last week’s blog hinted this week, I’d explore the sensitive subject: ‘To Churn or to Nurture’? Specifically; when owning/operating a LLCommunity, and or selling new and resale homes on – site, deciding whether to ‘make easy money’ or ‘build lasting value’. Well guess what? Didn’t get far into that heady dual topic before realizing how many toes I’d likely be walking on, when citing even a few examples of churn. Still want to explore the subject, just need more time to research, marshal my experiences, and consider my thoughts on the subject. For now, suffice it to know, ‘churning & nurturing’ have been around as long as there’ve been rental properties. The matter received quasi official MHIndustry attention at the first National State of the Asset Class (‘NSAC’) caucus in Tampa, FL., on 27 February 2008, when identified as one of Five Action Areas (Still in play!), by 100+/- LLCommunity folk gathered from throughout the U.S., to wit:

“Value proposition. Ensure a fair interplay of housing product pricing, financing, and value, with site rentals and more….”

Churn? I’ll leave you with a defining thought or two about the word and concept. Even a classic Webster’s dictionary’s ‘take’ on the word provides a viable starting point: “To engage in excessive trading (of stocks, etc.) to increase commissions”. Hmm. How’s that translate to the field of realty in general, home sales in particular? “To facilitate excessive turnover of contract sale homes, to increase (number of) down payments, commissions, and other fees.” Churn was relatively common practice in the late 1970s, as owners/operators segued from ‘rental units’ to ‘contract sale’ transactions, often when readying their property(ies) for sale (marketing). Hopefully this is far less a reality today, as enlightened owners/operators realize ‘building value’ (i.e. stable, rent – paying clientele, a.k.a. residents) is easier, more cost effective, and more worthwhile in the long run, than churning ‘easy money’ in the short term. But that’s as far as I’m comfortable taking that subject this week.


Many readers of this weekly blog posting are also paid subscribers to the Allen Letter professional journal. Know the September 2010 issue features an expanded work originally penned by Richard ‘Dick’ Bessire of California – domiciled, Bessire & Casenhiser (One of this nation’s, and our industry’s largest, oldest, and most respected fee property management firms!). The piece features four Seven Year Cycles, apropos to professional property (i.e. realty) management, but applied specifically to the landlease community real estate asset class! My guess is, many owners/operators will clip, mount and retain this ’28 year cyclic business (operations) plan’ for reference, time and again, during the years ahead. Don’t miss this unique learning experience opportunity! To subscribe, phone the MHIndustry HOTLINE cited at the end of the following paragraph.


End Note. To those blog readers accessing this week’s posting via a blast email message, know there’s a 19th International Networking Roundtable brochure attached to the conveying email message. If you haven’t registered to attend yet, don’t delay. We’re already more than halfway to our max number of attendees. Remember; this is the sole national 2 ½ day gathering designed specifically for the advanced educational, interpersonal networking, and realty deal – making needs of all LLCommunity owners/operators in North America! Questions? Call the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.


George Allen, Realtor®, CPM®Emeritus, MHM
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024 Indianapolis, IN. 46247 (317) 346-7156
(317) 346-7156

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