Keeping Score & ‘MHI MHARRvelous’ Dream!
Keeping Score, & ‘MHI MHARRvelous’ Dream!
Just How Many Landlease Communities & Rental Homesites?
‘MHI (‘My’) MHARRvelous’ Dream, is to See Chattel $s Return,
Advocacy Bodies Work Together, & We Sell Affordable Housing!
The feature article, ‘How Many Landlease Communities Are There in the U.S.?’ attracted much reader attention when it appeared late last year in MHI’s National Communities Council (‘NCC’) division’s Community Connections newsletter. It’s since been republished as a reprint, and Appendix V in the 22nd annual ALLEN REPORT. For a FREE copy of the reprint; and or acquire a copy of the report proper, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. The ALLEN REPORT & one year subscription to the Allen Letter professional journal ‘together’ cost $250. And when you ask for the FREE reprint, and or ‘special offer’, also request a FREE copy of the reprint ‘To Rent or Not to Rent’…manufactured homes on – site in your landlease (nee manufactured home) community! This latter reprint was also debuted in Community Connections. The point of this paragraph? Simply some Old but Helpful News leading to New News you’ll likely want to read, hear, know…
‘How Many Landlease Community Rental Homesites Are There in the U.S.?’ Several of you asked this question during the past few weeks. So we dusted off some reliable ‘stats’, e.g. 50,000+/- LLCommunities; 85% of which are 100 rental homesites and fewer in size; and 15% of which are larger than 100 rental homesites in size! Then we made two assumptions: the 85 percentile properties average 25 rental homesites apiece in size; while the 15 percentile properties average 150 rental homesites apiece in size. Then it was a simple matter of:
50,000 X .85 = 42,500 properties X 25 sites = 1,062,500 rental homesites
50,000 X .15 = 7,500 properties X 150 sites = 1,125,000 rental homesites
The two subtotals added together = 2,187,500+/- estimated number of rental homesites X 10% vacancy rate (reciprocal of 89.9 or 90% national physical occupancy rate reported in 22nd ALLEN REPORT) = 218,750+/- vacant rental homesites throughout the U.S., with probably 50% of this number classified as being ‘functionally obsolete’, i.e. generally in older landlease communities and too small to handle contemporary ‘big box = big bucks’ manufactured homes.
Wanting to ‘proof’ the preceding figures, we took recent information regarding MHI’s Community Attributes System (‘CAS’) program, to wit: “We have some data on approximately 19,000 (landlease) communities, containing 2.4 million homesites. Roughly 8,000 of these have 100 or more homesites, representing a total of 1.8 million homesites.” DR
Borrowing assumptions, from preceding paragraphs, our ‘proof’ penciled out this way:
8,000 properties X 150 sites = 1,200,000 rental homesites (vs. 1,800,000 @ CAS)
42,000 properties X 25 sites = 1,050,000 rental homesites
And the two subtotals added together = 2,250,000+/- estimated number of rental homesites X 10% vacancy rate = 225,000 vacant rental homesites throughout the U.S. Or, using the CAS figure of 1,800,000 rental homesites (among larger properties), plus 1,062,500 rental homesites among residual of smaller properties, grand total = 2,850,000.
Figurative ‘bottom line’? Total number of rental homesites, among approximately 50,000+/- landlease communities may range from 2,187,500 to 2,850,000, or average of 2,518,750 or roughly 2 ½ million rental homesites; and at 10% vacancy = 250,000+/- vacant rental homesites in landlease communities throughout the U.S.!
‘MHI MHARRvelous Dream!’ begins with this unsolicited albeit critical commentary from a longtime community-investor.com blog ‘flogger’ (reader), setting the stage for what follows:
“MHI & MHARR have proved ineffective and uncaring in regards to financiers and street retailers. (Landlease) Communities have the only cohesion with which to survive and grow…. When communities go it alone, within a few years, they will drag first the retailers, then financiers, to their side. And unless something changes in manufacturers’ ‘love’ of Washington, DC., they will become the pawn of retailers, dealers, financiers, and communities – which ain’t such a bad idea, when you think of it, since they (the dealers, communities, and financiers) are the manufacturers’ customers.” N
Before we proceed with some specific examples, good and marginal, of advocacy body action and inaction in Washington, DC., let’s address a couple notions in the preceding paragraph:
First off, MHI & MHARR are not wholly ineffective and uncaring regarding the chattel finance and retail sales segments of the HUD Code manufactured housing industry. However, their continued disparate approaches (i.e. ‘go along to get along’ diplomacy/consensus building efforts versus ‘confrontation at every turn’ reform efforts) relative to industry issues advocacy, particularly those that are regulatory in nature and affecting the housing manufacturing segment, sure makes it appear, read, and be interpreted that way!
Communities going it alone? That’s doubtful now and going forward. Today, two of three real estate investment trusts (‘REITs’) and several of the ten largest portfolio owners/operators of landlease community property portfolios are direct and active members of MHI’s National Communities Council division. And now that the NCC, once again has a salaried executive, Lisa Brechtel, at the helm, membership numbers and national advocacy for the asset class, in Washington, DC., should only improve.
For those of you who read last week’s posting, ‘George’s Lamentyen Dimension’, you know there’re plans afoot to launch a new, national, not for profit platform to serve the data research & distribution, professional property management education, interpersonal & corporate networking, print & online communication, and deal – making needs of landlease community owners/operators nationwide, including Canada. Such a research and resource – oriented base will be a valuable supplement to advocacy bodies like MHI, the NCC, IREM, MAI, and other realty trade groups in the U.S., as well as CMHI, MHICanada, & CREA in Canada.
Now to those examples of good and not so good action and inaction, by manufactured housing advocacy bodies in Washington, DC.
First off, MHI’s undated White Paper, titled: DODD-FRANK IMPACT ON MANUFACTURED HOUSING, ‘Ensure Access to Affordable Credit in the Manufactured Housing Market’ should be ‘required reading’ for every businessman and woman active in the industry! To obtain a copy, phone Jason Boehlert @ (703) 558-0660.
Too many details to even start to parse here, but know that it’s only via efforts like this, political action by MHI & MHARR, and grassroots influence on federal legislators, will our industry be spared new regulations that’ll make it nigh impossible to fund future manufactured housing chattel loans of less than $78,000 – or even, some say, $50,000.
Then there’s MHARR NEWS, dated 10 June 2011., headlined: ‘INDUSTRY DECLINE WORSENS – DISINFORMATION PERSISTS. Well, I couldn’t find much evidence of specific disinformation, but I did learn 1) two things; 2) took strong issue with one posture; and 3) walked away with four unanswered questions:
Post – production defined. “…retailers, (landlease) communities, finance companies, insurers and other (nonspecified) service entities.” Whether you realize it or not, this is improved trade lingo; as heretofore, MHARR thought and wrote of ‘us’ as being the ‘aftermarket’, as in afterthought and afterbirth. You get the idea…
Then there was this stunning paragraph. “…over the past decade, manufactured housing production has declined by more than 86% (from 373,143 units in 1998 to 50,046 in 2010), while nearly 75% of manufactured housing production facilities (from 430 to fewer than 110 plants) and 7,500 retail (sales) centers have closed over the same period, resulting in the loss of more than 200,000 manufactured housing industry jobs throughout the United States.” Well, the 1998 home shipment total might be closer to 372,843; and, how ‘bout all those new sales jobs created on – site in new landlease community retail salescenters opened during the same time period? This question suggests MHARR spend more time ‘getting to know and understand’ post production folk, like you and me, before trotting out half – baked facts and uninformed opinions.
And this additional example. “…a renewed effort to alter and water down the statutory definition of a ‘manufactured home’ that would introduce ‘trailer’ elements and ‘trailer’ comparisons that the industry fought to end with the 2000 law (i.e. Manufactured Housing Improvement Act of 2000, or ‘MHIA@2000’ in short). And all of these have been packaged, portrayed and ‘spun’ to the industry grassroots as positives.” MHARR
Do YOU know what’s being talked about here? In a nutshell, ‘park model RVs’ (i.e. recreational vehicles that look like miniature houses, less than 400 square feet in size, a.k.a. ‘Granny flats’, and at present not subject to the HUD Code) are increasingly used as year round homes for snowbirds sojourning in Sunbelt regions, and folk struggling to survive our nation’s struggling economy. The issue is whether these homes should be brought under the HUD Code for regulatory purposes, or remain outside as RVs. Apparently MHARR believes ‘park models’ will pollute our HUD housing image.
MHARR appears to dismiss this idea ‘out of hand’, without soliciting any input from post production segments of the industry, with lively and timely interest in the matter. For example; ‘park models’, though more expensive per square foot in cost, are near ideal for siting on functionally obsolete rental homesites in landlease communities. Not saying this is right or wrong, simply that here’s a clear example of the left hand of the industry, figuratively speaking, not knowing what the right hand is doing, or perhaps prefers to do – in an effort to return HUD Code manufactured housing to it’s ‘affordable housing’ roots, i.e. smaller, less expensive homes, as in Community Series Homes or CSH, already discussed in previous blog postings at this web site. And, as was pointed out earlier in this very blog posting, there’re approximately 250,000 vacant rental homesites to fill across the U.S.! At the present level of annual shipments, that’s five years of work, right there!
Four unanswered questions. Then, under the guise of ‘Full & Proper Implementation of MHIA@2000’, MHARR offers four FACT SHEETs, describing perceived shortfalls:
‘HUD has not Appointed a Non – career Program Administrator.’ Agreed! What to do about it? No plan of action proposed in this document. Why?
‘Collective Industry Representation on the Manufactured Housing Consensus Committee or MHCC Must be Restored.’ Agreed! What to do about it? MHARR suggests: “HUD should immediately place non – lobbyist representatives of the industry’s national organizations (i.e. MHI & MHARR) on the MHCC as voting members.” Since they’ve not done it to date, it’s highly unlikely they’re going to read this and do it. So, what now?
‘HUD has undermined the role and authority of the MHCC.’ Agreed! What to do about it? No plan of action proposed in this document. Why?
‘HUD has undermined the independence of the MHCC.’ Agreed! What to do about it? No plan of action proposed in this document. Why?
To my mind, it doesn’t make much sense to identify perceived problems (i.e. Let’s consider them challenges and opportunities!) without making specific recommendations for action to effect substantial and timely change to the unwanted circumstance or circumstances. How’s the old bromide go, ‘If you’re not an integral part of the solution (even just suggesting one), you’re likely part of the overall problem!’ So, for a change, let’s move away from finger – pointing, and together seek answers to questions (as stated above) and solutions to the challenges and opportunities faced by our industry! GFA
George Allen, CPM®Emeritus, MHM®Master
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46247