Repurposed Steel Shipping Containers or Manufactured Housing?
COBA7® via community-investor.com Blog # 332 Copyright @ 18 January 2015
Perspective. ‘Land-lease-lifestyle Communities, a.k.a. manufactured home communities and ‘mobile home parks’, comprise the real estate component of manufactured housing.’
This blog posting is the primary national advocacy voice, official ombudsman, research reporter, & online communication media for all LLLCommunities in North America!
To input this blog &/or affiliate with Community Owners (7 Part) Business Alliance®, a..k.a. COBA7®, use Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764
Introduction to this week’s COBA7® blog posting at community-investor.com website:
Beginning this Introduction differently from previous postings, as Parts I & II following, have to do with the gist of what’s quoted here from the January 2015 issue of RISMedia’s REAL ESTATE magazine. First the quote, then my introductory comment:
“As the McMansion era continues to fade into the abyss, the green building movement is picking up speed with each passing day. In fact, many of today’s buyers are trading square footage for spaces that are not only smaller, but eco-friendly to boot. There’s also much more attention being paid to unique building materials such as re-purposed steel shipping containers.” P. #6.
But wait! Why are these folk overlooking the greenest, efficiency supportive housing type manufactured in the U.S., to consider living in re-purposed steel shipping containers? Probably because 1) HUD-Code manufactured homes are no longer ‘affordable’, and will be less so in the days ahead, as our industry acquiesces to comply with expensive DOE energy standards; 2) we lack easy access to (chattel capital) financing needed to mate homebuyer/site lessees, to rental homesites in land-lease-lifestyle communities; and, 3) we do nothing to ‘spread the word’ about the desirability of contemporary singlesection and multisection Community Series Homes, or CSH
Models. Now, ‘read on’ for the details…
Not a fan of crystal balls! But now. in manufactured housing history, I clearly see what ‘projects’ & more, must be done, if this industry & its’ real estate component, LLLCommunities, are to be revived as this nation’s main source of affordable housing!
‘Evolution of a Business Model’, continues the challenge described in Part I of this week’s blog posting; and let’s you know, as a blog flogger (reader) where to go for, as radio commentator Paul Harvey, used to say, ‘the rest of the story’, and how to get it!
A Look Into Manufactured Housing’s
There Are Projects Afoot & Planned That’ll Affect All of Us!
Sometimes searches for the hidden and obscure cause us to overlook the obvious, even what’s ‘hidden in plain sight’. Such was our experience recently, when pondering, ‘Why aren’t manufactured housing’s national advocacy bodies communicating contemporary paradigm shifts occurring throughout the industry and land-lease-lifestyle community (a.k.a. manufactured home community) realty asset class? ANSWER? Because, for the first time in the 70 year history of the manufactured housing, we have NO print trade publications reporting industry’s news beyond publication of self-serving Press Releases! If you think I jest or err, pick up the sole remaining tabloid and search for ‘new news’ & ‘new columnists’ therein. You’ll find neither. Take a look at the Allen Letter professional journal. What do you find there? ‘New news’ yes, but only pertaining to the LLLCommunity income-producing property type. And yes, there’s also the Allen CONFIDENTIAL!, but that’s a high-priced business newsletter featuring strategic MH & LLLCommunity ‘stats & info’ for dozens of senior corporate executives and portfolio owner/operators who insist on ‘Knowing what’s going on’ well before their peers.
Hence the gist of this week’s blog posting. A taste of projects afoot and planned, that’ll affect all of us, during the weeks and months ahead:
• Did you know? There’re efforts afoot, right now, to create a web-based Pre-home Purchase Counseling Program for individuals and families contemplating buying a new or resale HUD-Code manufactured home sited within a land-lease-lifestyle community. Yep; sure is. And if you’d like to be in touch with the folk preparing said aid, to serve as a resource, or perhaps ‘user’ of the program, let them know via the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. Hint. Yes, these are Community Owner (7 Part) Business Alliance®, or COBA7® affiliates hard at work in your behalf.
• Lease-Option. To date, much talked about, but little done, to fully articulate a practical $ program that’ll ‘pass regulatory muster’ across most state lines, and enable small to mid-sized LLLCommunity owners/operators to effectively consummate home transactions on-site in LLLCommunities. Again, if you’d like to be considered a resource person, or potential end user, of such an L-O program when ready, make your presence known via the aforementioned Official MHIndustry HOTLINE. Yes again; COBA7 affiliates at work on your behalf.
• LLLCommunity owners/operators = as you likely already know, the ‘New Breed of MHRetailer & Lender’. In fact, that moniker will go into the new edition of the MHIndustry’s Official Lexicon when updated in June, and distributed with the Allen Letter professional journal. Anyway, the project here, is to quantify the number of new HUD-Code manufactured homes being shipped directly into LLLCommunities nationwide! We already know certain large property portfolios buy new homes in bulk, need to know what percentage of 2014 & 2015 shipment volume is being affected in this manner. Why? Think about it….
• Frost Free Foundation or FFF. As you likely realize, this is the third blog posting covering this subject. See blog postings # 326 & 331. The project here is to encourage every HUD-Code home manufacturer to include complete description and protocols of FFF in their firm’s Installation Manuals shipped with new homes. To not do so, subjects LLLCommunity owners, siting new homes, to $5,000.00+/- in reconstruction of rental homesite costs – even if existing decades old foundations haven’t failed, but do NOT meet the federal manufactured housing installation standards codified in 2007, but not fully enforced until year 2015 and beyond. When will national advocacy bodies get on board with this timely and cost savings project, where our housing product & LLLCommunities are concerned?
• The Big Picture in Two Parts, maybe Three. Huh? That’s right; someone has taken the time, and made the effort, to – once again – describe the sorry and sordid events, of the past few decades, that brought the manufactured housing industry, and by extension LLLCommunities, to its’ knees, shipment wise, for the past six years (@ average of 53,000+/- new homes/year). Part I was the feature story in the January 2015 issue of the Allen Letter professional journal. Part II, a detailed description of manufactured housing’s flawed operating model and ‘Ten Recommended Model Changes’, will be the feature in the February 2015 issue. Hopefully you’re reading the newsletter. If not; well, you’re missing the effort to turn our industry and asset class around, to reclaim national market share of factory-built housing! To participate, phone the aforementioned Official MHIndustry HOTLINE and affiliate with COBA7 at any one of three $ option levels.
There’s more, much more going on, but these five projects suffice for now. That’s why you need to read this weekly blog posting – to get ‘new news’ available nowhere else!
EVOLUTION OF A BUSINESS MODEL
PAST, PRESENT & FUTURE
There was a time when state MHAssociations together, were as politically powerful as the (then) one manufacturer-funded national advocacy body; when there was only one such trade entity (pre-1986) ‘inside the capitol beltway’; mobile home park owners did not buy new homes – ever, to fill vacant rental homesites; and everyone, for awhile, seemed to be in collusion to turn our homebuyer/site lessee customers ‘upside down’ in their new home transactions.
Yes, all this occurred until the turn of the 21st Century. The HUD-Code manufactured housing industry’s Business Model, prior to year 2000, was a lively and profitable interaction among 1) home manufacturers, 2) independent (street) MHRetailers & ‘company stores’, 3) (then) manufactured home community owners/operators, and 4) independent third party chattel finance companies. Then the $ bottom fell out, as easily accessible chattel capital went away, nary to return.
Today? 1) home manufacturers now ship new homes at 20% of their estimated optimum capacity of 250,000 homes per hear, and 2) two thirds of independent (street) MHRetailers are gone from the marketing scene, and 3) easily accessible chattel capital, after 15 years has not returned to manufactured housing. BUT, some of the shipment slack has been picked up by 3) land-lease-lifestyle community (portfolio) owners/operators, a.k.a. ‘The New Breed of MHRetailer & Lender’ – buying and selling new homes on-site and often self-financing the transactions. And what ‘cherry picking’ of $ deals there is to be had, is garnered by the now ‘3 Lenders + 1’ who remain active in the MHBusiness: 21st Mortgage Corporation, Triad Financial Services, Inc., & CU Factory Built Lending, + Vanderbilt Mortgage& Finance, Inc.…the first and fourth firms being Berkshire Hathaway companies.
Tomorrow? Depends on whether the ‘selling & self-financing of new homes on-site in LLLCommunities’ trend continues to grow in $ volume, and breadth (i.e. spread among smaller owners/operators not presently engaged), OR we realize a new and practical means of filling vacant rental homesites with new homes (e.g. modular homes, ‘park model RVs’, ‘tiny houses’, etc.) – complete with financing. If NOT, manufactured housing will continue to languish at 60,000 new home shipments per year – until home manufacturers treat their LLLCommunity partners with respect, relative to home design, emphasis on Community Series Homes (characterized by WOW! factors & durability-enhancing features), and market their product like they want it to SELL, i.e. emphasis on ‘affordable pricing’ rather than default, every time they have an opportunity, to the fallible ‘Big Box = Big Bucks!’ mindset.
Specifically, here’s what some folk believe is needed to move this future scenario today?
• Manufacturers. Cultivate working ‘home sales & service’ relationships with not only LLLCommunity owners/operators with large property portfolio, but small Mom & Pop-sized properties too. Ask what they want on their Community Series Home, in the way of durability-enhancing features, and deliver at a truly affordable price and (now) reasonable freight charge. One example. Do you realize how much it’s appreciated when hot water heaters are mounted three inches off the floor, so drain hoses can be attached and effective maintenance effected? (Yes, we’re asking for that courtesy!) And, IF you want your firm, and your Business Development Managers included in the Community Series Home directory being updated, telephone the Official MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764. By the way, COBA7® is negotiating with a national buyers’ group to secure bulk purchase discounts on building materials and aftermarket goods. If you want your firm to be part of this initiative, affiliate with the Community Owners (7 Part) Business Alliance® when you phone!
• Land-lease-lifestyle Communities. Face it, if we’re to have a viable FUTURE, as property owners/operators, we must separate ourselves from trade bodies tightly controlled by a few housing manufacturers and as few mega-portfolio players. As a realty asset class, our collective influence there numbers fewer than 100 firms nationwide, among 50,000+/- LLLCommunities and 500+/- property portfolios. A mere ‘drop in the bucket’. As one mid-sized property portfolio owner/operator recently put it:
‘When I buy a new MH, or a dozen MHs, the ‘per floor fee’ passed onto me – and ultimately the homebuyer/site lessee customer, should go to the national advocacy body or bodies directly promoting and protecting my political, regulatory, and business interests, not just those of the manufacturer(s) who sold me the home(s).” (Lightly edited re ‘homebuyer/site lessee’. GFA)
This is a message increasingly communicated, out of frustration over perceived marginalization during the past several years. It’s not too late to turn that situation around, but will it be soon and effective enough to make a difference? It’s going to take enlightened and bold leadership, the sooner the better.
• What else? Yes, there’s more, much more, but you’ll have to read about it in Part II, of the two part series, published in the (February) Allen Letter professional journal. To do so, phone the aforementioned Official MHIndustry HOTLINIE, and affiliate with COBA7®. Goal is to have 400+/- COBA7® MHInsiders by the end of year 2015.
Speaking of COBA7®. If you plan to be at the MHShow in Louisville, KY., this week, 21-23 January 2016, make it a point to look me up – and share your views on what’s good and not so good about manufactured housing and LLLCommunities these days. How to find me? Stop by the IMHA (Illinois) booth and ask for me by name. And if you have business interests in Illinois, take time to become a member of this rejuvenated state MHAssociation!
And know what? If you’ve read the 26th annual ALLEN REPORT, ‘Chapter 1 of COBA7® History’, you know ‘Luavul’ is where I was challenged, two years ago, to “Do what you’ve gotta do!”; and this time last year, we did so – birthing the Community Owners (7 Part) Business Alliance®! So, especially if you’re among the 200+ ‘MHInsiders’ affiliating during the past 12 months, stop by and introduce yourself! And if you haven’t done so, but want to affiliate, ask me for a COBA7® brochure! Plus, I’ll have special gifts for you, & MHInsiders, until my supply runs dry! See YOU in Luavul! GFA
George Allen, CPM, MHM
Box 3 47024, Indpls, IN. 46247