The CAMPAIGN; calc ‘price points’; & $$$ talk!

The CAMPAIGN, Calculating Housing Price Points, & $$$ Talk!

HUD Housing CAMPAIGN Continues to Generate Lively Interest, Introducing the ‘Ah Ha! & Uh Oh! Housing Price Points Worksheet’ &
How Manufactured Housing Shoots Itself in the Foot, Hand & Head!


For a second consecutive week, The CAMPAIGN to promote HUD Code manufactured housing, proposed at a recent ULI Manufactured Housing Communities Council meeting by, stimulates record level response from readers of this blog at!

Four executives from the Cherry Hill, New Jersey firm described how the manufactured housing industry “…could (should) create new distribution channels by effectively partnering with big box retailers, and other similar venues, to bring new homes face – to – face with new and old target markets.” *1 This past week I asked Lauren Shippy, Strategic Planner for, to summarize The CAMPAIGN.

‘This isn’t just another marketing campaign. It’s about creating a new channel in which to integrate the value supply chain (of manufactured housing), so gaps are bridged between the home manufacturer and financier, landlease community or building site, and the consumer/homebuyer.

The CAMPAIGN begins with a strategically located showcase event (featuring one or more manufactured homes), framed and vigorously promoted with regional and continuous marketing and public relations measures, to capture the attention of targeted demographics, and initiate procedures to change consumer perception.

Once consumer’s attention is focused on the housing display, sponsors have opportunities to educate them about ordering, financing, and siting their new home! The process connects the dots for the consumer/homebuyer in a simple and straightforward manner.

The CAMPAIGN also allows sponsors to identify and overcome product marketing hurdles, one region at a time. Using the showcase event as a forum for educational and bridge – building seminars, sponsors can demonstrate the numerous benefits of affordable manufactured housing to local banks, municipalities, zoning boards, even local employers.

Housing design flexibility provides opportunity for various sectors, within the manufactured housing industry (e.g. landlease communities), to produce campaign – supporting promotions, directed at their particular demographic in a specific region. In summary, The CAMPAIGN is comprised of components working together to increase the demand for manufactured housing, making the design, buying, and installation process easy for the consumer, and resolve historic hurdles in local housing market. (Edited. GFA)

What’s next? SUCCESS or FAILURE to implement The CAMPAIGN is up to YOU! Last week, suggested you contact Thayer Long at the Manufactured Housing Institute (‘MHI’): (703) 558-0678; Danny Ghorbani at the Manufactured Housing Association for Regulatory Reform (‘MHARR’): (202) 783-4087; & Amy Haven, at (609) 313-5885. Did you? If not; and another week goes by without your vocal support, this creative initiative will, sorry to say, surely die, like an earlier similar proposal unanimously lauded at the 2008 Networking Roundtable! How so? HUD Code housing manufacturers, later that Fall at MHI’s annual meeting, voted down a plan to launch a Nationwide Brand Awareness & Image Improvement Campaign, fearing non – participating HUD Code manufacturers would have a pricing advantage over those supporting that campaign with fee assessments on each new home shipped.

Understand this, if The CAMPAIGN fails to materialize this time around, just as in baseball and crime, manufactured housing will be one strike, or opportunity, away from (Or, closer to!) being terminal; you know, as in the ‘Three strikes & you’re out!’ call or death knell! Is that how HUD Code housing wants to exit the national housing market? With nary a whimper? I surely hope not; and trust you feel the same. Frankly, the manufactured housing industry’s future is in your hands today! What will YOU do?

Are YOU and I alone in promoting The CAMPAIGN? NO! Reread last week’s blog posting at this website! And here’re recent, additional (edited) thoughts on the timely and strategic subject:

• ‘With regard to The CAMPAIGN. I agree an image campaign is well over due. Remember when Champion Homes (nee Champion Enterprises) effected a national campaign a couple decades ago – on the Johnny Carson Show? I’m thinking any image campaign should be localized, funded by (home) manufacturers, landlease community owners/operators, and MHRetailers in that local housing market.” One caveat however: “Until we have a firmer handle on our (chattel) financing situation, now may not be the best time to kick off such a program; rather, ‘keep our powder dry’ for now.” DO

• “We have always wanted to change the image of our industry, to equal and better than ‘mainstream’ homes. However, our (business) success is and always will be, associated with the down payment and monthly payment (amounts) required for safe, comfortable, low maintenance homes quickly delivered for move – in.” NB

• The CAMPAIGN “Can’t hurt, until some manufacturer will not back his (housing) product, or a ‘trailer’ dealer messes over a customer – but still worth a try. Better we return to the lowest cost housing product we can build; that is and always will be our market.”

OK; ‘the ball is NOW in your court’. Again, what are YOU going to do? Pass or play???


When the time comes to calculate appropriate home sale price(s) for a prospective homebuyer visiting your standalone or on – site salescenter, or estimate price points for new inventory to be ordered when opening a salescenter in a new local housing market, ‘How do you do it?’ Historically, in the rough and tumble world of HUD Code manufactured housing, we’ve oft relied on the self – serving advice of manufacturers’ regional sales representatives, concocted a formula of our own that sometimes seemed to work, adjusted the easily researched ‘book value’ of resale homes, or simply priced existing or newly ordered inventory by the seat of our pants. Now there’s a much better way! Use the ‘Ah Ha! & Uh Oh! Formulae’ for “…estimating maximum recommended ‘affordable’ & ‘risky’ purchase (or sale) prices for new & resale, privately – owned homes of any type, sited on realty owned fee simple with home, or leased – as in a landlease community (‘LLCommunity’)”. *2

The ‘Ah Ha! & Uh Oh!’ methodology begins with either a prospective homebuyer or household’s Annual Gross Income (‘AGI’), or the Area Median Income (‘AMI’) of any local housing market with a postal zip code. For the purpose of calculations to follow, AGI & AMI can, and will be in this example, the same dollar amount, e.g. $60,498. Specifically, this is the National Association of Realtors (‘NAR’) estimated national Median Family Income or MFI (akin to AGI), for between 2006 and the present.

Side Note. Why the ‘Ah Ha! & Uh Oh!’ Moniker? Originally, the formula was used to estimate home sales and price points per ‘affordable housing and housing affordability’ alone. Well, Creighton Weber, realty loan originator with Wells Fargo, noticed the first letters of the four words were AHHA, and he morphed them into the common exclamation: ‘Ah Ha!’; as in, “Ah Ha!, here’s how to effectively estimate affordable housing price points!” And when the scope of the formula was broadened, to include less stringent measures of housing affordability, accommodating homebuyers willing to take on more risk, when buying and financing a new or resale home, it made sense to round out the title with the exclamation, ‘Uh Oh!’ Watch and see how these two thesis materialize in the paragraphs to follow…

Here’re the ‘givens’ and related factors, in order of appearance, in the eight step calculation process. $60,498 MFI (Just as easily, AGI or AMI – the latter, easily available from, per postal zip code, of subject local housing market); a 30% Household Expense Factor or HEF, per ‘loaded’ (Including PITI & household/utility expenses) and ‘barebones’ (Only PI, no TI, etc.) perspectives.*3 Then, either 75% or 100% of estimated ‘loaded’ & ‘barebones’ HEF amounts available for annual PI & site rent – if applicable; and in this case, $333/month, depending on whether it’s to be an ‘affordable’ (e.g. 75% of HEF amount) or ‘risky’ (e.g. 100% of HEF amount) loan commitment on part of borrower. Loan terms of 6.5% & 20 year terms for a real estate secured, and 9.5% & 20 year terms for a chattel (personal property) mortgage. Also assume a 10% of sales price down payment . Final step to the ‘Ah Ha! & Uh Oh!’ methodology, is to adjust the fee simple ‘affordable’ and ‘risky’ home sale prices and price point calculations, according to the value of underlying real estate, a key factor whose value varies widely, e.g. between $5,000 and $50,000+/- per site or acre, depending on whether raw or developed land, rural or urban locale, and other conditions.

With all that said, and given the factors cited in the previous paragraph, here’re the four new or resale home sales prices, and or inventory price points, for homes (to be) sited as follows:

With an ‘affordable’ loan and within a landlease community: $95,000.00

With a ‘risky’ loan (Using 100% of HEF for P&I only): $141,000.00

With an ‘affordable’ loan and on realty owned fee simple: $169,000.00, minus value of underlying realty, e.g. @ -$50,000 = $119,000.00+/-

With a ‘risky’ loan (Using 100% of HEF for P&I only): $225,000.00, minus
value of underlying realty, e.g. @ -$50,000 = $175,000.00+/-

Bottom lines? With an annual income of $60,498.00, buy a new or resale manufactured (or modular) home sited in a LLCommunity for an ‘affordable’ $95,000.00; or, a effect a somewhat riskier transaction (by dint of paying taxes & insurance & utility payments in addition to the 30% HEF) for $141,000; and pay $333/month site rent for professional property management, generally lower taxes (personal property vs. realty), and property amenities, among other benefit.

Or, given same $60,498.00, buy a new or resale manufactured (or modular) home sited on realty owned fee simple for an ‘affordable’ $169,000.00, less the value of the underlying real estate; or, effect a somewhat riskier transaction (by dint of paying taxes & insurance & utility payments in addition to of the 30% HEF) for $225,000.00, less the value of the underlying real estate; and be responsible for all the routine maintenance of the home and privately – owned site, whether in a subdivision or elsewhere.

Now, with all that said, again understand there’re additional factors, e.g. annual real estate taxes; where improved ‘realty owned fee simple’ generally pays much higher taxes than usage taxes levied on homes sited in landlease communities, where property owner also pays real estate taxes on the overall multifamily rental property; and tax credits, rent control, etc..


What do LLCommunity owners/operators talk about when they get together these days? Following is the slightly edited transcript of an actual conversation among small to mid – sized property portfolio folk, discussing the purchase, pricing, resale, repossession, and financing of used manufactured homes.

“Every time I run across one of these ______ repos, I wonder why the ‘suits’ on Wall Street, and the powers – that – be at that lender have so much difficulty understanding what we see day in and day out. This is a (manufactured) home in our LLCommunity in _______. The lender financed it for 30 years! The buyer paid site rent and house payments like clockwork for 12 years, then moved out, saying there’s no way she’s going to pay another 18 years on that home. Not sure what her ‘grunt line’ is, but I wouldn’t be surprised if she would have stayed in the home, if she only had just three more years to pay on it – for a total of 15 years.”

“Well, our property manager and maintenance man went to look at another _____repo on private property in _______ – a ’97, 24X40 (20% smaller than a 16X76). Their buyer paid regularly for 14 years, then decided he wasn’t willing to pay another 16 years. Considering the $3,500 we’d have to spend for move/setup, $4K for back taxes and rehab, $2K for decks and skirting rehab, and what we figure we could sell it for, we offered $3-4K for the manufactured home.” Lender’s response? “No! We want $12,000. ‘Comps’ have come in at $11,000. So, lowest we could go is around $9,000, since the balance on the loan is $38,000.” LLCommunity owner: “Unbelievable. Homeowner pays for 14 years and only shaves $3,000 off the principal balance! Don’t know about the rest of you guys, but I haven’t been able to buy a repo at a price that makes sense in about six months.”

“Over the past few months, we’ve bought eight manufactured homes. Two were in our LLCommunity; the rest in other owners’ properties. Best deals I’m finding are coming from homeowners who need to sell quickly – of which there seem to be a lot these days. We’re turning them around and doing Lonnie Deals (‘contract sales’).”

“Just got back from Jack Miller’s tribute seminar in Tampa. Pretty much everyone there sees things continuing to slide for the next two or three years, and credit remaining tight. This means affordable housing – combined with some type of seller – financing, will be very much in demand. This is what I’m seeing around here. Rarely do we hold a home for more than 30 days before reselling.”

And this summary, by yet another LLCommunity owner/operator: “Conventional lending today is a real conundrum. To the frustration of taxpayers and potential borrowers, beneficiaries (lenders) of TARP, used the funds to acquire weaker banks instead of making new loans, as the government intended, but didn’t require. Those lenders who want to make loans, are being required to follow incredibly strict guidelines, particularly regarding income, credit, and appraised value. Since many potential borrowers have lost their jobs, have little to show for retirement and savings funds, run up credit card balances, etc., many can’t meet the income, down payment, and credit requirements. Those few who can satisfy those requirements then run into appraisers who tell them the property (house) they want to refinance (to take advantage of today’s low rates) is worth half what it was two to three years ago – so they can’t get the loan they need. So, the only loans being ‘closed’ today are to buyers of foreclosed property with 750+ credit scores, high stable income, and 20% down payment. Since few transactions meet all those criteria, bank revenue (from loans) drops and more bank failures are inevitable. To keep more banks from getting into financial trouble, the government’s solution is to tighten lending guidelines. Second verse, same as the first.”


What’s happening? During first and second weeks of November, take a gander at that month’s edition of the Allen Letter professional journal. Why? Feature story is a ‘Request for Proposal’ to acquire the dozen or so Work Product profit centers that comprise GFA Management, Inc. dba PMN Publishing. Think: annual ALLEN Report, Networking Roundtable, two subscriber – supported monthly business newsletters, the popular Manufactured Housing Manager (‘MHM’) training & certification program (with nearly 1,000 MHMs designated to date!), and much more. To obtain a copy, phone (317) 346-7156.

On 17 – 19 November, in Chicago, there’ll be a Captive Finance Workshop. For information, phone Ken Rishel @ (773) 647-3125.

Louisville MHShow is now a definite GO! So; plan to be in Louisville, KY., on 13 & 14 January 2011 to help rejuvenate this valued Midwest manufactured housing event. There’ll be three LLCommunity – oriented seminars on the 13th: the Community Series Home; how to use the above – referenced ‘Ah Ha! & Uh Oh! Formulae’ to estimate home sale and inventory price points in any local housing market in the U.S. For registration information, contact Dennis Hill @ (770) 587-3350.

Plans are moving ahead for NSAC III. LLCommunity owners/operators should watch their mail for a letter to the 250 folk who’re on the Official Insiders List of the asset class. These are the owners/operators generally recognized as being the Movers & Shakers in the MHIndustry and LLCommunity asset class. IF you don’t get a letter by mid – November, phone the MHIndustry HOTLINE (see End Note # 2 below) and request to be invited to this seminal event tentatively scheduled for Florida in early February 2011. Focus? ‘Examining Self – finance from the LLCommunity owners/operator’s Perspective!’ This is where we’ll be talking about the ‘present and future’ of self – finance within the LLCommunity realty asset class for years to come!

End Notes.

1. See blog posting # 111, title: ‘Attention HUD Code Housing Manufacturers! Are You Listening?’ Visit:

2. ‘Ah Ha! & Uh Oh! Formulae’ available FREE by phoning the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

3. PITI = loan principal, interest, taxes, insurance

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

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