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Posts Tagged ‘rentals’

Current & Forecast Investing Habits of Millennials, $30 Trillion Dollar Transfer of Wealth Looms

January 18th, 2019 Comments off

 

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Centralization. Globalization. Immigration.

 

Those three words sum up much of what “the establishment” of both major political parties have actively or passively accepted and/or promoted for decades.  Those three words also help explain how Washington, D.C. has become more remote from the people it is supposed to serve.  Those three words help explain why wages have been stagnant for so many years.

That’s simplicity.

Those words are not considered often enough by millennials, or any other group, in the U.S. today.  But they should be pondered as part of the solution in understanding why the world’s wealthiest nation doesn’t even rank in the top 40 countries on earth in the rate of home ownership.

 

These irksome realities are educational opportunities in disguise. So too are specific items about the millennial generation, that over the next 3 to 4 decades will ‘inherit’ an estimated $30 trillion dollars.  Accenture says that $30 trillion will be the largest transfer of wealth, ever.

Morning Brew and the Visual Capitalist provided the data for the following infographic.  Note the relatively low amount being invested in housing?

Record low numbers of millennials think buying a home is a good investment—here’s why. America’s attitude towards home-ownership is changing. Only 48 percent of millennials (age 21-36) believe that buying a home is a good investment, according to the latest ValueInsured Modern Homebuyer Survey,” per CNBC on Aug 23, 2018.

CNBC provided the following infographic.

 

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With that vexing tee up, consider the VC/Morning Brew infographic on the investment habit trends of millennials.

 

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These factoids represent monumental opportunities in disguise.  What are you doing to tap it in your market(s)?

 

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For newcomers to the website not familiar with modern manufactured homes, learn more by clicking the image above or the link here.

 

As a plug, we know from experience how to attract this audience, and the others, and move them from curious to home owners.  It’s obvious from shipment data that others in our HUD code manufactured and modular home industry either don’t understand how the attraction of millennials are accomplished, or they have some other reason why they’ve left millions stuck in rentals. To learn more about our services, click here.

That’s this morning’s Manufactured Housing “Industry News, Tips, and Views Pros Can Use,” © where “We Provide, You Decide.” © ## (News, analysis, and commentary.)

 

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Compelling Information for Renters and Manufactured Home Owners

 

 

 

 

 

 

Manufactured Home Community Best Practices Debate, Rentals vs. Sales and Accounting Methods

May 26th, 2017 Comments off
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Arial photo credit, MHC-MD.com.

A recent post from Eric Enloe, Managing Director of JLL Valuation and Advisory Services has revved up debated topics in the industry – home rentals versus sales – as well as a look at various best practices regarding accounting and corporate structure methods.

Most participants in the manufactured housing industry know that the best way to add value over time to a land lease community is to drive maximum rental growth rates while holding expenses to a lower growth rate,” writes Enloe.

But, did you know you can often add value to a community without investing any time or capital?”

Enloe then provides three “tricks” to maximize community value, as viewed through what he calls the eyes of a lender:

  • Ensure that your leases allow for a pass-through of increases in real estate taxes and other government assessments.

Enloe writes that this lease clause will ensure that, as your property rises in value, a hypothetical increase in real estate taxes doesn’t impair the underwritten value of your property.

  • If you have community-owned homes, make sure you charge yourself the same rent as your third-party pad tenants.

If you charge yourself—or a related entity— below-market pad rent, you could be reducing the value of your property from a lender’s perspective because they are often limited to underwriting rents supported by the rent roll,” Enloe said.

Alternatively,” says Enloe “the lender is not likely to allow you to count community-owned pad rents in excess of unrelated third-party pad rents, but be sure not to short change your community by failing to ensure that community-owned pad sites depict rental rates at least in line with other tenants.”

  • If you have community-owned homes, some of your payroll, as well repairs and maintenance expenses, is likely associated with maintaining these homes rather than the actual land lease community.
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Credit: The Investor.

Enloe writes that, “if you can track these labor and materials expenses separately, or at least make a reasonable estimate of them at the end of each month, many lenders will allow you to deduct these expenses from your property’s operating expenses, thereby increasing the underwritten value of the community.”

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Eric Enloe. Credit: CRE.

He continues, “if the lenders can’t give you credit for your personal property (chattel), you shouldn’t be penalized by counting the expenses for maintaining such chattel as a community operating expense, reducing the underwritten value of your property.”

Following these three simple suggestions,” writes Enloe, “will maximize most lenders’ underwritten value of your community, ensuring the best possible financing terms for yourself or a potential buyer.”

 

Gathering Industry Feedback

As the manufactured housing industry’s trade publication of record, MHProNews asked for industry feedback from professionals in the community sector on Enloe’s article.

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Richard Nodel, owner, Nodel Parks, photo credit, LinkedIn.

I agree with all three points made. I think the most important one has to do with segregating all expense attributable to the home operation separate,” says Richard Nodel of Nodel Parks.

As we know lenders do not like to count the ‘home rental income.’ To help offset that, we need to clearly show all the expenses that could be cut if the rental homes were not there.  Again, nothing controversial there, just good common sense.“

I am in favor of more attention being paid to the ever-growing segment of our business, which is rental housing,” said Nodel.

Sun, ELS and UMH are among those community operators that turned to rentals as a faster way to fill vacant home site.

Bucking the Rental Trend with Home Sales

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Video still from Roberts Resorts are from an exclusive interview, A Cup of Coffee with Scott Roberts of Roberts Resorts, linked here.

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http://www.mhmarketingsalesmanagement.com/cup-of-coffee/a-cup-of-coffee-withscott-roberts

Scott Roberts of Roberts Resorts, is one community professional who is “bucking the trend” in the tide of rentals in communities.

Roberts says that his operation is focused on selling homes, rather than renting them.

Other industry professionals point out that renting homes routinely results in a drop in new manufactured home sales.

While some renters may, over time, decide to buy the home they lease/rent, the total conversions reported to MHProNews typically hover in the low single digit a year range when it comes to the percentage of buyers that become renters.

Other Views

I disagree with the first bullet – rising real estate taxes would be a reflection of rising site rents or occupancy – both of which should cover increases in RET. I assume owners are already charging what the market will bear for site rent,” said one industry professional, off the record.

Other comments included this from a Midwestern operator.

If the owner is at that max, and the RET finally catches up, does it really make sense to go to residents and say, “I just increased your rent for 2018 by $15.  That was before I knew I’d pay an additional l $5 per pad for increased RET.  So I’m passing that on too? Isn’t the increase in RET reflective of the ongoing increase in site rent?”

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Brian Gallagher. Credit: LinkedIn.

Brian Gallagher, Chief Operating and Financial Officer Santefort Real Estate Group, LLC, shared his take regarding point number three in the Enloe article.

Rather than record all home and site expenses on the books of the entity which owns the community and is the borrower on the mortgage, and then ‘deduct’ home related expenses from site operations, it’s much better to establish a separate LLC to account for all home operations, separately from site operations,” Gallagher told MHProNews.

 

A Closing Disclosure

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On the consulting side of MHMarketingSalesManagement, there are companies our sister operations work successfully with that fall into each of these camps.

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MHProNews is not taking a public position on these questions.

Instead, as the industry’s trade publisher of record, we’re highlighting the evolving discussion and debate in the important manufactured home community sector on how these issues are viewed by professionals.  This fuels the useful discussion of what are the best practices for community owner/operators?

The Daily Business News will continue to track these and other industry debates and discussions. ##

(Image credits are as shown above, and when provided by third parties, are shared under fair use guidelines.)

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RC Williams, MHProNews.

Submitted by RC Williams to the Daily Business News for MHProNews.

 

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Manufactured Housing – Hope for Ownership Versus Rentals?

February 13th, 2017 Comments off
ManufacturedHousingHopeforOwnershipVersusRentalscreditTheTruthAboutMortgage-postedtothedailybusinessnewsmhpronewsmhlivingnews

Credit: The truth about mortgage.

What’s the biggest factor driving site built property transitions? The answer may surprise you, but the opportunity for the manufactured housing industry won’t.

According to National Mortgage News, research from the Mortgage Bankers Association’s Research Institute for Housing America (RIHA) shows that a homeowner’s equity position is one of the major factors that drives property transitions between owner-occupied and rental status.

Between 2000 and 2014, 6.5 percent of homes built before 2000 and 10.3 percent of homes built in the 1990s went from owner-occupied to rental status, according to a study by Syracuse University professor Stuart Rosenthal.

Underwater homes are notably more likely to transition into the rental sector, possibly because of reduced incentives to maintain the home and related decay,” said Rosenthal.

ManufacturedHousingHopeforOwnershipVersusRentalscreditSyracuseUniversity-StuartRosenthal-postedtothedailybusinessnewsmhpronewsmhlivingnews

Stuart Rosenthal. Credit: Syracuse University.

Owner-occupied homes where the combined loan to value ratio (CLTV) is between 100 percent and 120 percent are between one and two percentage points more likely to become rentals, while homes that have a CLTV above 120 percent are between six and eight percentage points more likely to make this change.

Additional research showed that the share of single-family homes in the country’s rental housing inventory was 36.13 percent in 2014, about 5 percent higher than in 2000, and the share of single-family homes in the owner-occupied inventory remained relatively unchanged.

Rosenthal’s study further showed long and short-term trends that largely guide these transitions.

Over the long term, scenarios like age-related depreciation make it more likely that a home will become a rental property unless structural or neighborhood changes take place.

Over the short term, it’s housing prices that have a significant influence on an owner’s decision to reside in their property or rent it out.

For certain types of homes rising house prices encourage transitions into the owner-occupied sector,” said Rosenthal.

By comparison, Rosenthal’s research showed that falling prices tend to predicate short-term swings toward the rental market, and these shifts often reverse themselves as prices go back up.

Consequently, this indicates that the large volume of homes that moved from owner to renter-occupied following the financial crisis could continue to affect construction.

Movement of housing stock back to owner-occupancy status…has the potential to undercut demand for new construction since most home building occurs in the owner-occupied sector,” said Rosenthal.

Also, the drop in the homeownership rate to a low of 63% in the second quarter of 2016 suggests that a large buffer stock of potential owner-occupied homes may now sit in the rental segment of the market.

Rosenthal believes this explains one scenario from 2016, but believes more work needs to be done.

This may help to explain why new home construction in 2016 remains far below previous levels even though home prices at the national level have regained their 2006 peak, but this is a topic that requires further research.

 

Is MH the Solution?

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Graphic by CFED, text credit by MHProNews.

As Daily Business NewsMHProNews and MHLivingNews readers are aware, we have covered the case for manufactured housing as a viable solution to hope for the American Dream of home ownership at a reasonable price extensively, including Bloomberg making a statement to the same effect.

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Doug Ryan, CFED.

Bloomberg points to Doug Ryan, director of affordable home ownership at the Corporation for Enterprise Development (CFED) who cites advantages, and challenges, that the industry faces.

You can put them anywhere you have the land, said Ryan, who routinely promotes manufactured homes as an important option in the affordable housing crisis.

What you’re up against is the stigma. You’d have people coming to the planning meetings and saying that you’re killing their home value. ##

(Image credits are as shown above.)

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RC Williams, for Daily Business News, MHProNews.

Submitted by RC Williams to the Daily Business News for MHProNews.

Multifamily Rental Costs Hit New Record High

October 1st, 2015 Comments off

rentals  zimbio creditWith September’s year-over-year growth of 6.8 percent for multifamily rentals, multifamily rents reached a new record high of $1,167 in September, while also increasing to the highest year-over-year growth of the post-recession cycle, according to the most recent edition of Matrix Monthly by Yardi. The report says rents have risen every month this year, as globest tells MHProNews, giving the multifamily market an unusual consistency.

Rent growth is often at its highest point in the summer when more people move, leveling off in the fall and winter months. During the three months from June through August, rents rose at the lower end of the spectrum by 0.6 percent, but only by 0.3 percent for higher end properties.

Nationally, on a trailing 12 month basis, rents grew 5.6 percent, averaging the past 12 months as compared to the previous one-year period. During this period, higher end rents increased 5.8 percent outpacing the lower end rents which rose 5.5 percent.

Of all the major metro areas, apartment rent growth has been the strongest in Portland, Oregon at 12 percent, as growth is strongest in the Pacific Northwest and the Western markets. Behind Portland is Denver at 11.8 percent growth, San Francisco at 11.7 percent and Sacramento with an increase of 9.7 percent.

Yardi says, “Strong growth in employment and in-migration in most top markets continues to drive the rent engine. Some 60% of Yardi’s Top 30 metros have added 3% or more to their employment base in the 12 months ending in July, according to the Bureau of Labor Statistics.

As rents increase, home prices rise and incomes rise but minimally, the affordability of manufactured homes becomes stronger and stronger. ##

(Photo credit: zimbio)

matthew-silver-daily-business-news-mhpronews-comArticle submitted by Matthew J. Silver to Daily Business News-MHProNews.

REO Rental Program in the Pipeline

January 26th, 2012 Comments off

rentals photo by Eric MillerThe idea for an REO rental program could soon provide additional competition for the manufactured housing industry. Panelists at the recent American Securitization Forum expressed support for a government-led program to rent out foreclosed Fannie Mae, Freddie Mac and FHA homes. According to an article in Housingwire, the foreclosure pipeline could add a million new REOs in this year and another million in 2013, presenting further challenges for an already struggling market for existing homes. Paul Willen, senior economist and policy adviser at the Federal Reserve Bank of Boston tells reporters the program, which would make rentals more affordable, may not help the resell market. “Putting properties into rental pools doesn’t take it off the market,” Willen says. “Why buy if you can rent for cheap?”

(Image Credit: Eric Miller)

Value of Florida Communities on the Rise

March 1st, 2011 Comments off

PR Newswire reports from Tampa, Florida, that with tight credit and higher down payments required for home buyers, the rental market is increasing in factory-built communities across the Sunshine State, driving up their value.  Because of the real estate boom, some communities have been converted to other commercial use, leaving fewer alternatives for rental housing.  Most zoning has forbidden the building of new communities, but many have been grandfathered in and have become more upscale single family neighborhoods.  Andrea Ciuba of Global Commercial Real Estate Services, LLC, which specializes in manufactured housing community sales, says banks are not lending on these properties, but cash buyers are competing for them because return on investment can be in the teens.