Archive

Posts Tagged ‘Lance Inderman’

Unintended Consequences Can be a Good Thing

August 15th, 2012 No comments

Dan Rinzema posted in MHProNewsAs I read Lance Inderman's, Tyler Craddock's and DJ Pendleton's recent articles, a number of things came to my mind. One of them was The Law of Unintended Consequences. The Law of Unintended Consequences states that any purposeful action will produce some unintended, unanticipated, and unwanted consequences. A corollary states that the unintended consequences can turn out to be even more significant than the intended action.

Except for the “unwanted” part, that is in many ways what’s happened with MHVillage since 2004, when my partners and I decided to invest substantial amounts of Datacomp’s money and employee time into it’s creation. I'll recap another time some of the good unintended consequences of MHVillage, but for the moment let me focus on something that could bring rapid, immediate value to an issue that was raised by Lance Inderman, Ronnie Richards and others here on MHProNews.com.

Some months back, MHProNews ran a story that featured a lengthy video interview of Kevin Clayton. In it, Kevin Clayton expressed what Warren Buffett told him one day. “Kevin, it seems to me that the problem of your industry is resale.”

Resale or a remarketing path is in part what makes conventional housing and real estate perform better.

Conventional home builders don't have to tell a customer what their potential exit strategy is. The home buyer knows they can sell it themselves (FSBO or For Sale By Owner) or they can use a Realtor to sell their home. But what do we have in manufactured housing that works the same?

While there has been discussion back and forth about possible resale mechanisms, or using a recent Supreme Court ruling to list and facilitate the resale of more manufactured homes, the reality is that all of those approaches have time and cost challenges. The only resource that is up and running right now today is MHVillage and our MLX system.

The MLX or Multiple Listing Exchange is a rapid, low cost way that the industry at large could be tapping into the potential revenue and enhanced resale value that arguably must be part of the future to manufactured housing success. That is important for lenders, who may need to sell a repossession, and would rather do it without moving the home. It is also important for homebuilders, community owner/operators, and retailers as well as those 9+ million manufactured and mobile home owners.

Lance Inderman is correct. We have a great product in manufactured housing. Beyond his points, what keeps more well qualified potential home buyers from pulling the trigger? A 750 credit score or cash buyer customer will ask or think the following question. “What is my exit strategy when it comes time for me to sell this manufactured home?”

When you as a manufactured homebuilder, community owner/operator, or retailer can look that 750 credit score or cash buyer in the eyes and say, well, “We have a large and active Internet marketplace called MHVillage where you can either list through a broker or sell your home yourself,” that makes sense to that strong prospective customer.

Frankly, it was beyond our expectations that MHVillage would become what it is today, where 45,000 visitors – about 85% of whom are retail home consumers – visit daily to buy, rent, and/or use other services that all drive dollars for the manufactured home businesses involved. That was a good unintended consequence for us and others – one that I hope to cover in a future article here on MHProNews.com. But beyond MHVillage, there are other efforts that make sense for manufactured housing that can get or keep us in front of good customers interested in buying a home.

For example, we see value to efforts like Tony Kovach's new consumer focused MHLivingNews.com website, which promotes the positive aspects of the manufactured home lifestyle. We plan to support, engage in and encourage that effort, including but not limited to, providing content for them. MHLivingNews.comcan help over time improve the industry's image, which Lance's article discussed.

We see value to this MHProNews site, which has become the most robust platform of its kind. Articles on best practices, news, issues and discussions of problems and solutions must take place in our Industry in order for us to move beyond survive to thrive.

There are also efforts being put in place from state and national associations to drive the industry past the regulatory and other challenges that we face. I'm sure there are other private and planned efforts beyond those mentioned here.

The point is that when we learn to work together using the resources that we have, unintended consequences will happen and can be turned in our Industry's favor. That won't happen by itself. It will only happen as more savvy associations, businesses, professionals and pro-industry trade media platforms pull together to make it happen.

We tend to think of unintended consequences as bad. But some can be good, especially when we recognize the forces at play and make them work in our favor. It all starts with simple steps, often simply making use of resources that are already available today. ##

Dan Rinzema posted in MHProNewspost submitted by
Dan Rinzema
CEO, MHVillage and DataComp

What Manufactured Housing Competes Against

August 7th, 2012 5 comments

l;ance-inderman-mhpronewsI think we need to take a serious look at what our industry is competing with in the housing marketplace and the regulation that each of our housing competitors are facing.

We worry way to much about what one of the 3-C's of manufactured home building are doing than we should. As a percentage of new homes sold, we just keep loosing ground.

The site builders are pushing us further and further into the rural abyss. I have a partner that builds homes with me in Lubbock and we are able to build a brick home with porches and 6/12 roof pitches for around $40 a square foot including material and 100% subcontract labor.

I have another friend that builds about 125 new homes a year with annual sales of about $35,000,000 and a little over 10% net bottom line. He does this with 9 employees, no multi-million dollar building, total work in process and finished goods of about $1,500,000. He has no licensing requirements. His company and his salespeople have no continuing education requirements. He does not offer paid vacations to his employees or laborers. He is not faced with massive unemployment taxes if he does not have a house to build tomorrow. Government mandated health insurance does not affect him. Basically he has almost no regulation and very little overhead. He builds a quality product and is very successful.

I drove down the beach between Beaumont and Galveston and pass one RV park after the other with all types of RV's up to buses that cost over a million dollars.

I saw manufactured homes that were at least 12 feet in the air to protect a $40K double wide from flooding. The construction cost to complete these jobs has to be close to exceeding the cost of the home itself. This does not appear to be a very efficient way to supply housing to me. It looks to me that the RV industry is getting a big piece of our pie and the site builders are getting an ever increasing bite as well.

We have to become more efficient at what we do from the factory to the finished product.

I think the factories do a fabulous job building 16×76's, its the most efficient 3 bed 2 bath housing I have ever seen. But by the time we: 

  • market that 16×76 to our customer at retail,
  • deal with all the regulatory requirements to install and complete the home,
  • deal with private finance against government subsidized financing on site built's,
  • escrow over priced insurance and taxes and
  • then deal with the cost of servicing a home in the middle of nowhere,

our monthly payments are as much or more than most people can buy a new starter home including land in a tract home subdivision.

We must do everything in our power to control these costs, including, but not limited to:

  • getting our finance on a level playing field,
  • getting higher deductible lower cost insurance in our market,
  • factories working with the retailers/installers to do everything possible to lower the cost of installs and
  • last but not least keeping the regulators at bay.

I think our industry has a remarkable product that we can build and a great story to tell but all you hear and see is "I don't want a trailer in my back yard."   Most of those yards now include a brick home with an RV in the driveway.

I've said it a 1000 times that if we did not have FHA, FNMA and Freddie Mac that our industry would be producing the most affordable quality housing option on the market. What gives?

Lance Inderman

l;ance-inderman-mhpronews(Editor's note: Lance Inderman is arguably one of the most successful independent retailers of manufactured homes in the country. Champion Homebuilders recently purchased Athens Park Homes, a HUD Code, modular and park model builder that Lance and his associates operated. He was the Chairman for the Texas Manufactured Housing Association in 2010-2011 and remains an active player there. Lance plans to attend the TMHA annual event.)