Archive

Posts Tagged ‘MH Communities’

“What’s Happened to the HUD Code Manufactured Home Industry?”

July 9th, 2014 No comments

Many years ago, a famous Movie Cowboy, Mayor of Beverly Hills, Editor of the Saturday Evening Post and Entertainer, Will Rodgers said, “If Stupidity got us into this mess, then why can't it get us out?”

Manufactured housing has seen its media image perpetuated and the public perception remains consistently tarnished for quite some time. The HUD Code manufactured home (MH) appears too often to be viewed by government, Realtors  ® and the public as not being desirable. The MH Industry has seen its home production decline and new MH Communities (MHCs) have declined as well. Many of these existing communities are tired with no “Innovation” or “Cool” factor for prospects.

On this date in 2014, along comes the “Tiny House,” a version of the factories “RV Park model.”

The “Tiny House” is less than 400 square feet. It sits on a trailer frame; it has wheels and a hitch. It appears to be of the same type of construction as a RV Park Model or a small HUD Code manufactured home. Media professionals like “Tiny Houses” for stories and about those who live in them. See example below.

tiny-houses-steven-lefer-industry-voices-posted-mhpronews-com

Wow, the media’s attention is so positive to the “Tiny House” that it far exceeds that of the old and tired HUD Trailer/Mobile Home industry. TV shows with Bob Vila endorse it and A+E TV Network will begin showing “Tiny House Nation” July 9, 2014 at 10 ET/11PT on their home product.

The articles point to how “Cute” and functional this small single wide home is; and how they even have a “Cool,” “Hip” factor with “NO” negative publicity. It's astonishing. These homeowners and their tiny houses brag about the size and in some cases folks live in 120 square feet, which is no bigger than a backyard shed. A woman in the article below left a MHPark to live one, ouch!

I understand “Four Lights Tiny House Company” will be attempting to build a “Village” for people to live in a community of them. What? How? Is this not an RV Community? If you are part of the HUD Code Manufactured Home Industry, I am sure you are not aware of this image change nor have the leaders of the industry addressed or invited these competing folks to their convention. Are they part of the HUD Industry or do they prefer NOT to be? It sure makes me wonder?

credit-tiny-house-nation-series-graphic-Wednesday-july-9-10et-11pt-

Image credit FYI.TV

Here are three links for you to ponder!

http://www.deadline.com/2014/02/ae-lifestyle-network-fyi-sets-first-slate-launch-date/

http://www.sanluisobispo.com/2013/12/31/2857011/bette-presley-arroyo-grande-house.html

http://www.bobvila.com/articles/tiny-house-village/

Where and what happened to the HUD Code Manufactured Home Industry? ##

steve-leflervicepresident-modular-lifestyles-industry-voices-mhpronews-com75x75-Steven Lefler
Vice President
Modular Lifestyles, Inc.
(888) 437-4587
Dual DRE and HCD Salesperson
Advanced Green Building Professional
CEC Solar Wind Retailer/Installer

http://www.modularlifestyles.com

(First image supplied by Steve Lefler)

(Editor's Note: MHProNews strongly believes that accurate terminology matters, and as was noted with Ken Haynes' Industry Voices guest column today, the thoughts and statements made above are solely those of the writer.

Further, there are points in this commentary that are broad statements that could be construed as technically inaccurate, was used as hyperbole and thus depending on the context, should not be taken literally. Steve Lefler well knows about the recent positive press from CBS News or the Boston Globe, among others, touting the value of today's manufactured home.

Those who know Lefler's noteworthy work in net-zero and near-off-the-grid factory built homes makes him a pioneer, and that has lead him to a level of what might politely be described as frustration with the industry-at-large and its leaders for not promoting our factory-built home product, as his column above suggests.

As a recent Masthead blog post – Manufactured Housing's Declaration of Independence – underscored, market facts tell us our industry ought to be booming.

As on any issue of industry relevance, MHProNews accepts submissions of articles that may represent similar or other viewpoints. Subject line, “Letter to the Editor” or “OpEd for Industry Voices blog” can be sent to latonyk@gmail.com.

What More Can We Accomplish After This Year’s Manufactured Housing Institute (MHI) Congress and Expo?

May 13th, 2014 No comments

Like many others, I attended the 2014 National Congress & Expo two weeks ago in Las Vegas. I also chose to attend the National Communities Council Spring Forum held all day Tuesday prior to the opening reception. There were some exceptional programs! The attendance was very high according to reports from MHI. While there was an eye brow-raiser (or two…) on the agenda, off-agenda items that were pretty interesting and overall the Spring NCC Forum and MHI's Congress and Expo featured seminars with speakers focused on current industry topics and issues. Numerous vendors on hand shared their services, displayed their products and provided opportunities for deal making.

What should not come as a surprise was the number of new individuals who attended the Congress.

Many professionals from all facets of the housing, finance and investment sectors were on hand to listen and learn about the manufactured housing industry. This is another great indication on the positive future for the industry.

Today, there is something in the neighborhood of Two (2) Billion Dollars chasing the manufactured housing industry! That's Billion with a capital B!

Those dollars may or may not be invested in our sector; only time will tell. What we need to realize is that there is capital willing to invest and grow in manufactured housing. With new capital much can change, improve and set the stage for a brighter future of the industry.

Yet, even with the large amount of new capital looking to invest in the industry, manufactured housing will still be a very small piece of the roughly One (1) Trillion Dollar annual U.S. housing market.

The questions I continue to ponder are;

  • what can we do to grow the manufactured housing industry’s share of the overall housing industry?

  • How do we get to the root of the obstacles that continue to impede the MH Industry’s growth?

Flying home after Congress and Expo, those nagging questions bugged me. Below is a thought that came to mind that may provide a profitable starting point.

Why not host an – August 2014? – organizational networking/deal making opportunity event that is Trans-Associational?

Why not consider a location near a fine newer MHC property that breaks the stereotypes – such as Saddlebrook Farms in Grayslake, IL – where the potential for new development could better be understood by those who only know the 1 or 2 star MH properties? Would love to hear suggestions on other possible sites that fill the bill.

That property would also feature great looking, residential style product that is ground set, so this would shatter the 'mobile home' image for potential investors who only know the entry level product.

As you can see, I am not suggesting replacing any current event, such as the upcoming MHI annual meeting, NCC Fall Leadership Forum or other association or industry functions.

Rather I am suggesting something totally fresh and different.

Let’s bring the stakeholders and potential investors to the table at the same time with professional facilitation and the opportunity to participate.

The focus of the meeting would be how to get those multi-billions moving ahead, as well as advance the MH Industry as a larger and viable part of the overall housing market.

What makes this concept different than other current programs is that interested parties are invited regardless of current relationship issues or biases. Bringing goal and solution oriented individuals from differing backgrounds, all committed to growing the manufactured housing industry could be groundbreaking.

Please do not misunderstand; while I'd like to be involved, I am not volunteering to take the lead in this event due to my current business obligations. I am putting the idea out in this public forum for discussion.

The way this gets done is for

  • commercial real estate brokers and appraisers,
  • commercial RE lenders and brokers,
  • MH finance companies (personal property and Mortgage lenders),
  • Any – or all – HUD Code manufactured housing and modular builders,
  • developers
  • Suppliers and other service vendors

to pay for the costs of the meeting, mixers and main meals.

Pick a place that is nice clean convention location, and keep the entry fee really low.

Let's put an asterisks next to this one. What if we make it easy for the hundreds (or thousands?) of owners of MHCs who are looking to exit due to age, health or other reasons to come at a pre-event day to discuss their properties face to face with those who may want to buy them?

Might this be a good way to facilitate the capture of more of that circling capital which would also facilitate the improvement of languishing communities and the sales of more homes in them?

There also ought to be an ability for the event organizers to bar this or that person or group at will, so that the Ishbel Dickens/NMHOA or Industry naysayers don't get in. That keeps this focused on business and solutions.

Just think about the number of organizations who would want to take part in an event of this nature. Here are a few who I believe would join the effort.

rick-rand-industry-voices-mhpronews-com

There probably are others who should be included on this list. These are the organizations that came to my mind while thinking about who the stakeholders are in the future of the MH Industry.

One more critical point. Let's tackle the creation of a vibrant, efficient resale market for manufactured homes. This is absolutely critical for the future of our industry, the benefit of our residents and lenders as well as our homes' broader acceptance.

By being trans-associational, this could also prove to be fertile ground for meeting with and recruiting new members.

As to a target date, based on the interest being shown about the industry, sometime in the near term would be better than delaying. By doing it in the summer, a successful meeting could position the 2015 trade shows for dovetailing with this concept.

The location must be close to a major airport so that there is easy access to the event. As noted, having some newer and older MH communities nearby would be beneficial so that participants can take a charter actually view the new homes and better understand the true breadth of the MH product and variety of community lifestyles.

I believe that an event like this will assist in not only promoting the Manufactured Housing Industry but also could be a catalyst for additional new capital investment and future financing opportunities.

We must not lose sight of a key goal of the meeting; how to advance the MH Industry as a larger and viable part of the overall housing market.

Please feel free to comment below or email me with your thoughts. The future of the MH Industry is ours to create. ##

rRck RandRick Rand is the president of Great Value Homes, and has been involved in small and large scale MHC operations. You can contact him at:
Richard J. Rand, President, Great Value Homes, Inc.. 9458 N. Fairway Drive, Milwaukee, WI 53217-1321,

414-352-3855
414-352-3631(fax)
414-870-9000(cell),
RickRand@gvhinc.net

Why Retailers and Community Operators should go to Tunica!

March 19th, 2014 No comments

As I read the digital 2014 Tunica Show brochure and business building and profit protecting seminar line up, it became crystal clear why Retailers and Community Owner/Operators ought to be in Tunica next Wednesday morning through Friday at noon (March 26-28)!

Retailers and Communities can get free:

  • Networking with your peers,
  • Compare Manufacturers side by side, over 80 homes will be on display!
  • Compare products and services needed by your business side by side,
  • Get the latest on Manufactured Home Lending available TODAY, from all the major lenders all under one roof.
  • Get expert guidance on Commercial Lending on MH Communities,
  • Get marketing and sales tips in the Dominate Your Local Market 2.0 Seminar, featuring manufactured housing marketing and sales veteran, L. A. “Tony” Kovach.
  • Compare CRM products in a free panel discussion with Scott Stroud and myself, and learn why they are a key to growing your sales in 2014 and beyond.
  • Get success tips on MH Communities (MHCs) from pros with successful firms who know!

Let me give you a quick snapshot of the last bullet point above, which will provide the reasons you need to grab your business cards, and have your photo ID so you can enter the Tunica Show, free!

In the last decade, as the numbers of retailers and shipments declined, manufactured home communities (MHC) have of necessity become on-site-home leasing and selling operations.

Communities have always had to do the types of services and duties that developers and multi-family operations have provided in the conventional housing world.

Tunica has become a magnet in recent years, attracting more communities as well as more retailers than in prior years.

Here is the line up of on the panel for MHC Lessons Learned, to be held Thursday, 10:00 AM – 10:55 AM on March 27th.

Success Tips from Manufactured Home Community Owners & Executives!

For anyone in or thinking about getting into the land-lease community business, this panel discussion is for you! Hear practical tips from community operators that can help you operate your community more professionally and profitably.

jenny-hodge-national-coummunities-council-ncc-industry-voices-manufactured-housing-pro-news

Jenny Hodge, Vice President of the National Communities Council (NCC), will be your panel moderator.

You can learn more about Jenny in this month's MHProNews exclusive interview A Cup of Coffee with…Jenny Hodge.

tammy-fonk-8-2013-cbre-posted-mhpronews-industryvoices

Among those on the three person MHC panel is Tammy Fonk, an Associate with the CBRE MH/RV National Group. Tammy was born and raised in the MH industry with two family owned communities. She operated the family owned company's sales and marketing business as well as having an active role in day to day community operations and resident relations. As a member of the MHRV Team, Tammy now works closely with public and private investors on building business relations and opportunities to enhance the Manufactured Housing Industry as well as the RV Resort and Marina properties in North America. Tammy works with owners and buyers of small, medium and larger communities in addition to representing large portfolio owners.

maria-horton-newport-pacific-capital-posted-industry-voices-manufactured-housing-pro-news-com

Maria Horton is a regional manager with West Coast powerhouse, Newport Pacific. Maria's bio is linked here, but having met her, let me tell you what her resume doesn't say. This is a warm, delightful engaging professional! You will love to hear here insights and experiences on this panel discussion.

rick-rand-great-value-homes-l-sam-zell-equity-lifestyle-properties-els-chair ... layton-clayton-bank-chairman-industry-voices-manufactured-home-pro-news

Rick Rand (l), Sam Zell (c), Jim Clayton (r)

Last and not least, is Rick Rand, who made quite a stir recently with this guest column. Rick was the subject of another MHProNews.com interview, A Cup of Coffee with…Rick Rand.

If online registration for the Tunica Show is closed by the time you read this, don't worry! You can bring your business card and a photo ID, retailers, communities, builder-developers, realtors and installers will be able to sign up at the door, free with those credentials!

Let me close with a tip of the hat to L. A. Tony Kovach. Dennis Hill recently gave Tony quite the well deserved public shout-out, for his key role in the come back of the Louisville Manufactured Housing Show.

Community Operations executive Ted Gross, with Continental Communities praised his session as being the best marketing presentation he had seen since coming into the MHC business.

We've worked with Tony about 90 days now, and let me tell you from first hand experience his deep passion for the MH Industry.

Tony cares about the success of people, operations and loves to see happy consumers enjoying our product.

I don't personally know of anyone who gives more time away for the benefit of the industry.

Tony's consulting and banner ads have helped our company's growth and presence in MH significantly! On MHProNews, he brings out the articles, experts and tackles the topics others shy away from, and is a friendly, peace loving professional and family man.

When you think about it, Tony's efforts to inspire our industry to do more and grow at shows like Louisville and Tunica are part of the rising tide of sales in our industry. You may or may not know it yet, but he makes you money just by being here and spreading the good word about our industry on sites like ManufacturedHomeLivingNews.com and here on MHProNews.com.

These are among the reasons why I'll be voting for him as MHI Supplier of the Year, and I hope others that read this will consider doing the same.

We will be at booth 13H in Harrah's Convention Hall. Change your plans! Make your travel arrangements! Fly, drive or hitch a ride, but we hope to see you in Tunica for the 2014 Tunica Manufactured Housing Show! ##

brad-nelms-coo-manufactured-homes-com-posted-mhpronews-comBrad Nelms
COO
ManufacturedHomes.com

Community Owners! MHC Lessons Learned

January 8th, 2014 No comments

Join your peers in the MHC world for an exciting hour to learn real life proven methods of how to improve your land lease communities Bottom Line Performance! Get tips from seasoned professionals who have profited in large, medium and small Manufactured Home Community (MHC) operations.

This is a program you will not want to miss.

ross-kinzler-wisconsin-housing-alliance-mhpronews-industry-voices-hall-of-fame-

The panel discussion will be moderated by Ross Kinzler, Executive Director of the Wisconsin Housing Alliance. Ross has over 25 years of experience in the Manufactured Housing Industry. He has been active at both the national and state levels. He is a founding member and past Chairman of the Manufactured Housing Educational Institute. Ross currently serves on the Executive Committee and Board of the RV/MH Hall of Fame. In addition, Ross has taken on many leadership roles industry wide and has served on numerous boards and committees dealing with issues facing MH communities.

tammy-fonk-8-2013-cbre-posted-mhpronews-industryvoices-.JPG

Among those in our three person panel is Tammy Fonk, an Associate with the CBRE MH/RV National Group. Tammy was born and raised in the MH industry with two family owned communities. She operated the family owned company's sales and marketing business as well as having an active role in day to day community operations and resident relations. As a member of the MHRV Team, Tammy now works closely with public and private investors on building business relations and opportunities to enhance the Manufactured Housing Industry as well as the RV Resort and Marina properties in North America. Tammy works with owners and buyers of small, medium and larger communities in addition to representing large portfolio owners.

don-westphal-manufactured-home-community-development-operations-owner-posted-mhpronews-com-industry-voices-.png

The panel also includes Don Westphal President of Don C. Westphal & Associates. Don has over 40 years of experience of working in; community conceptual planning, master site design and landscape architectural design for land lease communities. Don has represented developers and owners of communities from concept plan approval all the way through final construction. He also works with owners on Community Imaging and on Marketing Plans for communities. The communities have ranged in size from a small number of home sites to those with over 500 sites. Don was featured in this interview, A Cup of Coffee with…Don Westphal.

rick-rand-l-sam-zell-c-jim-clayton-r-posted-manufactured-housing-pro-news-

The third panel member is Richard (Rick) Rand, President of Great Value Homes, Inc. Rick has over 33 years of experience in the manufactured housing industry. GVH is an acquisition, development and property management firm specializing in multiple aspects of the Manufactured Housing Industry. The Company currently operates 6 Manufactured Housing Communities and is also a distributor of Manufactured Homes sold in the communities.

In addition, GVH acts as a broker for the resale of existing manufactured homes for residents who reside in the land lease communities the Company manages. Richard also acts as a consultant to institutional investment and private firms on various aspects of the Manufactured Home Industry.

Rick was founder and President of Asset Development Group, Inc. and its affiliate, Home Source One, LLC. From 1984 time until his departure in 2004, he grew the company to the 25th largest owner of manufactured housing communities in the country. During his tenure at Asset Development Group, Inc. Rick managed all aspects of the enterprise. He was responsible for all of the Company's property acquisitions and requisite financing. From the Company's inception, he oversaw the staffing and training of the ADG/HSO employees and management team. In addition, Rick was responsible for the planning and development of over 2,500 new manufactured homes sites that were both additions to existing communities and new green field development.

Rick is featured in this exclusive interview, A Cup of Coffee with…Rick Rand.

The Louisville Seminars are one of the most popular draws for attendees to the show.

business-building-seminars-credit-manufactured-housing-pro-news-posted-louisivlle-show-com-.jpg

Come Join us at the 2014 Louisville Manufactured Housing Show! The Show was the best attended event in all of Manufactured Housing in 2013. Most industry members can attend free, learn more at the link above, and learn more about the other valuable seminars available for industry members at this link. ##

rick-rand-great-value-homes-manufactured-home-pro-news-industry-voices-guest-blog-.pngRichard J. Rand
President
Great Value Homes, Inc.
9458 N. Fairway Drive
Milwaukee, WI 53217-1321
414-352-3855
414-352-3631 (fax)
414-870-9000 (cell)
RickRand@gvhinc.net

2013 CFED-I’m Home Retreat Snapshot

October 20th, 2013 No comments

Following a retreat for Next Step and its Partners, I was privileged to participate in the CFED I'm Home Retreat in Denver. Imagine a “for profit” mind immersed in a “non profit” retreat. It would have been easy to allow your head to spin if the topics discussed were not so familiar.

The Retreat was fully immersed in the role manufactured housing (MH) could play for the working poor as an answer for initial and replacement housing.

George McCarthy, from the Ford Foundation, gave some great statistics about those living in MH and the percentage of those populations in communities. These stats further magnified the continuing role MH communities’ play in general housing and manufactured housing specifically.

However, energies soon were redirected to the discussion on funding, both for inventory and retail; appraisals; placement, yadda yadda yadda.

As Barry Noffziger, from CU Factory Built Lending suggested – if you close your eyes, you could have sworn you were in any MH association meeting. The concerns and challenges seemed to be the same as the “for profit” side of the industry. The plea was to unite in order to facilitate change.

It was an interesting juxtaposition to find myself in the middle of a segment of the industry I knew/know little about; but yet I could appreciate their passion.

Their energy was unbelievable. Positive – glass seemed to be half full everywhere I looked.

Paul Bradley from ROC was there and talked about their success and plans for the future. 

There was a testimonial about efforts to re-house victims in a MH community affected by Hurricane Sandy; flood victims in Colorado and other locations.

Architect Bruce Tolar, of the Katrina Cottage fame, provided an overview on the lessons learned and how the Cottage is morphing for long term housing solutions. It was noted that long after the national news crews left the Gulf area, there are still victims of Katrina struggling to cope with inadequate housing – 8 years following the hurricane – FEMA gone, almost everyone else as well.

chris-nicely-posted-on-mhpronews-comHeck, that was only the first day and sadly, I had to leave. How often do you leave a meeting saying, “I can’t go, I want to hear and learn more."

Curious, the effort in the room was focused on the resident/owner and how MH can deliver more value and provide life with dignity. This, for a segment of the population most writes off as un-qualified buyers.

It was refreshing and left me wanting to know more about what I could do to help. Hopefully, I will get the chance. ##

chris-nicely-posted-on-mhpronews-com-2.jpgChris Nicely
9052 Legends Lake Lane
Knoxville, TN 37922
865.385.9675
cnicely929@aol.com  

Rent Control in MHCs

September 4th, 2013 1 comment

Tony,

The phone rang one morning and a young man returned my call to him, we'd been playing phone tag. I had left a message with his wife in Oregon earlier, and he was calling about two Vermont MH communities I have listed for sale. From the voice of each, I guessed they were both far younger than I.

Speaking with him, as I answered his questions, it was obvious this was not his first call on LLCs for sale. In a knowledgeable way he wound thru the obvious questions, finally asking whether Vermont LLCs are rent controlled. Yes, I explained, they are. I went on to explain Vermont allows CPI, about 3% annually presently, without concern, and a big one, allows provable capital improvements in addition, annually. I told him that as a former VT LLC owner I had found the scheme fully workable, as do many of my contemporaries.

The next day I got an email message saying he and his partner/wife had decided not to invest in any locale where rent control is in force. OK, I get it, but that removes quite a swath of locales, many which are hot purchase markets. This philosophy allows investment in say Mississippi or Alabama, but negates purchases in Florida or much of California. Oh…

After that, my mind wondered over my experiences of the dangers of rent control and lack of it. Yes, I said the danger of the lack of it. I actually was pretty young once, had hundreds of apartments and almost 2000 MH/RV sites. With the exception of a Florida LLC, I was in no jurisdiction where rent control was in effect. And when rent control was threatened in a jurisdiction, I was the first to the battlements opposing its imposition. I was and am a capitalist, and rent control seemed an anathema to my beliefs. I'm not alone, right?

But time went by, slowly the days passed, and some of my beliefs at 40 years of age made transition to a more measured understanding as I aged and acquired experience I previously lacked. Let me be frank, I was an accomplished and notorious rent increaser, which in my twilight years brings me no acclaim by others, and more importantly, myself.

What I found was that in apartments, and we're not speaking of New York City here, the market rents in an area kinda act as rent control. You find yourself as the top dog in rent rate for your 1000 sq. ft three bedroom apartment in your area. What you are very likely to find, as I did, your apartment rents last and less, staying empty longer than it should. Recovering the lost time and money brings you back to Earth and unless your calqy is busted, your late debt payments slap Hai Karate hard. I found apartments very self correcting as to rents.

Now, on to LLCs. We all know the reasons we invest in communities; they own the dwelling unit, they can't move the house, etc. All good stuff, of course. So as I bought LLCs from original owner/developers, I found that as longtime owners they had allowed their rents to slip behind the market, keeping their management easy, with many long term residents.

Of course, the purchase price always reflected the oft unspoken premium of raising rents to market. "Hell, they can pay a lot more than that!" So I paid more than cash flow to get the community, not real unusual, right? Then the rent increases started. Often stiff and early increases happened shortly after closing.

The first few increases were swallowed, albeit with plenty of bitching by residents. We raised rents as much in two-three years as the former owner did in 10 years. Note that in some instances the increased rent still didn't pay for the capitalized investment costs. I knew that, they only knew and cared their rent had doubled in short order. No esoteric explanations of cap rates and other MH investor jargon seemed particularly persuasive to the LLC residents.

Who was it, Newton, who theorized every action has an equal and opposite reaction? I raised rents, they moved out. And I acquired a reputation in that community as a rapacious rent increaser. And these reputations are hard to escape. I wouldn't really care that much except the reputation had a very bad impact on homesite rentals. That, I did care about.

At first I did the calculation I see many others doing. Yah, I had 100 homes at $100 per month, and even though I'm quickly down to 90 homes at $111 per month, hey, I'm getting the same money with less work and expenses. And it keeps going this way as rents increase, residents fleeing like a torrent, out the MH Paradise Estates gates, which has turned into Hell Bent Acres.  And as vacancies mount, you lose control of the community, no longer able to count on the desire to live in your LLC to keep people in line. And that desire includes pricing.

Were I the only one to have followed the raise-rents protocols, then only I would have suffered the residue, but of course, such was not the case. The MH industry's then flawed model, subsidized for years by flawed lenders, finally collapsed, dropping from 373,000 shipments in 1998, then tantalizing us into believing the hurricane-inspired 135,000 shipments of the mid 2000s was the stopping point, to the grim reality of 50,000 homes in the 2010s. Yah, I hear 60,000 homes could happen any day now.

I sat in on some very contentious MHI committees in the late 2000s era trying to formulate a chattel long term lease the GSEs could swallow. In concert with this I reviewed many LLC profiles showing monthly rent and occupancy. It probably won't surprise you that the vacancy was truly scary, yet rents occurred steeply and frequently.  I had already tried that, and even with the generous retail financing by GreenTree, CIT, The Associates, Security Pacific, Chase and their ilk, it didn't work. Now we were dealing with the GSEs, who I did not find stupid, and we were trying to equate rents in LLCs to the capitalized valuation of single family conventional real estate lots. Any thought of sharply limiting rent increases to gain long term and low rate financing being the trade-off, got serious push back. Such was not to be and by then as the effort lost all bouyancy, the GSEs woke up to far bigger challenges.

As a post script I am the very first to admit that some major figures in that committee have since come far closer to the rent restraints advocated in the long term lease effort as their stated belief for industry resuscitation.  Will that be enough? I greatly doubt it, but I sure think it is an indisputable industry wide measure in the road back to something other than Warren Buffett's table scraps.

So to my young friend in Oregon, rent control, other then confiscatory NYC apartments or some California cities in MH, can be a useful LLC owner restraint, quieting some of the early animal spirits we can all exhibit before experience shackles us. Did I like going to the rent hearings in my community in Florida and taking phallus down the throat to the gag control center? Oh, I loved it.

Still, Florida LLCs are and have long been highly prized acquisitions, not greatly injured by the relatively manageable process for raising rents.  With the relatively benign rent control such as in Florida and Vermont, you and the industry are actually protected from many of the practices employed in the industry, leading to so much push back against us.

Before you believe I'm asking you to petition your jurisdiction for rent control, let me disabuse of that notion. Nothing could be further from the truth. I rail against governmental intrusion in to my affairs daily. Everyday the beast grows larger, only a financial collapse likely to abort its growth. The only point I am making is that one must practice rental increase restraint on your own. Sometimes laws can help a process.

The flip side is that lack of restraint causes lack of residents at a time LLC vacancy nationwide forebodes another step down in industry size. In places like Vermont and Florida and others, rent control, which one should practice on their own, is instilled by statute. Perhaps not the best solution, but the record says the world did not end there.

Yes, we tell a great story which seemingly has legs of truth about our affordable housing heritage. But for whatever reason, even though its great dog food, the dogs won't eat it. Perhaps a legacy of rapacious rent increases, closing parks, high default rates and high home value depreciation could be a good place to start the industry resurgence. We build great homes, but my friends, that, by itself is not enough. ##

marty-lavin-posted-on-mhpronews(MARTIN V. LAVIN
attorney, consultant & expert witness
350 Main Street Suite 100
BURLINGTON, VERMONT 05401-3413

802-660-8888 off / 802-238-7777 cell
marty@martylavin.com

(Editor's note: The hot link was added by us, not Marty, nor was the link requested in any way by Marty. We think it is good for others to realize that while Marty is 'retired,' he is still involved in this industry and clearly cares about manufactured housing deeply. That is why he sounds off on issues, because he cares enough to raise them for discussion, thought and action.

As always, letters and articles by you or your colleagues that may agree or take other perspectives are encouraged. Send them to latonyk@gmail.com with Industry Voices Guest Column in the subject line. )

Interview with Marty Lavin, JD

April 3rd, 2013 1 comment

Marty, before we get into the meaty topics that will follow, let's establish your credentials for readers who may not know you and your background.

  • 1) MHProNews: Please tell us about your years involved in manufactured housing, including legal, as a community owner, expert on financing and any other. Include a sense of your MHC, financing and other business interests.

marty-lavin-50-posted-mhpronews-com-industry-voices-blog Marty Lavin:

I’m now 70 years old and I look back to 1972, when as a summer intern I entered the mobile home business. I was a junior in law school and was working at Ray’s Homes, who operated owned and franchised lots up and down the east coast, from New Brunswick to Florida.

For you youngsters, 1972 and then 1973 following it were the absolute pinnacle of the mobile home industry, reaching almost 580,000 shipments both years. At today’s shipments level, that is about eleven years of shipments, in each year, back to back. Those were giddy times, and predictions of 1,000,000 annual mobile home production seemed heady, but few seriously doubted it could happen, there seemed no barriers.

There were factories building homes all the way from some constructing them in their garage to the industry giants, Champion and Fleetwood or their compatriots. Time dims my full memory of 1972 and ’73, but not the excitement of those incredible times.

What it does not dim is that our sales organization was a national scope powerhouse, selling over 5,000 new homes in 1973. Think of that, almost 1% of all national sales, in one small outfit run by 3 people! I was proud of that then and still am.

What I remember most about 1972 is a time I was asked to go to a local land lease community owned by our organization. The community had about 214 homes in it, as I remember, a very large community in our small State of Vermont.

I was to field resident complaints. As I recall, a modest rent increase had just gone in and there was an uprising. I was to go up and quell the unrest.

I arrived at 5:30 PM, alone, at the community ballpark, and I met with 200+ very angry folks, and since they had been playing softball there were lots of baseball bats in the hands of the angry. Lesson: never attend a resident meeting alone with 200 angry people with baseball bats in hand. Actually a number of lessons came from that incident, which later served me well in both the MH Community and the apartment business. After all, the folks who inhabit apartments and MH Communities are not so different.

I came back after law school graduation and spent the next five years managing the legal affairs of sales lots, calling on banks for our service company, doing other legal work, and giving zoning presentations for MH Communities and strip shopping centers. Let’s say that the strip center zoning was easy compared with zoning MH Communities in most eastern states, as it was a serious challenge, even in the 1970’s. Always the endeavor was contentious, costly and endless, not a good business model.

By 1977 I became a General Motors dealer, selling Chevys for 4 years, then Oldsmobile and Cadillac for another 5 years. Sad to say, as much as I liked selling cars, I could not succeed financially although my sales were excellent, but profits, not sales volume sets the business paradigm, in cars or MH, and I fell short there. At the time the U.S. auto business was under serious pressure from the foreigns, and GM was already a doomed giant.

Back I went to real estate and the MH business.

From 1985 until 1995 I ran fast and hard buying communities in several states. As I remember at one point I was in George Allen’s top 75 list or thereabouts of community owners. These were communities I owned mostly on my own, few partners, just bank and seller debt. And of course, whether it is equity money from public subscription or money partners, or purchase money debt, they can all be harsh masters, and the vicious real estate depression of the 1989-1993 and the RTC (Resolution Trust Corporation) had us all in workouts. Most of my friends and partners declared bankruptcy. I thought that foolish, as it seemed unnecessary. Lots of talking and court appearances, but I got through it in spite of $55 million in debt, in 1989 dollars.

Rather than bankruptcy, my own course was entirely different. I chose to be prickly, but reasonable. Prickly, in that I could not be easily rolled by the creditor, and reasonable in that sometimes a property is not working, and it needs to go to someone with greater resources.

By 1988 I had formed an MH chattel loan service company, representing a large number of northeast area banks in originating loans, for home only, going primarily into communities. The general downturn of 1989-1993, with a steep decline in MH sales and lots of repossessions, stopped the service company’s climb to the big loan numbers. But they ultimately did come. In 1998, our company, Mortgage Services, Inc. (MSI) originated over 6,500 loans, totaling $188 million in originations. Those are big numbers in chattel loans by a broker. But as proud as we are of our volume, our record of clean paper without games, is a greater source of pride.

We originated loans for Vanderbilt, Chemical/Chase Bank, The Associates, CIT Group and many others. As one lender said to me a couple years after they left the industry and was running off the portfolio, “If every loan we bought were like yours, Marty, we’d still be in the business.” Satisfying words, indeed, in an industry enshrined in the Lending World Hall of Shame for Fraud.

We hung on with ever-smaller loan volume throughout most of the 2000’s, finally calling it quits after 2008, when we could no longer make money and my eyes glazed over trying to reinvent myself.

In 1999 or thereabouts, I was elected Vice Chair of the Financial Services Division of MHI, a two year assignment, which then leads to a two year assigned as the chairman of the Division. But, the industry was cratering so quickly, that the then chairman’s company exited MH lending, dropped out of MHI, and my term of almost 4 years as Financial Services Division Chairman began quickly.

In spite of an industry decline of frightening proportions, for many the reality had not yet sunk in. Mid-2000s shipments ranging from 125,000 to 150,000 homes, only with the grace of God who sent hurricanes and the industry built homes to house the dispossessed. But for anyone who could put it together, it was obvious: things in the industry were unraveling very quickly with scant hope of recovery.

For almost ten years I wrote a monthly newsletter, “Marty’s News and Notes,” commenting on the scene in Trailerville. What was obvious to me seemed less obvious to many. The industry was putting itself in an ever-shrinking situation and was not lifting a finger to try to save itself. The MH Image Campaign was endlessly pondered, but in the end, powerful industry forces that would profit by a weak industry joined hands with industry nabobs who to this day contend that our present situation is just an industry pullback, to kill the image campaign. Today, the industry has no ability to do any general industry promoting being too small to raise the money.

The highlight emotionally of this fading late 2000’s era was my dis-invitation from a community owner’s conference I was accepted to attend. My ideas of the industry decline, its causes, potential cures, and likely outcome were too radical. “Lenders could make money, they just got scared,” they said. They’d be back. I reasoned with even “good” MH chattel portfolios into land lease communities suffering over 30% lifetime defaults, lenders were unlikely to return, and so they haven’t. My one satisfaction since is that those who dis-invited me to the conference have of late finally grasped what I was saying over 5 years ago. Welcome to the party, even if belatedly so.

I very much enjoyed my assignment with Fannie Mae from 2003-2009 as their factory built housing consultant. I tried, as did Fannie, to bring some useful and survivable lending programs to the industry, but essentially they were rebuffed. To the end, the industry wanted to shuck and jive lenders to take losses in their behalf. I found the people at Fannie to be very intelligent and knowledgeable. They knew how to research a subject.

In many regards industry performance and industry attitude have never meshed. One would think an industry which had shrunk by 80% would go into bodies they were soliciting for help with hat-in-hand. Instead, bolstered by the industry shibboleth of “America’s Most Affordable Housing Form,” demands were more common than requests. That operating form continues to this day! I call it Pit Bull lobbying.

My proudest moment was in October, 2004, when my peers at the MHI Financial Services Division awarded me the Totaro Award of outstandinglifetime achievement to the division and industry. An award of this type makes one feel that all those meetings, flights, conferences and commuters, time consuming and personally expensive as they are, did not go unnoticed.

              

2) MHProNews: Tell us what you think the outlook is for us on the legislative or lobbying fronts on initiatives to modify regulations with the CFPB (Consumer Financial Protection Bureau) in Washington DC and why.

Marty Lavin:

One must look at the world as it is, not as one wishes it to be. Since the enactment of the Patriot Act in this nation, government found that they could pass very onerous and controlling laws, with relatively muted public outcry. In fact, the general public mood was that we wanted to be regulated. “Me, I’m ok and can be trusted, but that guy over there, let’s put him in regulatory shackles,” seemed to be the prevailing attitude.

An onslaught of rules and regulation ensued (Osama, you won, pal!). Many of them came as a response to the 2008 financial crisis, leading to an endless array of rules, regulations and laws. Nothing was left to chance. Endless government employees were hired to man all fronts. People not wanting to sit around in their government office with nothing to do, wrote their hearts out with rules and regulations. This necessitated a whole new group of people to enforce the laws, to make sure knuckles were broken for transgressors. Dodd-Frank and the Alphabet Laws ensued, and who knows what else (ObamaCare).

And what industries were targeted?

Well, all those mortgage lenders who had caused or appeared to cause the 2008 fracas. One would think the manner in which our industry had responded to being entangled by the regulation was that was they had “clean hands.” The industry acted as though they had not caused any of the lending problems which brought the regulations. Forget that from 1999 until 2005 or thereabouts, millions of MH homeowners lost their homes to the depredations of our sellers and industry lenders and the highly flawed portfolios they originated. “But we gave them a chance for home ownership,” was the industry refrain. Some chance, when portfolios were originated with well over 50% defaults.

This led to many problems for the lenders, but the primary losers for those bad portfolios were the homeowners, and the investors who bought the portfolios, just as occurred in the 2008 mortgage disaster. In the MH 1999-2005 loan meltdown the plight of homeowners with lost homes, lost jobs, divorces, financial problems, moves for other housing and the emotional distress it caused seemed unreported and without concern by anyone. But did it escape the gaze of the regulators?

When these things occurred in the real estate lending meltdown of 2008, the scope was so great and consequences so extreme, that homeowner plight did not go unnoticed. To the contrary, many undeserving homeowners were given breaks they did not deserve. Little of that occurred in the MH debacle.

The CFPB arose from that wellspring; Chattel loan shenanigans led to homeowner/borrower consequences essentially identical to the mortgage mess, so why treat them differently? To say nothing of the industry reputation for loan fraud, and dealing with many financially fragile people who were not viewed as able to protect themselves.

Don’t misunderstand my drift; I’m simply reporting what I see as the motivation for the formation of the CFPB, and by extension, the prospects for any serious changes in their rules and regulations.

Were I sitting across the table from industry lobbyists, in the back of my mind is the knowledge that exempting the MH industry from these rules is loosening the grip on an industry who hasn’t acted as though their past lending was fair to the consumer.

Yes, as the industry claims, a few more homes might be sold if rules were relaxed, but the CFPB rules and regs do not by themselves stop a 580 FICO buyer from getting financed. That’s a self-sustaining process by industry lenders for the moment. But it might protect the 660 on up FICO MH buyer from some of the known operating defects from which the industry has suffered. That’s the thinking the industry faces in seeking changes.

So, what do I think the industry lobbying efforts will gain as to the CFPB? I seriously doubt that any meaningful loosening of regulations will occur as making the case for it is not easy. At best, a few more homes could be sold and financed to responsible buyers, but regulators do not see loosening regulations which simply allow people at the bottom to “buy” more MH, and suffer a high loss of homes. And that is what the industry seeks, at its heart. My advice, onerous as the regulations are, learn to live with them and take advantage of a new competitive factor introduced by CFPB. Master the requirements and get a leg up on those who will not, of whom there appears to be many.

3) MHProNews: What is your impression of the working relationship between various industry associations, HUD and the DOE?

Down through the years I have known both sides of the continuing lobbying drama. The industry wants this and that, most of which conflicts with the regulators desire to control the industry and protect the consumer. We now have a history of going at this since the late 1970’s, without any magical results for the industry. It has recently become a highly regulated industry which heretofore, though the industry viewed itself as highly regulated, it was not. That changed. Welcome to the new America where regulation of all stripes holds sway.

Of the major industry associations, MHI (Manufactured Housing Institute) has been the compromising industry element. While individual members have been combative, the association has tried to be firm, but compromise has not been unknown.

The other group, MHARR (Manufactured Housing Association for Regulatory Reform), has catered to the industry segments which feel we can go toe-to-toe with industry regulators and have our way with them.

I think if we took a long and serious look at the actual achievements of both associations, the record reveals little success by the pit bull faction, and some, though limited success from the compromisers. But what would we expect from an industry whose main claim is that it is America’s most affordable housing, when government now finds non-profits or developer-required low-income housing as the better vehicle to deliver affordable housing, not the MH industry. The industry has become suspect, and that is at the heart of the regulations, just as it was with the mortgage industry which brought on their highly increased regulatory burden.

I’ve written at some length in this publication in the past on this very matter of the associations, and a view of that might shed even more light on the subject as to my thoughts on our associations and their operating style and effectiveness.

I do not want to leave this matter of lobbying without speaking to the state associations.

All during my 40+ years in Trailerville, I’ve dealt with them. They have many very talented people involved and members can really get involved without the major time and money cost of national association meeting attendance. Some belong to both, but at my speeches at various state associations I met many I never saw in Washington, who obviously were very involved in state matters. Their record of storming the state capitols to seek redress shows how effective close relationships can be. We see an effectiveness locally we simply do not see on the national stage.

Locally we may represent a strong voice listened to. Nationally, even when we had a fairly strong PAC $$$$, we were a minor player in most regards and were treated as such. Today with our PAC having the same money as the allowance for an 18 year-old, we don’t get too much respect or time.

In most states, with strong associations, getting into the halls of power and talking with a regulator or politician who is a personal friend of yours yields excellent results. Would it be this action was transferable to DC. But in DC relationships seem to hinge on $$$$$.

4) MHProNews: What do you think would help the industry's working relationship with regulators?

Marty Lavin:

The industry needs friends. It has few if any in government, and none I know of in the non-profit world, which takes an ever greater share of attention within government. As we’ve seen repeatedly, at all levels of government, a few loud critics, especially from non-profits, have enormous sway over board and regulators. Meanwhile, everything we say is questioned and mostly disbelieved.

Long have I encouraged MHI to join folks like AARP, who is a serious critic of the industry, in trying to resolve issues between us.

Is the water too poisoned to join with various non-profits? Perhaps, but if we can work with them on specific issues, powerful forces could be unleashed on our behalf, which would greatly enhance our clout with government. Against us they seem to be prevailing. But we must get past the ingrained industry belief that we do no wrong and do not need to change or compromise.

By ourselves, in an essentially buggy whip industry (fading), I do not see the regulators doing anything we request, save at the margin. And any slide back from regulations will quickly be rescinded as soon as industry infractions occur once more. History tells us that will happen quickly. Just look at the number of industry people trying to slide around the numerous lending regulations now hung around our necks.

5) MHProNews: What do you think would be useful in having a positive impact on our lobbying efforts for modifications in Dodd-Frank with Capitol Hill?

Marty Lavin:
I fail to come up with any positive, easy solutions to our problems, heaven knows I tried. The industry reputation of “bad-actor,” who treats consumers unfairly, who closes communities to sell 150 families out so a Wal-Mart can be built, who champion chattel lending where very financial fragile people have high default rates in communities, who raise rents endlessly, have led to not only Dodd-Frank, but to highly restrictive zoning laws, rent control laws, and a myriad of lending and non-lending regulations. These have help squeeze the life from the industry.

But let’s confront the real culprit for the fall from 580,000 homes in 1973 to the 50,000 range today, even as population has increased by 50% since 1973.

Listen intently here, Junior, it ain’t the regulations which plague us.

It is this simple fact, like it or not: Chattel lending to the average customer drawn to our product is not sustainable because of high default rates and the attendant high loss upon resale of defaulted collateral.

I needn’t remind you this is a complex, intractable problem at least for now, and solutions are extremely elusive. If lenders lend only to those customers likely to default at less than 20% lifetime rates, then this is a small industry, as we now see. If lenders follow the lending regimen of 1960-2003, then defaults will lead to huge lender losses, even as sales soar, for a while anyway.

Since the ABS MH meltdown of the late 90’s and early 2000’s, lenders are aware of this fact. Sad to say, after innumerable industry meetings, I note only our lenders seem to appreciate this fact. The rest of the industry seems unconvinced, not wanting to be confused by the facts.

Thus the present extreme caution in lending, as even six months of lending error will likely bring an enterprise down, results from the reported facts of the ABS era. MH Lenders have decided that it will not be them who subsidize the industry through loan losses.

The GSE’s were probed to take over that role and even though they did so with real estate mortgages with disastrous ramifications, they refused to do so with MH.

HUD/FHA through its lending programs has always been probed to have them assume that role. Once the 50 year lender subsidy of the industry was withdrawn, reality set in as to the real size of the industry. Not the 1975 to 1999 trend line of 250,000 homes annually, but a mere 50,000 home shipments per year, was the real size.

And even if the hurricanes run wild again, will government turn to us again for homes?

That leaves only government-subsidized loan losses in order for the industry to be able to return to those golden 250,000 annual home shipments. So far every government agency has refused to do so, especially after the losses suffered in the Title I, Chattel Loan program, which the GAO report demonstrated was a serious loser. No one wants to be our bitch.

I dare say that the loan losses and its connection to industry size were well recognized by some by the late 1990’s, when I heard a senior GSE official say that only with government subsidies could the industry succeed once lenders retreated. That hasn’t happened. I was gape-jawed at the time, but how right they were!

So going to Capitol Hill on Dodd-Frank almost seems like deck chair moving. Let’s suppose all Dodd-Frank and other new lending license requirements were repealed, does selling self-financed used homes to 580 FICO borrowers save the industry?

I think not and clearly stated as such years ago when an industry scribe was waxing eloquent about the potential for self-finance to save the industry. It is not going to happen for a variety of reasons, and I told him so as well. It may help some individual organizations, but the entire industry? Yeah, right.

6) MHProNews: What closing thoughts would you like to leave with industry readers today?

Marty Lavin:

Tony, in those dozens of “Marty’s News and Notes” I wrote in the 2000’s I proposed many changes in the industry operating model I thought would help. Of course, most all of them were unenforceable, were likely to be violated by many, and some were deemed to make industry action more difficult, as though if not enacted the industry would get better and easier.

The Image Campaign was an excellent example. After Roper Associates polled the public on industry public perception, their report to the industry said that in their 30+ years of polling, no industry had been so poorly perceived by the public and their customers. This was strong incentive indeed for an industry seeking to refurbish itself. We did nothing. So they don’t like us? Who gives a rat’s azz?

Regulators deal in the real world. They read the newspaper account of another tenant revolt in a community after a rent increase. The photos of another community closing with pathetic people having to move a worthless 40 year old home to another elsewhere and not having the resources to do so can’t help but move the public.

Not our problem you say? Perhaps, but our regulators and critics wield their dictatorial power against us, even as the industry seems oblivious to it. And like the drip of the Chinese water torture, little by little our operating style has gone out of style. Yeah, but dick-head, we are moving to create green homes! That will help.

In spite of everything I’ve said in here, let’s zero in on the most important fact I can remind you of today.

Like the stock market which is a market of individual stocks, this is not an industry, but an accumulation of individual opportunities, all revolving around a factory built home.

There are plenty of players surviving, even flourishing in their own endeavors.

It would be nice to have a strongly growing industry to help business, but the industry has shrunk enough, shedding many enterprises, as it seeks its new level. Some elements, like the communities, will likely continue shrinking as the cornfields which became mobile home parks courtesy of crazy lending, revert to cornfields.

You know that from those endless real estate broker-sent emails asking for offers on troubled properties, with 50% occupancy, almost all of which are owner financed homes. Mercy, Jesus…

Don’t plan your business around Dodd-Frank, or SAFE or CFPB being modified or overturned. The chances of that are slim. Pay attention to your own unique niche. Follow the rules, stay out of trouble, and meld business needs with empathy for your buyer or community resident. Become the “good guy” in a sea of others.

Hard as it is, do the things required by law if necessary to succeed. If the laws are overturned or modified, you can quickly revert, but you are wasting time trying to battle what is in place now.

Know that GreenTree Financial is not returning and the industry lenders, few as they are, will not become GreenTree. Don’t worry about that rumored 580 FICO industry chattel lender coming to the sales lot close to you. It isn’t happening. And if it does, keep those bottom right drawer loans denied by everyone else flowing to it quickly, as the life expectancy is about three years.

Nothing is likely to change. Partner with your local hometown bank(s), protect them, and reap the rewards that can flow from that association. Make your plans based on increasing regulations, not less. Your ability to operate easily in that regulatory environment will be the key in the future.

Finally, the hot button of this moment; titling what has historically been personal property as real estate, that is the home-only, even in land lease communities.

I first bumped into this around 2004 at a meeting of land lease residents and non-profit employees who ran the communities. This was described as the new panacea, after all, we know how secure real estate secured mortgages can be, especially with sub-prime lenders and borrowers. This change in titling protocols would fix everything for the homeowner.

Then about 5-6 years ago a law professor from the University of Minnesota contacted me to discuss the concept. She was writing a law review article on the matter, as I remember, and had liberally quoted a lot of my written work. Very complimentary. I will tell you the same thing about titling personal property homes as real estate by fiat as I told her. You can do it by law if you chose to but to what end?

Presumably, doing this well-intended move is a desire to remediate the whole purchase, default, repo resale process. That process entails two issues: first the incidence of loan defaults, or what percentage will default, and severity, or how much money will be lost on the repossession and resale of the home. With broadly expansive chattel lending, these two have plagued the industry since the very first, and by extension, plagued the homeowner.

Of course, if by fiat one can entirely change the character of an item, I am all for it. I would start by declaring Martin V. Lavin as a young, handsome, vital man instead of an old, ugly, tired man. Well, of course logic tells us that in both the home and the man, the declaration by fiat of something it isn’t is doomed to failure.

Don’t let that hold you back. Perception is reality. Remember, put a tooth under the pillow and the good fairy comes.

The refrain always is; it works in New Hampshire, why not elsewhere?

This is a refrain that can only come out of a mouth of someone who hasn’t been in a three year old home which has gone into default, the home has been owned by uncaring people, the rugs stained, the appliances and furniture taken with the former owners, and during the repo period, neighborhood kids stoned all the windows and took a dump on the floor in the bathroom. They missed the hopper.

I’ve been in those homes, often located in a community with very substantial home vacancy and the owner just loves those substantial, frequent rent increases. So why does it all work in New Hampshire and a few other states as well even without real estate titling? The key to low frequency and severity hinge, on several factors:

  • High home values in conventional housing in the area
  • A relatively tight area housing market
  • A home placed in a community with low vacancy
  • Landlords/community owners who exercise rent increase restraint or rent control
  • Low numbers, if any, of community-owned homes

New Hampshire has most of these factors. Take away the vaunted “real estate” designation and do you think the MH market in New Hampshire would noticeably change. I think not.

Alternately, go to rural Alabama or Mississippi and go into some of the typical communities there, which do not share the factors above enumerated and do you think that real estate titling will change anything? “Hot damn, my trailer just became a mansion by the new law passed,” said Johnny Hayweed. All I can say, is if passing a law which says that chattel is real estate is all that is needed to correct frequency and severity, bring it on! Do you really think that is the answer?

From the recollection I have of dealing in New Hampshire financing years ago, the process was more onerous than a simple chattel loan for whatever that means. On the positive side real estate financing brings with it a number of borrower protections that pure chattel transaction have not always enjoyed. I’m not sure that with all the Alphabet Laws plus Dodd-Frank that protections on pure chattel transactions are now lacking.

But again, it doesn’t really matter whether this move has any particular merit or not, get your throat ready for the shove-down, its coming. And who is pushing it? Why the aforementioned non-profits, especially the Ford Foundation and its many allies. You know, the people the industry has failed to engage and who are now calling the tunes. Wake me when it’s over.

For the record, I still own a manufactured home community, remain comfortably retired, but keenly interested in the manufactured housing industry. And I still get an occasional consulting and expert witness assignment. ##

(Photo Credits: Supplied by Marty Lavin)

(Editor's Note: As with all of our Industry Voices guest articles and other featured articles, the opinions expressed are those of the the writer, or in this case, of Marty Lavin, JD, who thoughtfully and candidly replied to each of our questions. A careful look at Marty Lavin's thoughts will reveal that this is not pure 'doom and gloom,' as he points out exceptions to the rules that he has witnessed. We at MHProNews.com welcome posted comments or reply columns on this article and encourage similar or differing points of view. You may submit a guest column with the usual editorial guidelines to us by email. Use the words Letter to the Editor or Industry Voices Guest Column in the subject line to: iReportMHNewsTips@MHMSM.com or latonyk@gmail.com Be sure to ask for a message confirming your submission, thank you.)

An MH Industry Turn Around Plan, Part II

November 16th, 2011 No comments

An MH Industry Turn Around Plan, Part II

 
In my previous article, I explored the potential benefits of an alliance that included not only industry players, but the involvement of the end user – the homeowner. Regardless of the geographical location and cultural differences in this country, affordable housing is a necessity. Whether a consumer is interested in purchasing a manufactured home on land or renting a site (and/or home) in a manufactured home land-lease community, the end result is the same; occupancy of a manufactured home.
 
Like an uncoordinated kid who accepts being chosen last for a sports team, the manufactured housing industry has all too often settled for being considered the less than optimal choice for consumers. At some point, that uncoordinated kid is going to learn the rules, receive instruction from coaches, gain support from teammates, and develops the skills and passion for success at the game. This hypothetical player is going to seek any available resources – from physical fitness and honing skills to setting personal goals and overcoming obstacles – in order to improve positioning. Obviously, the kid is not on this journey alone – coaches, teammates, parents, and fans play an integral role in turning the “last choice” into the first round pick.
 
In a similar manner, the MH Alliance is taking a holistic approach to providing solutions to the manufactured housing industry. One of the biggest hurdles is gaining support from all industry players. The MH Industry is highly segmented – manufacturing, retail, communities, suppliers, finance and insurance, government entities, etc – all hold separate paradigms. More time may be spent by some blaming the other segments for the industry downturn than is spent pulling together and taking action to reverse the trend. The concept of working together to identify and implement sustainable solutions may thus be overshadowed by the reluctance to change and move beyond one's comfort zone.
 
Sports teams recognize that the weakest link can be transformed into the strongest point through the right drills and effort. Therefore, the team takes a holistic approach by identifying specific problem areas and identifying solutions to increase the level of strength by improving the weakest link. The team members recognize each individual’s contribution and the value that it adds to the team’s performance. The MH Alliance is a collective venue that gives balanced value to every player on the team. The strategy is based on breaking down the walls of segmentation to form a team with a unified approach to problem solving. The only “favored children” ought to be the consumers – the manufactured home owners! – of the Industry's products and services.
 
Using a systematic approach, problems are identified and a collaborative effort is used to develop strategies and solutions. The MH Alliance can benefit manufacturers by distinguishing them as a valid and credible source of a much needed product. Quality control issues have been hammered in the media and public opinion. Industry professionals are well aware that manufacturers are held accountable for quality standards. However, the general public – POTENTIAL CUSTOMERS – are not privy to the same information. Consumer awareness and education is a necessary component for image change, yet the current individualized strategies are all too often ineffective. A more unified effort therefor is a must.
 
Information about manufactured homes are usually gleaned from internet searches or a visit to a retail sales center. Manufacturer participation would be linked to current homeowners through the MH Alliance. Not only would the linkage provide access to potential consumers, it would also improve accountability and provide transparency.
 
Manufactured home land-lease communities, MH Retailers and others would also benefit from the Alliance. Let's look at a quick example.
 
Unemployment, foreclosure, and divorce rates are at all time highs in this country. The commonality between the three is that the actions produce a greater need for affordable homes and rental units. Part of the consumer’s resistance to MH Communities (MHC) is the negative stigmatization that is derived from a lack of consistency among owners or managers. One MHC may require yard maintenance requirements and a neat home site with enforced rules while the other allows a goat to eat the grass or you can see barking dog chained to the steps or a tree. The carrot of access to marketing dollars can be a tool for the MH Alliance to involve community owners and encouraging a set of standards will move the choice far beyond the “trailer park” and “mobile home” mentality. Furthermore, by targeting and driving 1-2 star customers to 1-2 star locations, and driving 4-5 star prospects to 4-5 star locations, consumers will find the 'right lifestyle choice' for their needs, wants and budgets.
 
The same can be done with “street retailers” sales centers. We have all seen the state of the art sales centers with HUD Code and modular homes that look like or are ground set, with great landscaping, furnishings, etc. Such 4-5 star retailers should be the ones to see the 4-5 star customers. Those retailers who have 1-2 star locations will have the 1-2 star clientele driven to their sales centers.
In marketing, one goal is always to match the right product and service with the right buyer. One of the good points that the MH Alliance plan offers is that it will avoid marketing disconnects. This will result in more closed business.
 
A key point to remember is the MH Alliance is more than just marketing or image building. So while this article has focused on that aspect, it is important to remember that issues such as better exit strategies for lenders and home owners, improved financing and much more are a part of the mix. Perhaps we can look at those aspects in a future column. # #
 
Links to comments from Industry Professionals who have participated in an MH Alliance/Phoenix Project GoToMeeting small group webinar.
 
 
(Editor’s Note: All links in this article and some edits were provided by MHProNews.com for context to Ms. Tyler’s article. It is good to recall that Ms. Tyler's perspective includes years of MH Retailing and MH home ownership.)
Lisa Tyler, MBA
Marketing Instructor
Walden University
Planning a doctoral dissertation on manufactured home marketing and image.