Upgrading Your Manufactured Housing Community, Part 4

by Chrissy Jackson

What to do about Older Homes?

In many older Manufactured Housing communities, the main thing that causes a problem is simply the age and size of the homes. They date the community. One comment heard from Wall Street is that "the value of a community is the value of its housing stock," meaning that a community can be worth no more than the sum total of the value of the homes located within the confines. And, if the value of a home is based on the perception of the buyer (and we know for a fact that it is) then what do we do to improve the perception of value in older homes?

In some areas, it is most advantageous to the community owner not to allow existing homes to be moved. If your community is located in the flood plain, homes moving into your community must sometimes meet new installation standards. Many times, this will result in a home being set four feet or more off the ground and causes a jolt to the senses when a prospect drives through the community. If your homesites are large enough to accommodate some of the current models, or even more modern homes than you now have, allowing homes to move and make way for these more up-to-date replacements may be a good idea. In some states, but not everywhere, you can require homes to be moved upon sale. Be sure you know your state laws before trying to implement this idea.

In many older manufactured home communities facing the problems of trying to upgrade, there are homes owned by someone who dies. Their heirs do not want the home, and in countless instances have turned over the title to the community manager rather than continue to pay rent. Now that you own the home you were trying to get the resident to upgrade, what do you do with it?

First, decide whether you want to keep the home or not. If you want it removed, advertise it as a home for a fishing or hunting retreat at the lake. Advertise it as a "mother-in-law suite," ready for installation and occupancy on someone else's property. Or, if you know of other communities in your area that are saddled with small homesites and struggling to find homes to fill them, call the community manager and offer this home for sale or give it to them free for moving it.

If you want to keep the home, look at ways to improve the exterior appearance, and in so doing, you will come up with ideas that may work for other residents who also need to do some improvements. First, if you are strapped financially, you can always offer the home for free to someone who will move in and begin paying rent, with the agreement that within a specified number of days, certain exterior improvements will be completed. In this instance, part of your approval process will be to determine if the applicant has the financial wherewithal to live up to his/her end of the bargain.

If you are keeping the home to enhance it and then sell it at a profit, there are several things that can be done to improve the exterior. Look first to the shed, if there is one. If it needs too much work or repair, simply remove it and haul it to the landfill. Analyze the condition of the skirting. Consider replacing it if it needs too much repair or has a lot of missing or dented pieces. Decide whether the steps, deck, porch or rails need attention for safety as well as for appearance.

Then, turn your attention to the home itself. Is it worth replacing old jalousie windows with a more modern style? Is it worth installing vinyl lap siding to perk up the appearance? In some markets, you can easily recoup the investment for improvements. In others, you cannot. You must know your market and make these decisions based on profitability as well as aesthetic improvement to the community. If you are in a tight market, and don't think you can recover a large investment in the home, consider simply painting it in more modern colors. Look at some of the newer homes for ideas. Add shutters to the windows of an older home to dress it up even more. When you look at the roof, consider the structural integrity as well as the appearance. If it is a metal roof, you may be able to get by with a good coat of sealant to dress up the appearance. Trim any branches that are scraping or rubbing.

And while trimming tree overhangs, look at the landscaping in general. Try to open up the homesite area by eliminating overgrown shrubs and bushes, and trimming back and weeding untidy flower beds and potted plants. Use color and attractive landscaping techniques along with inexpensive plantings to help improve the perception of value in the eye of the buyer.

For small homes, adding a planter box across the front of the home and extending it beyond each side helps grow the visual size of the home. Finish this over-sized planter with an upright trellis at each end. When vines or flowers grow up the trellis, it will mask the lack of a home behind it, and will instead present a front appearance of ten to twelve feet in width rather than the true eight- or ten-foot width of the home.

If the home has only traditional steps, and if there is room on the homesite, consider adding a raised deck to help update the appearance. Or, if there is a driveway, consider adding an awning, carport or screened room to enhance the overall look and value of the home.

Think about changing the curtains in the windows that are visible from the street. Go with a style that allows a lot of light to enter the home, and something that looks inviting from the street. Use a color that blends with the interior furnishings or a bold color that demands that passers-by pay attention to it.

If Homesites are Small…

When you find that your homesites are too small for the more modern homes, yet you still want to upgrade your land-lease community, don't despair. There are solutions and ways to do it. First and foremost, pay attention to your market area. What other communities have older, smaller homes that are in good condition but no longer suit their overall plan? Would they sell them to you at a reasonable price? Be sure other community managers know that you want to purchase smaller homes.

Depending on the economic strength of your market, you may be able to place (with the sales being handled by a local retailer or yourself) two-story HUD Code homes on smaller homesites. These two-story models have smaller footprints (less square feet per floor) and consequently fit on smaller homesites, while still providing a decent amount of living space on the two floors combined. This is generally not an inexpensive option, but it is being used successfully in several markets where the demand is strong, and the homes are competitively priced when compared to other housing alternatives.

Another option is to combine two small homesites to create one larger one, or to make two new sites out of three existing ones. Sometimes this involves re-permitting through a licensing agency - check with your state association to see if this applies to you. In most cases, you can then charge a higher rate of rent on these larger sites that will help make up for the loss of individual site rents. If this option requires moving utility connections, be sure you are comfortable with the expense and limited future options this may allow the community.

Some community owners, depending on the needs of their market and local ordinances regulating MHC's, will buy park-model homes to put on vacant homesites. These will then be rented on a seasonal basis, sold or simply leased on a regular basis. It is an expensive, but attractive way to fill smaller sites when the need for small homes is present. In some areas of the country, this has proven to be very profitable for the communities.

No matter the size of homesites, or the age of the homes, keep them neat and tidy. Resolve to end the clutter that sometimes accumulates outside the home. Just having open space around a home improves the appearance of the entire homesite and consequently, the whole community.

Depending on the layout of your community, you may be able to take two homesites that are currently designed for vertical placement of homes in relation to the street, and place two homes horizontally in an offset position. This would allow each home to have some road frontage while still affording you the opportunity to collect two rents from two homesites. Once again, caution is recommended with regard to utility connections and a possible need for re-permitting the sites. An example of the change in layout for the homesites is shown sketched below.

Some manufacturers are making a multi-section home that is actually two separate living units, connected by a firewall. Each unit has the entrance on opposite ends of the multi-section. The floor plan affords both residents some privacy. This is another option for markets where rentals will provide a steady income, and you can place one multi-section on two homesites. Not only will you still collect the same two homesites rents, you will collect additional monies for renting the home.

If your budget will not allow for the purchase and installation of homes to be used for rental housing, look for an independent investor in your area. There may very well be people with money to invest in rental property who will allow you to handle the qualification and approval of the renters. You will collect site rent and the investor will get a return of home rent to cover his/her mortgage and a little profit for him/herself. Or, if you have a strong market for selling pre-owned homes, and are unable to buy them with your existing budget restraints, look for a private investor to make the initial purchase. Work with them on programs that will allow you to either sell these homes or lease them with an option to purchase to new residents. Then, if this is a profitable venture for both of you, your new-found investor may be willing to advance more money once the original investment is repaid. ##