To Be, or Not to Be: Die, Survive or Thrive & Manufactured Housing

by Michael Barnabas

The klaxon-like warnings are all around us. Another plant closure. A municipality or county that seeks to prevent or close 'another mobile home park.' In areas where there were once 25 retailers, there are now six, or four or… Associations whose cash flows are so low that they, too, may face extinction.

Those who survive can't afford to think, 'business as usual.'

"To be, or not to be, that is the question!" - so saith William Shakespeare. Centuries after Shakespeare's time, The Existential Question faces us all in Manufactured Housing today.

Why?

Because collectively our industry is unwilling to change! Some by their actions - if not their words - deny there is even a need to change. But if your business is in the ER, or if the business down the road is, you better smell the coffee, wake up and say, what must we do? What must I do to save my business?

If statistics and estimates are accurate, five billion or more dollars have been pumped into manufactured housing communities in chattel loans originated by or linked with property owners. Five billion dollars in chattel - personal property or 'home only' loans - and yet, even the major portfolio players still report an average physical occupancy rate hovering around 10% average. Where would they be without that in-house or related lending?

The answer to that question is found in those land lease communities that are run by those who don't do in-house lending, rentals, lease-to-own or on-property sales.

There are some ghost towns that used to be thriving manufactured housing communities. I look at mobile home parks and manufactured home communities for sale. Take a look, and you will see many with physical occupancy rates at 30-80%. Then consider that their economic occupancy is typically lower still. That, my friends, is an alarm that needs to be heard as a call to action, a call to change.

Every business has an inherent right to live or die. If you or someone you know has a business in our Industry that is in trouble or dying, start thinking - and have them start thinking - we must change. Business can't be done the way it has always been. 'Business as usual' doesn't work anymore. Have them start by reading here, getting the help they need, or by selling out to someone who will pick up the pieces for them.

I see retailers with old metal-on-metal homes that are not properly blocked or leveled, with rough steps propped up by their doors. Those old 'mobiles' sit on the same sales lot as manufactured homes that are brand new and look good. What do the potential buyers - those with cash or good credit - see as they drive by? They see those old 'mobile homes' and wonder why they should stop to look at that nice multi-sectional with a residential-style exterior. So why do the owners of those locations not wonder why only customers with bad credit walk in their door? Hello? Anybody home?

Lenders give away their repos, because that is the only way they think they can sell them. Don't get me talking too much about financing, because those who lend and those who want financing all tend to be guilty of short-sighted thinking.

I could tell you that:

• Manufacturers are borderline crazy for not providing dealer support in sales training and marketing. If a builder wants more sales, they better get those who sell their homes to market and sell professionally. If the retailers can't do it, factories that want to sell homes had better help them out.
• 'Parks' are borderline insane for trying to stick it to a lender for back lot rent. Some overcharge for everything from lot mowing, to lock changing to winterization. Think! You want more and 'easier' chattel financing? And yet some 'park manager' sends a huge bill to a lender with a repo in their community? And then next week, they still want that lender to buy a 550 credit score prospect that is highly likely to default in 48 months? Then will that community want to stick it to that lender again?

Affordability. We must make affordability a reality. Land lease communities should ensure their residents' combined site and home payments are in line or lower than area rentals.

Exit strategies. Home owners and lenders must have a viable exit strategy, at least on par with conventional real estate.

Companies who don't train well or at all are committing slow suicide. Training is crucial to ANY profession! McDonald's trains people how to 'pull' a drink, cook fries with timers and make burgers that sell for under $10 bucks! And way too many companies in our industry have virtually no systematic training program. I hear the most outrageous statements come out of the mouths of people in offices associated with our Industry. From service to sales to supervisors, improper terminology and just plain misinformed people abound. Is it any surprise that where you find that, you often find other problems, too? You better train and do so well, or prepare to die!

I write about manufactured housing issues for MHMSM.com because I care about this Industry. Publishing is vital to any Industry. Think about retail, grocery, food service, hospitality, medical, legal, educational, automotive - name almost any industry, and there are publications for professionals in that field. Publishing is as vital to the health of an industry as good trade associations are.

What does MHMSM.com have to offer?

• A publication that is essentially about news and views, supported by savvy advertisers
• A publication where articles and blogs are top-quality, information-dense material - from local to national import - to communicate, educate and inspire
• A publishing team that believes in the bright, compelling future of the Manufactured Housing Industry even while being fully cognizant of the perilous challenges we face

Isn't it obvious why these guys are growing? MHMSM.com isn't perfect, but it is obvious they are in a league of their own. Maybe that is the reason more sponsors are coming on board here and ever more readers continue to follow, too. I look at the published stats for another publisher and then look at the monthly number MHMSM.com shows in their emails; this publication has more than double the numbers the other does.

A healthy industry needs good publishing. Read and support what you have.

Associations. They are taking some flack these days, as always. In fairness to associations, they arguably have the toughest role of all in our Industry! They try to bring together various personalities and interests, they have to lobby to protect and promote our Industry. They have to do this with fewer dollars when they need more. They have less staff, less time and smaller attendance at their meetings. Houdini had it easier than an association exec does today.

But that doesn't mean that associations are off the hook; they are at the epicenter of all that must happen in manufactured housing. If your company is not an association member, find the association right for you and join it. Be active if you are already in an association. Unless your name is Zell or Buffett, you don't have the money needed to do what you must. Even the big money guys are in associations. Besides, where else - besides a trade show - can you rub shoulders with so many of your peers? Where else can you meet independents and the big boys all in the same meeting room? Support your association and be involved. Do your part. Then hold them accountable for protecting and promoting manufactured housing. Help recruit other members, and learn to work together with others in your chosen field.

This column has set up some of the many problems we face. There are more, but it would take a book to write them all. Some say we are dying, and the truth is that many firms in our Industry have died and more may die. This article, by pointing out some of the flaws, already suggests some of the solutions. But those solutions will be outlined in the article I've planned for next month.

For now, let me end on a note of hope.

The American Dream has always been home ownership. HUD Code manufactured housing is unparalleled in its ability to provide low cost, high quality homes. Regulators need to be aware of this fact and support instead of undermine our industry. America needs workers building homes. We continue to grow in population, while incomes have declined in recent years. Where else can people go, save to factory building, for affordable, quality home ownership?

We have an historic opportunity ahead of us. HUD Code, prefab and modular homes could easily become the dominant form of housing. All the facts point in that possible direction.

But to tap the enormous potential of factory built housing, we have to fix what is wrong with the HUD Code segment's image and financing issues. Can it be fixed? I believe it can. Will it be fixed? Yes, if enough people are humble, honest and hard-working enough to do what it takes, and will make the changes necessary.

Let's look at viable solutions in next month's article. "To be, or not to be"? Let's answer that question by making things the way they ought to be. The future is in your hands. Do what it takes daily, and you will find yourself not just surviving, but thriving! # #

Michael F.B. Barnabas is a pen name. The inspiration came from columnist M.H. Ronin in George Allen's newsletter. Posted comments, for or against, are welcome. Suggestions on future articles can be sent to my email, This e-mail address is being protected from spambots. You need JavaScript enabled to view it .