Why build an Energy Efficient Manufactured home?

by Stephen Lefler

The appeal of energy efficient housing is growing. The choices of a new site built home, a foreclosure, an old mobile home or living in an old apartment are becoming increasingly less desirable for the public.

The demographics indict the population will need to downsize from their current house sizes. The idea of 20% down payments, FICO scores and the banks unwilling to lend on Chattel mortgages make the process of buying difficult. The loss of their 401K, the low % rate of their CD's and the loss of their jobs are solid reasons for this upcoming change to the housing market. A recent developer in Davis, CA is in Phase one of 315 multifamily units. The project is leased out at 97% awaiting renters, before construction, why? This developer decided to offer "Net Zero" units. These units will have no utility cost to the renter. The real advantage to the developer is they will own the units and believe the cost of utility will rise in the future. What a novel way to approach housing today while promoting energy efficiency and save the renter $ during their lease agreement with this developer. Many Land Lease Community owners are beginning to see this change too. 

The Land Lease Community is well positioned, it is what they do (a sweet spot) they have it perfected for over 30+ years, just the wrong product.

Our Land Lease Communities have been profitable in the business of land leasing for quite some time, but not home building. The Land Lease owners must begin to take responsibility for their land and community by offering a home product not offered by any NYSE home builder. One of the largest land lease community owners offers "Rent –A-Home" program.

The thought of changing to rentals is not one readily accepted in most Land Lease Community business plans. An opportunity is not often seen unless risk is taken first. 

Our manufacturing home industry is in dire need of the something to change the course of profitability. The home industry is changing to multifamily due to the economy and renting, not home sales. The amount of building permits being pulled shows a high % of permits for multifamily units across the U.S. Have you ever noticed that the national awards presented to the manufacture home industry typically are for home concepts and never for a proven real home with real results?  This might be a good start for the industry to change the award process.

The past relationship of the Dealer (selling a "trailer"/manufactured home) and the Land Lease Community owner is falling apart. The reality of the two parties is no vested interest in making the homes in the Land Lease community of great quality. The manufacturer was not in this relationship.

The many Banks never cared for the concept, product or lack of interest and got out of manufactured home lending business. 

Rarely did the Dealer and Community Owner talk about the type of the home product going into the community; most community owners were concerned about the accessories, improve to the lot. The community owner would demand new driveways, hardscape skirting, irrigation, car port awning etc… Why? They did not want to pay for it. The Industry still to this day has an image problem with this type HUD Code home product. The manufacturers today, "tell me the Dealers want even cheaper homes, talk about insanity". In fact, the community owner for years, left it to the dealer to spend his money to install the "Trailer" years ago then today they want them to change out those "Trailers" improve the lot and still pay the space rent while the home was up for sale. The home placed into the community lot from the Dealer always contains less costly items with little energy efficient amenities, cheap materials, its called profit.  The Dealer's cost of acquisition of the old home, removal, lot prep, installation, accessories and space rent continue to this day and they want it cheaper from the manufacture. Do not expect innovative or energy efficiency homes from this sale formula. The Land Lease Community owner had it too good too long; the cash flow is great from the increases in space rent over the years. Time is passing by though and now looking at the their community landscape of old mobiles within his community and the consequences of this  sales program, no one willing to use their money anymore to help the community owner. The Dealers money was always on the line, the community owner previously had no skin in the game, how sad.  

Some Land Lease Community owners realizing their misfortune resort to increasing the space rent to gain access and capture old homes in their community.  The concept is to get rid of the existing resident and rent the resident's old home for market apartment rents while possibly avoiding Rent Control. The existing space rent formula being 30%-40% lower than current market apartment rents. While this is a good short run to control the houses in the community and keep the cash flow going, less is more. The term: "The value is in the Land only concept". The reality is the rent for these old mobiles will reach an apex, become expensive to retro fit and repair. The community will begin to decline from the high rent structure and the cash flow will decline in time from renter's lack of appeal and the quality of the home. This concept will need new homes. I understand this program works best if there is a better use for the property other than a mobile home park.

The Dealer, Land Lease Community Owner and Manufacturer's knowledge and experience in how to build a "Net Zero" home is limited at best. Their motive is profit of the sale first, and not a long term housing solution. They are not concerned about the proven efficiency of the home product. They collect space rent. How great would it be together they gained the knowledge to build a product to be attractive with proven utility savings for the resident? The manufacturer must be able to promote their ability and demonstrate the efficiency of their home product. Currently, the manufacturer builds homes unfinished and in their disclosures will not warrant the home for its energy efficiency.  This must change soon. The Dealer is on the hook for that proven ability, to get the contractor to put it together and demonstrate and prove it is efficient, by allowing certifications and 3rd party verification, the old "Trust and Verify" concept. That takes time and cost more money! The Dealer is no position to do this work, nor wants to be his money. Certainly not the community owner. The Dealer/Manufacturer is no position to install Solar or Wind power to the new home, unless he gets licensed, more money. They must sub-contract the installation to a licensed solar company, which is even more money. The solar offers a great benefit to the community for reducing the load of the community and makes the homes more attractive to the consumer buyer/renter. The community owner has a decision, "how much is he willing to devote his involvement in the home selection process for his community to have any skin in the game and the future of his community."
 

The good news is the "Net Zero" manufactured/modular home can be built by a manufacturer today for less money than NYSE home site builders throughout the U.S..  The fact is the factory is in a great position due to its ability to recycle and control its on-site waste, allow 3rd party raters, have quality control and be green in the selection of materials to build a home. I have been asked many times why the concept of green manufactured homes we build are so desirable.  I respond by saying, "Would you ask Toyota to build its "Prius" on your lot?" Would you ask Rolex to assemble your watch in your kitchen? If not, then why would you expect 12-15 subcontractors to build your home on your lot and pay more for it?  Would you expect the same quality each time the home was built?

There is a manufacturer that works closely with our firm, using new materials in testing, and has the experience, willingness and desire to build these revolutionary homes. We have achieved several awards and met some energy efficient program from the local utilities to get certifications and rebates. There other factories beginning to make considerations, offer green marketing materials and some are quite successful. The modular industry is now being recognized by the "NAR= National Association of Realtors" for its ability to build proven energy efficient home products. The site builders using "NAHB= National Association of Home Builders" offer guidelines "often referred to as "LEED" are beginning to record the use of green materials and document cumulative points to the homeowner. The relationship of the Land Lease Community owner, Dealer and Manufacturer  to succeed in the future must change and become strong. It must collectively look to the future and forget about their past relationships. The Land Lease Community must recognize the "Times Are Changing" and take the course of action of change that best fits his business plan. # #