Best Kept Affordable Housing Secret in the US!

by George F. Allen

Why HUD Code Manufactured Housing & Landlease (nee manufactured home) Communities Continue to be 'Best Kept Affordable Housing Secret'

One person's passion is often another's piranha, poser, puzzle or problem! Think of KIA brand automobiles. Today, a popular consumer choice; but for combat veterans, the chilling acronym for 'Killed In Action'! Same to be said about succulent Kobe beef. A delicacy for many diners; but a 'not on your life' food choice among vegetarians. Some opine a similar dichotomy for this nation's Best Kept Affordable Housing Secret….

Think HUD Code manufactured housing and landlease communities ('LLCommunities')!

For aficionados of quality, inexpensive (1/2 the cost, per square foot, of site-built housing!), energy efficient, non-subsidized, transportable, single family housing, certainly a valuable bargain when well bought and well-sited, on realty owned fee simple or leased. But how many American homebuyers clearly know this, and select unique factory-built housing products when in the market for a new home? Not many. Why? A half dozen reasons.

1) Presently, there's a major DISTRACTION. With 4,000,000± foreclosed and/or repossessed stick-built homes in play these days (a number that varies from week to week, and from news source to resource person), would-be homebuyers will shop in that affordable pool first, before seriously considering new manufactured homes. And 2) since there's NO SECONDARY MARKET to effectively market and resell manufactured homes, beyond MHVillage online listings, that avenue, too, is a nigh non-starter! So, they're the first two reasons why manufactured housing continues to be this nation's Best Kept Affordable Housing Secret!

3) Complete lack of national product and brand PROMOTION.

Automobile manufacturers regularly do this – on national TV; so do pharmaceutical firms hyping virility and PDA pills; and, a plethora of companies peddling cable and dish TV, cell phones and other cutting edge technology. So, why doesn't HUD Code manufactured housing follow suit – at all

In my opinion: "Because we don't play well together" has too long been our self-defeating siren song, playing out in more ways than one.

A possible tri-part solution? Debut an effective, charismatic, focused national leader (I can think of one!) and leadership cadre; collectively backed and financed by a no-longer-divided national voice; if necessary, wrought from a drastically reorganized advocacy presence. Bottom line? As long as we don't effectively nationally promote our unique housing product and lifestyle alternative, we'll remain this nation's Best Kept Affordable Housing Secret!

4) BAD IMAGE, bad image, BAD IMAGE, bad image, BAD IMAGE, bad image! Who's to blame for the sorry state of affairs? BAD PRESS & BAD ACTORS! In the first instance, most of the secular and business press continue to practice the bromide: 'BAD NEWS SELLS!' In our case, this is regularly exhibited via the press's persistent use of archaic, negative terminology, to subliminally negate positive views one might have for manufactured housing and landlease communities. Some in our businesses fight skirmishes of this nature in various ways; e.g. one with stock postcards responding, in part: 'Oops…you slipped! Trailers haul livestock and beer. People live in manufactured homes. No one lives in a trailer!' (For a free copy of the 'Ah Ha! & Uh Oh! Formulae' form, call 317-346-7156.)

What do youdo? It's going to take many more manufactured housing loyalists, doing things like this and more, to turn the press in a positive direction. Here's a novel suggestion. Research and prepare a comprehensive MHStyle Manual to distribute to every print and online news purveyor in the U.S.! Style manuals are everyday references, generally containing a dictionary or lexicon of trade terms, as well as contact sources for industry information and statistics.

And the BAD ACTORS? They take many forms. Shoddy workmanship within housing factories, shifty 'street dealers', unsatisfactory customer service, predatory lenders, lousy landlords, and more; all working (often unintentionally) to keep BAD IMAGE in place year after year. How to interrupt this perennial cycle? Begins with each of us in the MHBusiness, the 'five percenters' who genuinely care! Make a sincere commitment to personal and corporate excellence! Seriously. Get active on the state level, via your trade association, as an industry image activist and board member. And when given an opportunity, make yourself and image improvement views known on regional and national levels. Frankly, until we, as an industry and asset class, effectively address BAD PRESS & BAD ACTOR impediments, we'll continue to languish as this nation's Best Kept Affordable Housing Secret! Are YOU a direct member of the Manufactured Housing Institute ('MHI')? If not, phone (703) 558-0678 today and join!

FINANCING. This is a bona fide hiatus (a space where something is missing; a gap; a break" – Webster) at this time! Available only to the most credit worthy of would-be homebuyers, and then generally on the realty-owned fee simple side of the lending house. BUT, frequently available within many, if not most, larger LLCommunities (i.e., containing more than 100 rental homesites) throughout the U.S. How so? Well, that's another major part of this story: NOT ALWAYS AFFORDABLE. And there are two interrelated aspects of this impediment to manufactured housing and landlease communities breaking free of their 'rep' as this nation's Best Kept Affordable Housing Secret!

One aspect has to do with calculating the price (value) of new or resale (manufactured) homes marketed in specific local housing markets (identified by postal zip code and referenced as Annual Median Income or AMI at zipskinny.com) and/or sold to an individual or household with a provable level of annual income (a.k.a. Annual Gross Income or AGI).

But first, ask any HUD Code home manufacturer's regional sales representative, or MHRetailer, how to take either or both those '$$$ starting points' (AMI &/or AGI) to calculate 'affordable' and 'risky' price points of homes to be sold in the given local housing market, or to the individual or household buying a home. You may be surprised at the answer(s) or, more likely, non-answers. And don't forget to ask 'How they got to their numbers?' Today there is a practical way to effect these key computations, using the obliquely-named 'Ah Ha! & Uh Oh! Formulae' (see above).

The other aspect? Has to do with relationship of on-site homesite rent and PITI factor calculated using the 'Ah Ha & Uh Oh!' methodology. Here's the rub – sometimes referred to as the KY-MN Rule of Thumb (named for two MHIndustry leaders routinely using this rule in KY & MN) – to wit: For a manufactured home sited in a landlease community to 'sell well' against similarly-sized and appointed stick-built homes in the same local housing market, the total monthly PITI & site rent payment on the former must be at least $50.00/month less than the PITI payment for the latter! When that relationship is out of sync, it's usually due to too high site rent, too much home for the prospective homebuyer (often the case), and or combination of both factors. Now you know.

CONSPIRACY. Do you really want to go there? Some do, some don't. However, want to acknowledge that this theory frequently surfaces in casual conversation among MHIndustry purists and veterans. Such talk usually centers around personal convictions that advocacy bodies have been infiltrated by stick-built housing loyalists intent on gradually dismantling the industry; and, HUD, as federal regulator of the our industry, has been its most reluctant bridesmaid for 35 years, rarely doing anything proactive, even reactive, to pointedly promote manufactured housing beyond being this nation's Best Kept Affordable Housing Secret. 'Nuff said, for now…

Can YOU identify additional reasons why HUD Code manufactured housing and LLCommunities continue to be this nation's Best Kept Affordable Housing Secret? ##

George Allen, Realtor®, CPPM® Emeritus & MHM author & freelance management consultant specializes in factory-built housing & landlease (nee manufactured home) community real estate asset class. George authored three textbooks on realty development, investment and management, plus his popular Chapbook of Business & Management Wisdom. Also pens subscriber-supported monthly Allen Letter and the Allen CONFIDENTIAL! business newsletters. Contact him at Box #47024, Indianapolis, IN. 46247. Phone (317) 346-7156. FAX: (317) 346-7158. Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Website: www.community-investor.com for his blog.