MHInsider™ October 2018 - SECO18 Edition

OCTOBER 2018

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MHINSIDER.COM â„¢

T H E N E W M A G A Z I N E F O R M A N U FA C T U R E D H O U S I N G P R O F E S S I O N A L S

SECO18 The Conference For Community Owners,

By Community Owners

OCTOBER 10-11

Equity LifeStyle Properties Finds Success in RV/MH Property Mix IN THIS ISSUE: Fannie Mae Looks to the Future of Manufactured Housing Overcoming Customer Objections Are Your Model Homes and Clubhouses Staged to Sell?

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VOLUME 1 • ISSUE 4 OCTOBER 2018 ON THE WEB MHInsider.com

––––––––

Publisher

50

Equity LifeStyle Properties Finds Success in RV/MH Property Mix

12

22

Darren Krolewski darren@mhvillage.com

Executive Editor

Patrick Revere patrick@mhvillage.com

Managing Editor

Matt Milkovich mattm@mhvillage.com

Creative Director

Mark Dollan dollan@mhvillage.com

Graphic Design

SALES Overcoming Customer Objections

SECO Fills The Void For Learning, Networking Among Small to Mid-size Community Owners

FAIR HOUSING 6 Fair Housing And Those Tricky Familial Status Issues NEWS BRIEFS 10 Industry Happenings: News And Updates From Around The Industry TIPS/ADVICE 18 Are Your Model Homes And Clubhouses Staged to Sell?

EVENTS 27 Beyond SECO18: Experience Atlanta’s Spirit 30 Upcoming Industry Trade Shows 31 MHI Congress and Expo Moving to New Orleans for 2019 34 The 6th Annual NCC Fall Leadership Forum ADVOCACY 37 MHI Asks Consumer Financial Protection Bureau to Change Regulations Supporting MH Financing FINANCING 39 Fannie Mae Looks to The Future of Manufactured Housing 42 Interest Rates Matter Less Than You Think 47 Community Owners Nationwide Have an Attractive Option to Purchase New Homes TRENDS/INSIGHTS 57 The Promises and Pitfalls of Park Owned Homes 60 The Case for Manufactured Homes as Workforce Housing BUILDER/RETAILER 65 Retail Insights 66 Ask The Planner 4 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

Chelsea Mungons chelsea@mhvillage.com

Contributors

Gary Adamek Robert Blum Mark Bowersox Ken Corbin Suzanne Felber Dr. Lesli Gooch Edward Hicks

Juliana Ludema Ben Navarro Kaitlyn Palatucci Alexander Rindner Ken Rishel Rick Robinson Don Westphal

Cover Photo

Lake Conroe RV & Camping Resort, Willis, Texas Photo courtesy of Equity Lifestyle Properties

Advertising Sales

Matthew O’Brian Call (877) 406-0232 matthew@mhvillage.com

Disclaimer

Although we made every effort to ensure that the information in this issue was correct before publication, MHVillage, Inc. and the publisher do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.

Opinions expressed are those of the author or persons quoted and not necessarily those of MHInsider or the publisher MHVillage, Inc.

Copyright Notice

Copyright ©2018 MHVillage, Inc. All Rights Reserved. Reproduction in whole or in part is prohibited without written authorization from MHVillage, Inc.

MHInsider™ is published by:

2600 Five Mile Road NE Grand Rapids, MI 49525 (800) 397-2158 www.MHVillage.com

PUBLISHER'S LETTER

From the Publisher

I Can’t Help But Be An Optimist for Our Industry

By Darren Krolewski • Photo courtesy of Equity LifeStyle Properties, Inc.

A

quick Google® search defines an optimist as “a person who tends to be hopeful and confident about the future or the success of something.”

I don’t know about you, but I can’t help but be an optimist for the manufactured housing industry.

The country is in the midst of an affordable housing crisis that is getting worse, not better. Sure, we’ve seen a slight dip in the overall demand for housing as site-built home prices have continued to soar, but most experts believe that demand is only set to rise as one of the largest groups of potential homebuyers in history continues to enter the market. To me, that sounds like opportunity knocking.

Thankfully, I’m not alone in my optimism. Last month, I had the pleasure of spending a few days in Indianapolis for George Allen’s 27th International Networking Roundtable.

It’s no wonder why the Roundtable has been a mainstay of our industry.

Consultant, publisher and Hall of Fame inductee George Allen never fails to attract the industry’s top influencers to engage the most pressing issues of our time. This year’s event was no exception.

As this is the time when many of us involved in our companies’ budgeting

and forecasting processes finalize our projections for the coming year, I took advantage of the networking opportunities to informally survey my fellow attendees on their feelings about the year ahead. What do they expect? Is business going to be better? Worse?

I can safely say that the overwhelming majority in attendance felt that next year is going to be as good, if not slightly better, than this one. We saw a lot of positive activity in 2018, from strong consumer demand to legislative progress both in Washington and at the state level. And as a direct result, we’re all very busy.

On the other hand, a smaller percentage of attendees expressed a hint of caution, citing the upcoming elections, the tight labor market, world events and various economic and consumer indicators as reasons why they thought growth could be constrained.

And then, of course, there was the inevitable naysayer who forecasted only doom and gloom. But by his own admission, he’s always been a bit of a pessimist.

As for my opinion, it’s more than gut intuition. Our MHVillage data suggests that interest in manufactured housing is growing, undoubtedly a reflection of the large number of con-

sumers searching for more affordable housing alternatives. Search, home listing and sales activity metrics are all on the rise – all strong indicators that bode well for our industry.

In an industry where the glass can easily be seen as half empty or half full, I’m seeing that next year will be one full of opportunity for all of us. MHV Darren Krolewski is Co-President and Chief Business Development Officer of MHVillage, the number one website for manufactured homes, retailers and communities. Prior to joining MHVillage in 2014, Darren held senior marketing positions in the telecommunications, advertising and financial services industries – and was a partner in a marketing consulting firm serving the housing industry.

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MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

5

FAIR H O USIN G

Fair Housing And Those Tricky Familial Status Issues By: Rick Robinson • Photo courtesy of Southwest Homes

A

s general counsel for the Manufactured Housing Institute, the industry’s largest trade association, I spend a great deal of time dealing with issues relative to the Fair Housing Act. Title VIII of the Civil Rights Act of 1968 makes it illegal to discriminate in any type of housing based upon race, color, religion, gender, national origin, disability or familial status. The “protected classes,” as they’re called, are the basis for what has become known as the Fair Housing Act. Coupled with a detailed review of additional protected classes added by state laws and local ordinances, fair housing policies and training for community staff are a must.

One area that raises a lot of concern for communities is potential discrimination based upon familial status.

Simply put, a claim for discrimination based upon familial status will be

grounded on the premise that the housing provider somehow treated families with children differently than other potential buyers or residents.

As there has been an increase in familial status claims in recent years, community operators and retailers should be aware of the need for familyfriendly policies, drafted in ways that are least restrictive to children.

Occupancy Standards First, and foremost, consider the occupancy policy for the community.

In doing so, remember that many jurisdictions have state laws or local ordinances governing the number of people living in a unit.

The U.S. Department of Housing and Urban Development (HUD) has a Statement of Policy on Occupancy Standards that states, “An occupancy policy which limits the number of

children per unit is less likely to be reasonable than one which limits the number of people per unit.”

The Statement of Policy also notes that “in appropriate circumstances, owners and managers may develop and implement reasonable occupancy requirements based on factors such as the number and size of sleeping areas or bedrooms and the overall size of the dwelling unit.”

Thus, in reviewing any occupancy policy, make sure any limits are based upon the number of people residing in the unit as opposed to the number of children. HUD will recognize state and local occupancy standards.

Steering Secondly, make sure that the community does not have a practice of steering residents with children to one particular area of the community.

CONTINUED ON PAGE 9

6 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

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FA I R HOU S I N G CONTINUED FROM PAGE 6

There are several cases where housing providers paid large fines for segregating families with children to a single portion of the property.

You can’t draw an imaginary line in a community and state one portion is for families and the other for adults.

by a resident relative at all times when using the pool.

The argument that the restrictions for parental supervision are for the safety of the children using the pool are generally rejected by the courts.

Community operators should consult state law and local ordinances on supervised swimming.

Community operators and retailers For instance, California law should be aware of the need for family requires those under 14 friendly policies, drafted in ways to be supervised. that are least restrictive to children.

Therefore, swimming rules that broadly target all children and require parental Pools And Other Amenities supervision should be avoided. Instead, draft policies that specify the Thirdly, for communities with basis for the restriction and narrowly amenities, you must ensure that the target the subgroup of children to rules for use are not discriminatory which it applies. The policy should against families. Rules that restrict not limit supervision only to a parent, or single out usage by children often but by a competent swimmer. can be determined as discriminatory.

This same analysis goes for commuExamples of pool rules that courts nities offering other amenities where have determined to be a violation of there are safety concerns, such as the Fair Housing Act include: fitness rooms or gyms.

• Children under the age of 18 are not allowed in the Other Rules pool or pool area at any time unless accompanied by their Finally, community owners are now parent or legal guardian. getting the idea of how age-restrictive • Under no circumstances rules can violate the Fair Housing Act. may a child under the age Other problem areas include curfews, of 18 be in the pool or the supervision, noise, attire and common pool area without a parent. areas where playing is restricted.

• Children must leave pool by Like those listed above, housing 6:30 and must be supervised providers have gotten into trouble

when the rule strictly targets children.

A policy requiring “Children on the premises are to be supervised by a responsible adult at all times” was held to be a Fair Housing Act violation. On the other hand, a rule that required all tenants (not just children) to keep “bikes, carriages, strollers, tricycles, wagons, etc.” in the home or garage was upheld.

Conclusion When it comes to Fair Housing Act claims based upon familial status, words matter. Avoid policies that are restrictive to children. Make sure that all policies restricting use are tailored to specific safety concerns and are the least restrictive possible. Blanket rules should be children-neutral on their face. MHV Rick Robinson is General Counsel and Senior Vice President at MHI. He first b ecame fami liar with manufactured housing issues when working as Legislative Director for then-United States Congressman Jim Bunning.

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9

NE WS B RIEF S

Happenings

INDUSTRY

News and updates from around the industry...

City of Chino, Calif., Settles Lawsuit

Skyline Champion, Inc. Sells Shares Skyline Champion Corporation (NYSE: SKY) announced that certain of its shareholders intend to offer for sale 9 million shares of its common stock pursuant to the company’s shelf registration statement filed with the Securities and Exchange Commission.

In addition, the selling shareholders expect to grant the underwriters a 30-day option to purchase up to an additional 1.35 million shares from the selling shareholders.

Datacomp Appraisal Systems, Inc. launched a new website at www.datacompusa.com that details its services in the manufactured housing industry, including appraisals, inspections, market data, and more.

The City of Chino, Calif., reached a $1.5 million settlement in July with a mobile home park owner who brought a lawsuit against the city, alleging the council’s actions caused a loss of income by delaying and interfering with plans to convert the park to resident ownership. The lawsuit, originally for $34 million, was filed in July 2010 by Chino MHC, owner of Lamplighter Chino Mobile Home Park.

Tricon Capital Group, Inc. Sells to Blackstone Group

Patrick Industries, Inc. Announces Quarter Results

Tricon Capital Group, Inc., a principal investor and asset manager in residential real estate, recently completed the sale of its 14-park manufactured housing investment portfolio, called Tricon Lifestyle Communities, to Blackstone Group, an institutional asset manager, for approximately $172 million.

Elkhart-based Patrick Industries, Inc. reported second-quarter net income of $53.1 million, compared to $33.7 million during the same period a year earlier. Results were driven by a nearly 50 percent increase in sales, bolstered largely by customers in the recreational vehicle industry, which made up twothirds of total sales.

Datacomp Appraisal Systems, Inc. Launches New Website

10 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

NE WS BR IE F S

Parkbridge Lifestyle Communities Acquires Worthington Park Parkbridge Lifestyle Communities announced its acquisition of Worthington Park Community, 10 minutes from historic downtown Kingston, Ont. The community adds to the largest land-lease portfolio in Canada, with more than 115 residential communities and resorts.

“We’re excited to grow and enhance land-lease communities as attainable housing options for Canadians,” said Katherine Gyles, SVP, Organizational Effectiveness and Corporate Communications for Parkbridge. “As we continue to share our unique model of homeownership with municipal partners and homeowners across the country, we’re hearing increasingly often how land-lease is a welcome and necessary addition to the continuum of affordable housing. It’s ideal for those wanting to get out of the rental market and start building equity in a home, as well as an option for retirees who are looking to downsize and free up their financial resources to enjoy life’s other priorities.”

Equity Lifestyle Properties, Inc. Announces Quarter Results Equity LifeStyle Properties, Inc. (NYSE: ELS) recently announced results for the quarter and six months ended June 30, 2018. For the quarter ended June 30, total revenues increased $19.2 million, or 8.7 percent, to $240.5 million; compared to $221.3 million for the same period in 2017. Net income available for common stockholders for the quarter ended June 30, 2018, increased $6.6 million, or $0.07 per common share, to $46.1 million, or $0.52 per common share; compared to $39.5 million, or $0.45 per common share, for the same period in 2017.

For the six months ended June 30, 2018, total revenues increased $32.8 million, or 7.2 percent, to $486.5 million; compared to $453.7 million for the same period in 2017. Net income available for common stockholders for the six months ended June 30, 2018, increased $10 million, or $0.09 per common share, to $106.4 million, or $1.20 per common share; compared to $96.4 million, or $1.11 per common share, for the same period in 2017.

ITC Investigates Anti-Dumping And Countervailing Duty The U.S. International Trade Commission (ITC), in response to a complaint from a manufactured housing industry supplier, is conducting a preliminary investigation into anti-dumping and countervailing duty for import of steel trailer wheels from China. The ITC will determine if there is reasonable indication that the domestic steel-wheel industry is materially injured or threatened with material injury by imports of steel trailer wheels from China. The investigation is in response to a petition filed by Dexstar Wheel Co. Ltd., an Elkhart, Ind.-based manufacturer of steel wheels owned by Kenda Rubber Industrial Co. Ltd. Dexstar produces wheels for towed trailers, recreation vehicles, manufactured housing, lawn and garden tractors, mowers and farm equipment.

MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

11

SALES

Overcoming Customer Objections By: Ken Corbin

12 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

SA L E S

redictors of ultimate success isn' t nat he best p t f o e ural "On u overcome objections and ex o y w o h tale 's plain e. It is t r nt e p f ailur ex or es." i -Ke ndus nC t orb ry in

Pareto’s Law

By: Ken Corbin most common objection, or smoke screen,

Objection or Question

you’ll hear is “I’m only looking,” before you Here’s an interesting question: Are you serious about earning more money by overcoming more objections? Of course, everyone says, “Yes, I want to earn more sales commissions!”

If it was that easy, everyone would sell a lot of homes and make more money overcoming simple, easy customer objections.

Unfortunately, the 80/20 rule carries in our industry. It’s called “Pareto’s Law,” and says 20 percent of all the housing consultants make 80 percent of all the

even say anything.

Many housing consultants who first

Think about the reasons behind such attend my sales seminars confuse a simple statement from the customer:

questions with objections.

“Is there a full guarantee on not just

• They don’t want to show any

the home, but the appliances?” is not an

commitment by asking for help • They’re short on time

objection to the home. It’s a question. It’s

• They’d like help, but don’t want

also a clue as to the benefits the buyer is looking for in the transaction.

to show lack of knowledge

Get the prospective homeowner to ask

• They don’t want to give any

questions. Encourage it. There is nothing

financial details • There’s a fear of salespeople

more frustrating than a low-reaction

Many new housing consultants

customer who gives little information

commissions. Unfortunately, 80 percent

automatically will become frustrated. with one-word answers.

of all salespeople make only 20 percent

My goodness, all you did was offer your

Even questions phrased negatively

of the earnings.

assistance! How were you supposed to

should be welcomed, not seen

The sales strategies we’ll discuss to know what was going on in their head?

as objections.

overcome objections will give you some

Here are some techniques to overcome

“Do you think that’s an awfully

well-proven ideas and strategies to

objections that will add to your sales skills.

expensive price?” is not an objection. It’s

help you deal with demanding situa-

These techniques will give you additional

a question. And it’s easily answered with,

tions and close more sales. There’s no

strategies and skills anywhere in the sales “That’s a great question and let me show

waffle or padding, just the information

process. The aim is to give you alternative

you the added value this home offers you

you need to increase your sales by over-

viewpoints on how to handle objections

and your family.”

coming more objections.

in the home-selling process, so you can

Of course, the best way to utilize these

adapt them for your sales role. At no point

sales techniques is to answer the objection

So, What Are Objections?

am I saying scrap what you do now and in your own words, appropriate to the do it this way. Sales is about acquiring situation. Just like there are different

They’re just a part of the complete

new skills and using the best techniques

personalities, there are numerous ways

home-selling process. Objections can in each situation.

to overcome objections during the selling

occur anywhere in the sales process. The

process. Over time, you’ll develop your own CONTINUED ON NEXT PAGE

MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

13

SALES CONTINUED FROM PREVIOUS PAGE

set of phrases and techniques that fit

Over the years, I’ve found it more

not only your personality, but the

effective to categorize objections as

personality of the customer.

“Defined” or “Vague,” rather than real and smoke screen.

The Two Types of Objections

The objection was, “That sounds very expensive.” It’s now viewed as a

How to Effectively Work Through Objections:

“Obstacles don’t have to stop you. If

vague objection that needs defining by

you run into a wall, don’t turn around

asking good questions.

1. Question to find the real objection

Not Acknowledging The Objection

2. Gain agreement from the customer

and give up. Figure out how to climb it, go through it or work around it.”

– Michael Jordan First, let’s discuss what are called smoke

Here’s where you need to learn to be

screens. There IS an objection the poten-

flexible. In most instances, I recommend

tial homeowner has; although they’re

you acknowledge the home buyer’s

simply hiding it.

objection, repeating and rephrasing it.

3. Present the answer to the sales objection 4. Close or gain agreement to your answer

One thing to remember is this

D e p e n d i n g o n t h e c u s t o m e r,

can be intentional or subconscious.

the situation and the objec tion,

Even if you use razor-sharp methods

it’s possible you can add strength

to answer the objection, you may

to their objection by acknowledging

Use your probing skills to discover the

be no closer to a sale. It’s because,

it. As an example, if you say, “I can

real objection. You’ll define it until it’s

in their mind, you haven’t answered

see why you might think that,” or, “I

clear for you to know what you need to

the real objection.

appreciate what you’re saying,” you’re

answer. Only once you have defined the

agreeing with them.

real objection can you continue moving

Unfortunately, sometimes you’ll find

1. Question to find the real objection

more objections keep popping up to

It’s what I call “Getting Caught.” It’s

create even more smoke screens. It can

going to happen to you, and when it does,

through the home-sales process.

If the customer does not give you the

become not only frustrating for you, but

I would use an acknowledgment that’s

genuine reason behind the objection, you

for your customer.

followed by an effective phrase.

should decide if you are making effective

The key to solving this is in how you

For example: “I can see why you might

use of your time. And don’t forget there

define the real objection. Let’s take a

think that, because I haven’t shown you

are many reasons why a customer may

moment and consider this statement...

all of the standard features in this series

not be forthcoming with the information.

“That sounds VERY expensive!”

of homes. Many of the items I’ll show

• There is a financial situation

you would be expensive options in other

• They need to speak to a

Is this a genuine objection or a smoke screen?

models. I think you’ll appreciate how these

partner or family advisor

Genuine objections are honest reasons

custom features will save you time, money

• The home is great, but they’re

for not moving forward. It’s important to

and offer the convenience you’re looking

not sure about the community

remember this is from the customer’s point

for in your new home.”

• A bad sales experience at

of view. It’s a genuine objection they’ve

This technique is best used when the

developed based on the information they

objection is clearly defined and you can

• Nowhere to place the home

have at that moment, AND the viewpoint

answer it. It’s simply a process that’s

This is where your home-sales skills can

they have formed.

constant, that can be assessed, altered,

be used. It’s likely trust and relationship

adapted and made more effective.

building that will get you to the next stage

You may know they are wrong. Unfortunately, that’s your viewpoint, and the

If you just answer objections, with no

only one that counts is the viewpoint of

thought to the process, you’ll find it hard to

the potential homeowner. Even if you’re

know which parts are working and which

talking from a more informed position,

parts to change. So, prior to answering

the customer’s objection is real in their

their objections, you must define them.

mind. So, treat it as a genuine objection.

Here are four simple ways to do this:

a competitor

of the process.

2. Gain agreement from the customer Remember the saying, “Patience, grasshopper”? I often see sales people ready to jump straight in with an answer once they CONTINUED ON NEXT PAGE

14 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

SA L E S CONTINUED FROM PREVIOUS PAGE

think they’ve defined the objection. It’s

ize them during the sales process. Most of

moving forward, and that you understood

best to sometimes hold yourself back, take

these will present the answer that covers

and defined their objection. You can now

a breath, and consider a different action.

the objection. Keep your focus on what it is

close and move forward to the next stage.

Before you move to answering the

the customer needs, and then personalize

You can see now why gaining agree-

objection, you want to gain some agree-

EVERYTHING to meet those needs.

ment to the defined objection is such an

ment from the customer. This includes

Answering objections does not always

important part of the selling process. If

defining the objection and then making

mean making concessions! These are

you hadn’t asked if there were any other

sure it’s the only one stopping them

overcome by giving additional informa-

objections, you could now be faced with

from moving forward.

tion, changing the customer’s viewpoint,

even more objections to overcome.

Again, use your own words and phrases.

showing the benefits and personalizing

Admit you can’t handle every objection.

The more agreement you gain at this point

them to your potential homeowner.

It’s rare that a customer walks in and im-

in the home-selling process, the easier it will be to move forward and eventually get to closing.

3. Present the answer to the sales objection

mediately finds their dream home with no 4. Close or gain agreement to

negatives. In most instances, that type of

your answer

buyer is a “get me done,” and will purchase

Don’t take it for granted that you have

anything if you can get them financed.

This type of buyer knows this and

answered their objection.

Ask the customer. Gain their agreement

might push you with objections just to

The key message here is, “Forget the

that you have dealt with the objec-

make sure they are getting the best deal

features and focus on the benefits and

tion they raised. If the objection was

possible. Remember, many people start out

what it means to them.”

to the closing of the sale, then close

viewing you as possibly less than ethical,

now. Don’t wait.

or “a bit sharp.”

All your home-selling strategies help you by having a thorough understanding

They agreed earlier that there were no

On the other hand, some customers

of how to use those benefits and personal-

more objections to their purchase, or to

will make unrealistic demands either CONTINUED ON NEXT PAGE

MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

15

SALES CONTINUED FROM PREVIOUS PAGE

deliberately or because they are not as informed as you are. Take all this in

The key here is to address objections in

Recognize Resistance to Change

the beginning of the interaction.

stride and answer concerns in an

When speaking with the customer,

Some prospects have a natural resis-

appropriate way. Build the value of the

always highlight the most common

tance to change. They follow the “If it’s

home, stay with the process to overcome

objections and why those are not actu-

not broke, don’t fix it” philosophy, which

objections, and point out the positives to

ally problems. Then, watch their body

makes it difficult to decide. Some just can’t

outweigh objections you can’t answer.

language during this process. They

pull the trigger, and are unwilling to risk

may change their posture, fa-

Objections can occur anywhere in the sales process. The most common objection, or smoke screen, you’ll hear is “I’m only looking,” before you even say anything.

Objections Are a Vital Part of a Home Sale

that housing change.

cial expression or breathing.

When these potential homeowners

These are good indicators

raise objections, listen carefully and ask

that you have hit on some-

for clarification. By asking them to go into

thing they are feeling.

more detail about the objection, you’ll be

Of course, it is not pos-

in a better position to overcome it. Most

sible to guess everyone’s

housing consultants simply give up at

objections. So, through-

that point. They fail to understand the

out the sales process constantly check

customer is truly looking for a good reason

in with them and get a sense of what

to make that housing change! Remember,

they’re thinking. They will very

no decision IS a decision! MHV

often tell you upfront what their “An objection is not a rejection. It is simply

sticking points are, which makes your

a request for more information.”

life much easier.

–Bo Bennett

Ken Corbin is an industry leader in helping

When it comes time to close, don’t be

communities and retail-

afraid to ask if they have any concerns,

ers sell more homes.

Customers bring with them reasons

and watch their body language. If they

He can be reached at

to do business with you and several

appear more closed off, they probably

ken@callkencorbin.com

more reasons not to do business with

have not followed you through the whole

or (888) 823–4945.

you. Those housing consultants who

process. This is not a problem.

are highly skilled address both. By

At that point, simply go back and elicit

the end of the interaction with the

whatever their objections are and move

customer, they will have convinced

the customer beyond them. This will make

that potential homeowner to do

the sales process much easier, because

business with them.

you have built a good rapport with them.

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Call Kim Scott - Director (MH Operations and Sales) at 248-865-0066 | www.mshapirorealestate.com 16 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

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T IP S /ADVIC E

The Rio Grande model with an added living room rug, accent pillows and seasonal Fall accessories.

Are Your Model Homes and Clubhouses Staged to Sell?

By Suzanne Felber • Photos courtesy of Lisa Stewart Photography

18 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

Design TIPS /A DVIC E

INTERIOR

I

t’s magic. Just like when the magician moves scarves through the air, moving and adding seasonal decor to your homes and clubhouses can make sales reappear.

This is true even after a home has been in inventory for longer than you had wished.

Clayton Homes of Desoto, Texas, asked The Lifestylist Brands to update its existing homes, using as much of the existing decor as possible.

Yes, this seems like a tall order, but it’s something that good interior designers and merchandisers can make work each day.

Most of this effort is accomplished by rearranging furnishings and decor, but an earlier, important step in the process is to rid the home of dated, damaged furniture and decor that makes it look and feel used, rather than the beautiful new home it is.

Work Only With The Best Options You Have It’s so easy when you are busy selling homes to forget what happened to the leg of a sofa, or for upholstery to get stained or faded and remain on the floor. And many times, it’s difficult to buy something new. So what do you do?

Your goal as a retailer should be to get customers excited about moving into a new home, a place no one has ever lived, a place where the owner can start a new life. It’s important that the home looks as fresh as your customers’ dreams.

Customers look for bright, open floor plans. So now more than ever, it’s important that curtains

are pulled open, blinds are up and windows are washed.

We Want to Fill Your Home With Natural Light!

In the months when we are short on daylight, every lamp in the home is turned on and should be using LED bulbs. The energy-efficient bulbs cost a little more off the shelf, but they last for decades. And you can take them from house to house as places sell.

Re-Staging For The Season In the process of re-staging the Clayton homes, we decided to take a little extra time to stage a few homes for the holidays. We did a two-day professional photo shoot for images that could be used on social media, in advertising and for editorial opportunities.

It’s important to have great photography that can be accessed quickly when an editorial opportunity comes your way. Think ahead about how photos might be used. For Instagram, you will need a square shot, yet advertising or your website might need more overall room shots. On other social media, where images are small by comparison, it’s better to have a focal point in a room that is easy to view.

We decided to do staging with the Rio Grande model for Fall, Halloween and Thanksgiving. And we used the Drake for Winter and Christmas.

This gave us plenty of opportunity to design different looks and styles that could appeal to a range of buyers.

And it worked well, because the CONTINUED ON NEXT PAGE

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T IP S /ADVIC E CONTINUED FROM PREVIOUS PAGE

models come at two distinctly different price points.

Area Rugs And Pillows For the Rio Grande, the first thing we did was add color and texture to the main room. Area rugs are an easy and inexpensive way to add color, and with so many of our homes having rooms with wood or tile flooring, it’s good to achieve a warmer and more inviting look.

Area rugs also offer an easy way to seasonalize your home -- use a rug with darker, warmer colors in the cooler months, and change out to a sisal or lighter green colored rug in the summer.

Pillows provide yet another easy and inexpensive way to change the look of your homes. It’s fun to have cases sewn that allow you to change out looks and easily store away outof-season designs.

Our first priority always is to sell homes, not decor kits. So we want to make sure that the staging helps accent the important attributes of the home, rather than being the focal point. In the Rio Grande, we decluttered the open shelves above the kitchen cabinets and took everything but a few focal pieces off the countertops and island.

Develop a Theme Pick a theme that is consistent throughout the home for a clearly well thought-out decor. The last thing you want is the impression that you’re designing randomly with items you found in a storage closet.

We like to pick not more than three colors to focus on so the palette doesn’t get too busy or steal attention from CONTINUED ON NEXT PAGE

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VA

FHA

TIPS /A DVIC E CONTINUED FROM PREVIOUS PAGE

the home. For the autumn theme, we went with those lovely fall colors, foliage and foxes. For Halloween, we found cute vintage accessories and key orange accents in each home.

For Thanksgiving, we went with a theme of giving thanks and reminding people how appreciative we are of their business.

You’ll notice that a lot of items were used in all three looks; we just changed out the main themed items.

How to Work With a Centerpiece And don’t forget tabletops when you want to seasonalize your homes.

It’s hard to believe how many models overlook this very important part of the home: plates, napkins, and placemats add texture and color to a room that might only have wood floors, wood furniture and painted walls.

The Drake model was a perfect example of a home that was full of hand-me-down furniture and decor items that not only hurt the look of the home, but made it feel dark.

We pulled out some cream upholstery from another home, as well as

chrome cocktail and end tables.

Customers look for bright, open floor The results were plans.

So now more than ever, it’s amazing. This important that curtains are pulled open, change helped blinds are up and windows are washed. the home to s e l l q u i c k l y, and orders were placed for custom homes as well.

Just like every retail store you visit, Using large artwork also helped we need to keep our homes looking this home feel upscale and updated... updated and providing customers a and this was wall art stored away in reason to come back. By seasonala closet that came to us at no cost. izing your homes and making the time and investment to photograph Try a Vintage Look in Your your hard work, you’ll keep traffic up and sell more. MHV Next Home Redesign For Christmas, we did a vintage RV /m o b i l e h o m e t h e m e t h at was a huge hit.

Did you know that vintage styled mobile homes are trending? You’ll be seeing a lot of this during the 2018 holiday season. It’s been highlighted in nearly every furniture market we tour.

For the winter wonderland, we used a very cool color palette of grey and cream, which had a rich and contemporary feel.

Lifestylist Suzanne Felber has been active in the housing industry for over 30 years. She started American Housing Advocates as a way to share the great news about manufactured housing. To learn more about her work, visit www.lifestylist. com and www.americanhousingadvocates.com, or read her @lifestylist social media posts.

The Drake model with Christmas-themed pillow covers that are easy to change out after the holidays.

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SECO18 SECO Fills The Void For Learning, Networking Among Small to Mid-size Community Owners By: Patrick Revere • Photos courtesy of Nicely Made Media

E

ach year, the Southeast Community Owners symposium (SECO) learns a little bit from itself, with the intent of turning that self-education into a new program attendees can benefit from in the years to come.

“For three days of good networking, and the topics we’re going to cover, that’s a good investment for the ticket price,” said SECO co-founder and community owner David Roden.

“We cater right to the mobile home park owners for programs they cannot get other places.”

This year SECO seems to have hit its stride, with 45 exhibitors, more

than 10 pre-SECO learning sessions leading up to the symposium, and a host of solo presentations and panels on a wide-range of topics during the general program.

“We really wanted to focus on interaction and learning, which is one of the reasons we opted to not do model homes this year,” Roden said about the significant programming change for 2018. “Pre-SECO this year has really grown, where we’re double the number of sessions we had last year. So, with all the sessions we have on Oct. 9, we’ll be running in pairs concurrently.”

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« SECO planning committee members Larry Matthews, Ed Bridgeman, Bob Love, Steve Case, Cole Phillips, Tom Lackey, Maiara Spinetta, David Roden, Maryuri Barberan, Judy Roden, Jeff Buice, Jay Zandman, and Spencer Roane.

22 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

E VE NT S « SECO17 attendees

gather in the main hall for seminars and breakout sessions.

GA

OCT. 10–11, 2018 PRE-SECO WORKSHOPS OCT. 9

NOTE: SECO18 HAS A NEW LOCATION Atlanta Airport Marriott College Park, Georgia

CONTINUED FROM PREVIOUS PAGE

A Robust Pre-SECO Schedule – Oct. 9

COLLEGE PARK

All pre-SECO sessions are included in the price of general admission.

One of those sessions will be a field trip to an Atlanta-area community where manufactured housing professional Cole Phillips will conduct a live demonstration of home placement and set-up.

“A couple years ago we had a bus of people go out to the Legacy Homes factory they had just started manufacturing in and had our attendees watch some homes being built,” Roden said. “We received valuable feedback on that experience and

decided to do this same type of thing where we’ll take people off site to a nearby park and have them watch a live siting and install.”

Pre-SECO opens Oct. 8 with Katie Hauck from Hauck Homes offering a Manufactured Housing Managers Training Course. October 9 provides the home siting and setup experience, as well as topics that range from supplementing and diversifying with self-storage properties to calculating property valuations to a social media bootcamp.

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General SECO Programming – Oct. 10-11 As the lineup of presenters is finalized, SECO18 offers this list of presentation and discussion topics for the general program: • More emphasis on newcomers and those interested in community ownership • More emphasis on women in the community business— lessons learned, management, and home sales • Meeting the needs of MH buyers—qualification, affordability, home choices • Community ownership succession • Marketing of new homes – generating traffic, social media, staging, sales center • Community management best practices • Reflections by industry icons on the future of the industry • Who’s doing what with chattel financing • Secret sauce for bringing new homes into your community – without going broke • Community financing—availability, LTV, DCR, 3-star vs. 5-star

For More Information And Updates on SECO18, Visit www.secoconference.com

Roundtable Discussions at SECO18 Among the general programming opportunities is the Evening Roundtable, which provides a roomful of free-flowing touchdown spots with discussion of a variety of topics.

“One table will be talking about social media, another talking about rent control, lease options and that kind of thing, and people can be in the room and choose which discussion they want to engage in… It’s interactive and a good way to network,” Roden said. “We get a good number of brokers in these conversations and it’s a good way for community owners to meet brokers and build relationships. What we really want to do is get a face with a name and expand everyone’s network.” MHV

24 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

e! r e h t u o y See

SECO17 attendee learns from a seminar session

Darren Krolewski of MHVillage speaking at SECO17

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Beyond SECO18:

Experience Atlanta’s Spirit By: Juliana Ludema • Photos courtesy of Atlanta Convention & Visitors Bureau (ACVB)

A

tlanta’s arts, food and history are just asking you to extend your stay into the weekend after October’s SECO Conference. If you do, you might want to consider switching hotels to something closer to the downtown area.

But Atlanta Airport Marriott isn’t too far: Centennial Olympic Park, a central location, is a 19-minute drive or 45-minute trip by MARTA, the city’s public transit system.

Wherever your accommodation, take the time to get a taste of the “Empire City of the South.” We’ve designed a tasty list of activities for nearly every kind of traveler. Take a look!

The Novelty Lover: Near Centennial Olympic Park, you can explore the history of Coke at the World of Coca-Cola Museum. Try to discover Coca-Cola’s “top secret” recipe and taste 60 flavors from around the world. Avoid crowds by going early or late in the day. VIP tours are available, or download the app (iOS only) to unlock special features. Learn more at worldofcoca-cola.com.

The Sports Enthusiast: Cross the street to visit the College Football Hall of Fame. As soon as you enter, you’ll register your favorite team from more than 700 options and receive a badge; as you walk through the museum, the badge will cater your experience to your favorite team. Get active in the indoor playing field, see helmets from hundreds of college teams and learn how college players eat and train. Learn more at cfbhall.com.

dens al Gar anic Bot e Th

The Art Critic:

The World of Coca-Cola

m seu Mu

Take a 10-minute drive or 20-minute MARTA trip from Centennial Olympic Park and discover some of Atlanta’s diverse art galleries. The Museum of Design Atlanta and the Millennium Gate Museum feature small collections, as does the currently under construction modern High Art Museum, so check their websites for exhibits that interest you before making the trip. Nearby, visit the well-reviewed Center for Puppetry Arts, where you can see a show and explore a museum showcasing both Jim Henson’s Muppet-making process and puppetry from around the world.

Learn more at puppet.org.

Pick your artistic poison, then head to the nearby Botanical Gardens and try to spot all the giant, living plant sculptures. Love “Gone with the Wind”? Visit the home (a reconstruction, as the original burned in 1996) where Margaret Mitchell penned her one-and-only novel, right by the gardens -- a hilarious and informative actor-lead tour is a must. Learn more at atlantahistorycenter.com.

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The History Buff: Another attraction right by Centennial Olympic Park, the National Center for Civil and Human Rights, showcases the achievements of both the United States’ civil rights movement and the global push for human rights. See Martin Luther King’s personal letters, experience an interactive gallery showing what it was like to live during segregation and visit a mugshot exhibit juxtaposing dictators with modern-day activists. Learn more at civilandhumanrights.org.

You can also stroll the sidewalks of the Martin Luther King, Jr. National Historical Park to explore more history of the American Civil Rights Movement. From Centennial Olympic Park, the park is a 20-minute MARTA trip, 10-minute drive or half-hour walk -- a great time to stroll the “BeltLine,” the city’s former railway corridor repurposed into MARTA, as well as scenic walking, biking and hiking trails. Once there, tour MLK’s boyhood home, visit his grave and the church where he was baptized and explore a museum chronicling both the American Civil Rights movement and MLK’s journey. You could Th eN atio hts Rig nal C man enter for Civil and Hu

spend all day here; there’s so much to see and do! Visit nps.gov/malu to learn more.

The Trailblazer: Botanical Gardens not enough to quench your thirst for nature? Take advantage of “The ATLs” 70-degree October weather and head out for a hike. A four-mile, moderate-level hike, the Palisades West Trail follows the Chattahoochee River and features rocky bluffs and a hardwood forest.

The trail is a half-hour drive from the Airport Marriott and 10 minutes from the Sope Creek Trail, an easier, 1.5 mile hike featuring a clear pond and the ruins of a Civil War-era paper mill. Locals suggest taking a dip in the river to stave off the heat. Find more hikes at atlantatrails.com.

The Foodie: You can’t visit Atlanta without experiencing some Southern cooking. Right between the Botanical Gardens and Centennial Olympic Park, find Mary Mac’s Tea Room, a standard in Atlanta cuisine for over 70 years, designated in 2011 as “Atlanta’s Dining Room.” Enjoy the quaint atmosphere and fried chicken, chicken and dumplings, classic sides like mac and cheese, and for dessert try banana pudding or cinnamon rolls.

Reservations are a good idea, particularly for large parties.

Sotto Sotto, featuring Italian fare (and chocolate soup), and Bacchanalia (diverse fare, plenty of bread and drinks) are also classic Atlanta restaurants. American Spirit Whiskey Distillery is closer to the art galleries than to Centennial Olympic Park, but reviewers say it’s worth the trip. Georgia’s largest working distillery, ASW creates craft whiskey and brandy. Sample spirits or drink a cocktail and learn all about the history and science of distilling. MHV

28 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

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Customer Lending Support A dedicated 21st Mortgage MLO (Mortgage Loan Originator) is provided to assist customers through every step of the process.

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Upcoming Industry Trade Shows Photo courtesy of Nicely Made Media

2018 Southeast Community Owners Symposium – SECO

Trade Shows

Oct. 10–11 • Atlanta, GA • Atlanta Airport Marriott

Anyone who owns or has an interest in the vitality of manufactured home communities will find great value in attending SECO18. The programs focus on tactics that can benefit professionals who own anywhere from one to 100 communities. This includes owners and investors, but SECO18 also is beneficial for managers and other operators.

77th MMHA Annual Conference Oct. 11 • Novi, Mich. • Suburban Collection Showplace

The Michigan Manufactured Housing Association will hold its 77th Annual Conference at the Suburban Collection Showplace in Novi, Mich., the day before the Novi Home Show (Oct. 12-14), which will feature six stunning models from MMHA member manufacturers. The annual conference will run from 8 a.m. to 4:30 p.m. Oct. 11, followed by a reception and showcase from 5–7 p.m.

IMHA's 2018 Community Conference Oct. 24–25 • French Lick, Ind. • French Lick Resort & Casino

2019 Louisville Manufactured Housing Show Jan. 30–Feb. 1 • Louisville, Ky. • Kentucky Exposition Center

The Midwest’s premier event for manufactured housing professionals. The annual show brings out an array of new manufactured home designs, the latest in technology, the best in suppliers’ offerings and a look at all the newest amenities and system-built options the industry can offer.

The Tunica Show

Indiana’s 2018 MH Community Conference will be a highly attractive event for community owners, retailers and other MH industry stakeholders. The first day’s focus will be tours and a welcome reception, followed by educational seminars on the second day. Topics to be covered include Fair Housing Act requirements and time-tested sales techniques.

March 26–28 • Tunica, Miss. • Hollywood & Resorts Casinos

National Communities Council Fall Leadership Forum

May 6–8 • New Orleans, La. • Hyatt Regency New Orleans

Nov. 7–9 • Chicago, IL • Westin Michigan Avenue Chicago

Join MHI at the only strategic executive-level event of the year for those involved with manufactured home communities as an owner/manager, manufacturer, service provider, broker, lender or consultant. The NCC Fall Leadership Forum will take place Nov. 7–9 at the Westin Michigan Avenue Chicago. Secure your registration and housing today!

30 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

As the largest outdoor manufactured housing show in the nation, the Tunica Show captures the attention of the manufactured housing industry like few events can. This is a great opportunity to get a grasp on where the manufactured housing industry is headed in 2019.

MHI Congress & Expo

The top industry event of the year will continue to offer three days of impactful education, with time to connect with some of the most successful professionals in the industry. Attendees will be able to choose from top-quality educational workshops, networking receptions and pre-event forums focused on existing manufactured home communities and developing with manufactured homes.

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MHI Congress & Expo Moving to New Orleans For 2019 By: Mark Bowersox • Photo courtesy of the Hyatt Regency New Orleans

F

or 2019, the Manufactured Housing Institute (MHI) will be hitting the road and taking its largest event to New Orleans, May 6–8, at the Hyatt Regency.

This one-of-a-kind national tradeshow for the manufactured housing industry will continue to offer three days of engaging education sessions, innovative exhibitors, hours of networking time and impactful main stage speakers. MHI’s Congress & Expo caters to more than 1,200 attendees and 120plus exhibitors, who push the boundaries within the industry.

In the new year and new city, MHI Congress & Expo will offer an expanded tradeshow floor and sponsorship opportunities. The newly designed expo hall has multiple networking lounges, meeting pods and special feature attractions. Exhibitors and attendees can expect 12 hours of expo hall time filled with ongoing networking opportunities and functions.

In addition, Congress & Expo attendees have the ability to attend pre-event seminars tailored to

industry professionals who either specialize in communities or develop manufactured homes.

These pre-event seminars, National Communities Council Spring Forum and Developing with Manufactured Housing, are full-day classes that take deep dives into current challenges, impacts and new ideas.

Beyond education and networking, New Orleans will make the 2019 Congress & Expo one you won’t want to miss. New Orleans will continue to offer the one-ofa-kind experience every Congress & Expo attendee has come to expect and enjoy.

There is no shortage of dining options, attractions, festivals and history to explore.

So, mark your calendars now and check www.CongressAndExpo.com for updates. MHV Mark Bowersox is executive vice president for industry relations with MHI and a seasoned trade association executive with experience leading nonprofits at both the state and national levels. He is responsible for a variety of programs including membership, events, communications and advertising. He also serves on the Board of Directors for the RV/MH Heritage Foundation in Elkhart, Ind.

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N E C RE

S G N I S O T CL SOLD

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Yale is growing to accommodate our current and future clients from coast to coast.

New offices coming soon…

James Cook Head of Brokerage National & FL james@yaleadvisors.com 386.623.4623

Ryan Lorenzen Regional Director Western U.S. ryan@yaleadvisors.com 310.871.4977

Chris San Jose Head of Lending National chris@yaleadvisors.com 850.443.4580

Harrison Bell Regional Director Mid-Atlantic harrison@yaleadvisors.com 985.373.3472

www.YaleAdvisors.com Phone: 1-877-889-9810 | Email: info@yaleadvisors.com | Fax: 941-827-7977

Justin Cook Regional Director Southeast U.S. justin@yaleadvisors.com 386.292.3275

James Cook

Chris San Jose Head of Lending National

Head of Brokerage National & FL

2018 MHI Manufactured Home Community Lender of the Year

Thank you to all of our clients for your continued support!

45+ Years

of Real Estate and Mortgage Experience

Call us today for a free valuation or loan quote.

We offer excellent service and integrity in every transaction.

E V E NT S

The 6th Annual NCC Fall Leadership Forum By: Kaitlyn Palatucci • Photos courtesy of the Westin Michigan Avenue Chicago

Chicago, Illinois

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MHI’s NCC Fall Leadership Forum offers a strategic look at high-level issues facing the community segment of the manufactured housing industry.

T

he one-stop shop event for manufactured home community operators, service providers, brokers, lenders and much more is the National Communities Council (NCC) Fall Leadership Forum.

This event, in its sixth year, will take place in Chicago, Nov. 7–9, at the Westin Michigan Avenue Chicago. Each year the event becomes larger, more business deals get done and networking opportunities expand.

MHI’s NCC Fall Leadership Forum offers a strategic look at high-level issues facing the community segment of the manufactured housing industry. The event is ideal for executive professionals to engage and connect with their peers.

The NCC Fall Leadership Forum minimizes time out of the office, while maximizing education and face time with peers and potential clients. The event will kick off Wednesday evening, Nov. 7, with a Networking Reception to get acquainted with other attendees. Thursday morning will open with breakfast before a full day of speakers, legislative updates and much more.

Make sure not to miss Thursday’s evening reception at 360 CHICAGO in the John Hancock building.

Join MHI and other attendees for breathtaking views, cocktails, food and networking. Friday will close out with a handful of additional education sessions and have you looking forward to the NCC Fall Leadership Forum in 2019. MHV Register and get rooms while they’re still available at www.manufacturedhousing.org/2018schedule/ Questions regarding the event can be directed to events@mfghome.org

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Advocacy

MHI Asks Consumer Financial Protection Bureau to Change Regulations Supporting MH Financing By: Dr. Lesli Gooch • Photo courtesy of The Manufactured Housing Institute

T

he Manufactured Housing Institute (MHI) hosted Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, at the Legislative Fly-In in Washington, D.C., in June.

Acting Director Mulvaney expressed a willingness to work with MHI to address regulations that hinder financing for manufactured housing. Following the Fly-In, MHI sent a letter to the bureau in response to Mulvaney’s comments.

At Mulvaney’s recommendation, MHI’s letter stressed the importance of prompt implementation of Section 107 of the “Economic Growth, Regulatory Relief, and Consumer Protection Act” (Pub. L. 115-174 § 107), regarding the definition of loan originator and the need for adjustments to the Home Ownership Equity and Protection Act’s (HOEPA) “highcost mortgage” triggers.

MHI asked the bureau to issue a “No-Action Letter” confirming that it will not pursue administrative action against any retailer or seller

while it revises its regulations to be consistent with the new law. The recently passed definition clarifies that manufactured housing retailers and sellers are no longer considered mortgage originators simply because they provide customers with some assistance during the mortgage loan process.

Regulations now need to be changed to be consistent with the law, and such changes will take time because they have to go through a formal rulemaking process. A “No-Action Letter” would provide cover for retailers and sellers who want to immediately take advantage of the flexibilities offered by the new law.

MHI also requested that the bureau make immediate adjustments to the “high-cost” thresholds for smaller-dollar manufactured home loans under HOEPA, so these loans are not unfairly swept under this designation simply due to their smaller size.

MHI will continue to utilize its relationships with administration officials and manufactured housing

champions in Congress to advocate for these changes. At MHI’s June 2018 Legislative Fly-In, members of Congress were asked to contact Acting Director Mulvaney about them. MHI raised these issues again with Mulvaney and his leadership team, stressing that both requests will spur lending for manufactured housing without impacting existing consumer protections.

MHI said it will continue to pursue these and other legislative and regulatory changes that support improved availability of financing for consumers interested in purchasing a manufactured home. MHV Dr. Lesli Gooch is the executive vice president of government affairs and chief lobbyist of the Manufactured Housing Institute.

MHI is the only national trade organization representing all segments of the factory-built housing industries.

MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

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FINANCING

Duty to Serve Fannie Mae Looks to the Future of Manufactured Housing By: Ben Navarro • Photo courtesy of Clayton Homes

W

hen we began implement-

Since that launch, Fannie Mae’s man-

June 2018, Fannie Mae developed the

ing our Duty to Serve Un-

ufactured housing team has been hard

program to encourage the broader use of

derserved Markets plan in

at work building the foundation for our

manufactured housing as an affordable

January, Fannie Mae called manufactured

efforts in the coming years and we’ve

alternative to site-built homes.

housing one of the largest affordable hous-

already rolled out some exciting initiatives.

ing opportunities in the country. With starter home prices rising, and affordable homes increasingly in need of major

Expanding Access to Manufactured Housing Through MH Advantage

MH Advantage TM offers attractive terms that have typically been available to site-built homes in the past, like down payments as low as 3 percent and reduced mortgage insurance requirements, to

repairs, we know that manufactured housing is a critically important piece of

MH AdvantageTM is the most visible re-

buyers of eligible manufactured homes.

the affordable housing puzzle. And we

sult of our efforts so far, and it represents

What makes homes eligible is a list

believe that, with the right support, it

one of the biggest changes to the way

of characteristics, developed by Fannie

can be a key component in tackling the

we approach financing for manufactured

Mae in consultation with manufactured

affordable housing crisis.

housing in years. Initially announced in

housing industry stakeholders, that help CONTINUED ON NEXT PAGE

MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

39

FIN AN C IN G CONTINUED FROM PREVIOUS PAGE

manufactured homes blend into more

In the coming weeks, our Selling Guide

between Manufactured Home Chattel

traditional neighborhoods, such as:

will be adjusted with requirements

Lending and Real Property Lending. The

that will provide new direction to MH

paper, which is available on our website,

AdvantageTM appraisers:

will be critical in guiding our chattel

• Construction elements, including

lending strategy, as will the other research

durable siding materials.

• Roof treatments distinct from

• When possible, appraisers

traditional manufactured homes,

will be instructed to use MH

including higher-pitch rooflines.

AdvantageTM comparable sales

we are conducting in accordance with our Duty to Serve plan.

We have also invited lenders to share

appraisals.

data on chattel loans, so we can see how

• If comparable MH AdvantageTM

they are structured and how they perform.

homes are not available in the

Within Fannie Mae, we have gathered

marketplace, then the appraiser

a diverse group of stakeholders across

terms and enhanced features make

will use the best and most

the organization to assess the risks and

these manufactured homes more ap-

appropriate other sales available,

opportunities associated with chattel. This

pealing and affordable for borrowers,

including sales of site-built homes.

group helped to develop a preliminary

for MH Advantage

• Options for garages, porches and other desirable features.

Not only will these more generous

TM

MH AdvantageTM also puts manufactured housing on more even financial footing with its site-built counterparts.

set of standards and principles that These adjustments, as well as a handful of other revisions to the program, will

will inform Fannie Mae’s activities in the chattel space.

In addition to creating a new and

make it easier to build and finance

While it’s too early to say whether

appealing offering, we also put a lot of

these homes and spur activity in what

any new Fannie Mae offerings will be

focus on the lenders. Knowing that a

we believe is a promising opportunity

developed from this pilot, we are excited

complicated origination process would

for Fannie Mae and the manufactured

to learn more about this type of loan that

be a deal breaker for many lenders, we

housing industry.

constitutes so much of manufactured

took the time to ensure that originating

As before, the initiative is open to all

these loans would be quick and simple for

manufacturers who make HUD-certified

loan officers. Our expectation is that these

manufactured housing, and there’s no

efforts will make manufactured home

cost to join. For more information, and

financing more broadly available, making

to see how to participate, visit Fannie

it easier for homebuyers to purchase

Mae.com/manufacturedhomes or contact

manufactured homes.

MH_Notices@fanniemae.com.

Exploring Chattel Finance

Our Duty to Serve plan encourages us to carefully and deliberately consider a chattel loan pilot that would take place over the next two calendar years.

Positioning MH Advantage for Success

home financing today.

Fannie Mae And The Future of Manufactured Housing September marks nine months since Fannie Mae has been actively working to figure out how to advance manufactured housing under our Duty to Serve plan, but as much as we’ve done so far, this is

While Fannie Mae currently only

only the beginning.

supports manufactured housing

I can’t predict what the next two years

titled as real property, our Duty

will bring, but I’m looking forward to

to Serve plan also encourages

continuing work with the committed

us to carefully and deliberately

partners I’ve met in the manufactured

consider a chattel loan pilot that would

housing industry. Together, we’ll make

take place over the next two calendar

homeownership accessible to more bor-

years. Earlier this year, our regulator,

rowers across the country. MHV

While there was a lot of enthusiasm

FHFA, approved a limited Fannie Mae

about MH AdvantageTM at launch, we

pilot to purchase chattel loans that will

Ben Navarro leads Single-Family MH-

quickly discovered that there were sev-

help us better understand the complexities

related product development initiatives at

eral aspects of the program that needed

of the marketplace.

Fannie Mae, working as part of the Duty to

fine-tuning. With the help of our industry

This pilot is an extension of the research

Serve team. Ben focuses on projects such as

partners, we identified some parts of MH

we have done to inform our possible

the launch of the MH Advantage™ initiative

AdvantageTM that we could update to make

efforts in chattel lending, which also in-

and Fannie Mae’s potential chattel loan pilot,

it more successful.

cludes a paper titled Key Legal Distinctions

both outlined in the Duty to Serve Plan.

40 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

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FIN AN C IN G

Interest Rates Matter Less Than You Think By: Ken Rishel

O

ne of the topics that often comes up when discussing either captive or outside finance of manufactured homes is interest rates. The lament often is, especially with outside lenders, “If the lender’s interest rates weren’t so high, we could sell more homes”.

One of my best friends in the industry harped on that over and over for years, and I have certainly heard that from many others, including over discussions of where their captive finance company rates should be set.

However, nothing is farther from the truth, especially in these post DoddFrank Act days, with the limits now set as low as they are.

mortgage, we would run from it, but the great majority of our customers are very different from us. Frankly, unless a community or retailer is selling to five-star customers, the average customer is not emotionally invested in the interest rate itself.

However, they are very invested in the payment being offered to them. The payment will make or break a deal every time. Give them a payment they feel comfortable with, and the interest rate will not matter very much.

Given that strong statement, there needs to be considerable explanation of that concept. It is true that many customers ask about interest rates, in part, because they have been One of the very real impediments presented by much taught to of the available financing for consumers today is think they the unrealistic terms that are offered by many of should ask. the outside lenders and some of the captive lenders.

The reality however is they care I think this idea stems from seeing only because they have been told they the deal through the eyes of the should care and their real emotional owners rather than through the eyes involvement is more tied to an affordof the customer. Certainly, if most able payment. There are a number of us were to encounter double-digit of ways sales personnel and MLOs interest rate offers on a personal for the finance company can mitigate

any concerns about interest rates successfully, which will be touched on later in this article.

It is true: The higher the interest rate, the higher the payment for the same term, so this could appear to be self-defeating -- but such a premise ignores the role that term plays in those numbers. One of the very real impediments presented by much of the available financing for consumers today is the unrealistic terms that are offered by many of the outside lenders and some of the captive lenders.

In some areas of the country, an older single-family site-built home of 1,200 square feet can be purchased for as little as $75,000, including the land. That, in and of itself, presents a challenge to the 16’x 80’ new home in a community sale. Add to that the credit-worthy buyer is normally offered a 30-year mortgage on the site-built home, and it often makes it difficult to compete.

The question that should be asked is: If site-built mortgages can be 30-year mortgages, why can’t manufactured homes chattel loans also be 30-year mortgages? The answer is: They can be. That of course creates the question as to why they aren’t, and the answer to that is superstition.

CONTINUED ON NEXT PAGE

42 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

FFIIN NA AN NCCIIN NG G

CONTINUED FROM PREVIOUS PAGE

Superstition is the correct term, because far too many people base their loan underwriting on belief rather than facts. Despite the fact that government regulatory agencies demand written lending policies and credit matrices based on factual information,

far too many non-depository lenders still make decisions based on beliefs rather than historical data. Worse, many of those beliefs directly contradict real facts and historical data.

With the considerable historical lending data available, there is no

provable data that would indicate that longer lending terms on single homes at least 16’x 80’, or multi-section homes less than 10 years old built by a reputable manufacturer to higher standards, affect the overall risk of making the loan. In fact, there has CONTINUED ON NEXT PAGE

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43

FIN AN C IN G CONTINUED FROM PREVIOUS PAGE

been at least one regional lender routinely making 30-year loans for over 20 years without undue non-performance.

That does not mean that every loan should be based on 30-year terms. There are factors that incorporate credit quality, percentage of down-payment, location and quality of collateral, and size of loan that must be considered and balanced. Once the proper underwriting has been done, many of the loans can be considered for longer terms, which opens more opportunities.

As an example, using many current loan terms on a $50,000 loan, at 15 years the payment would be $537.50.

At 20 years, the same loan would have a payment of $482.51. At 30 years, the payment would be $438.79.

That is almost $100 per month less, which may make the

affordability possible without adjusting the interest rate.

As long as extending the term does not also increase the risk, longer terms are actually a valuable solution to the problem of higher interest rates. One of the reasons why the longer terms actually work is because the borrower is often being offered a more affordable payment. Given a choice between making a loan with a 43 percent DTI at 15 years and making a 20-year loan that yields a 28 percent DTI, if other underwriting factors are right, the 20-year loan will be less risky.

So, the higher interest rates are easier to deal with because the longer term creates a payment the prospective borrower finds desirable. Often it is more desirable than payments being offered on a site-built home, despite the CONTINUED ON NEXT PAGE

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FINANCING CONTINUED FROM PREVIOUS PAGE

higher interest rates -- in part because the site-built home purchase price includes the land purchase, in part because the property tax on the site-built home is normally far higher than the tax on the manufactured home, and in part because the site-built home finance amount will also include PMI for borrowers with lower down payments.

The tools are there to mitigate higher interest rates, but both the retail sales personnel and the MLOs have to develop the attitude that those higher interest rates are nothing to be afraid of if they say and do the right things as part of their sales process. Once they learn not to fear the consequences of the differences in interest rates, it becomes easier to plan their sales presentation and responses to questions about the interest rates.

For most prospective customers, the interest rates are of little consequence compared to the payment. If the focus is on the payment, and if the payment is affordable, most borrowers will not care about the rate. For the few that do – those with excellent credit – lower rates remain available through national lenders. The problem of higher rates is almost always in the mind of the sales personnel rather than the borrower, if longer terms are offered.

The higher rates provide incentives to the lender, captive or outside, to make higher-risk loans and lower

dollar loans. The industry needs them to continue to sell homes and prosper. Lenders need to reexamine their reasons for shorter terms, and retailers and community owners need to do a better job selecting and training their sales personnel. MHV A longtime veteran of the manufactured housing industry, Ken Rishel was appointed by the Illinois governor in 2002 to head an effort to establish the Illinois Manufactured Housing Quality Assurance Board. He has been elected to the board for two state associations and he is past board chairman of the Illinois Manufactured Housing Association.

He is the managing partner of Rishel Consulting Group, a nationally recognized consultancy in the manufactured housing industry that helps retailers and communities set up or fix their related or captive finance companies, as well as helps retailers and community owners set up compliance management systems that help navigate the federal regulatory and compliance landscape.

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FINANCING

New Home Financing Community Owners Nationwide Have an Attractive Option to Purchase New Homes By: Patrick Revere • Photos courtesy of Fairmont Homes and Fleetwood Homes

C

ountryPlace Mortgage now offers community owners

CountryPlace’s Brandom says the new financing platform is all

a fresh way to finance new homes for their commu-

about offering more inviting terms for communities, particularly

nities. “REvive is custom-tailored to the community

small to mid-size owners and operators.

owner,” CountryPlace Consumer Lending Division President Jack Brandom said. “It’s designed specifically for strategically

REvive offers a unique term of up to 11 years, the initial year with payments based on interest alone.

minded community owners to help them put new homes in their

“We have teamed with Cavco’s manufacturing group

communities, whether they’re filling vacant sites, expanding or

to provide the communities with lines of credit, and the

upgrading some of the community-owned homes.”

first-year payments are interest only,” Brandom said.

CONTINUED ON NEXT PAGE

MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

47

FIN AN C IN G

The way REvive is set up allows a community to get new homes for an attractive payment, enabling owners to generate a positive cash flow when they lease or rent a home.

has a limited number of sites, it can be hard to find long-term capital to buy homes.”

REvive has seen an increase in demand during the last six months as word has spread. The program is receiving growing attention for community expansion, as well as being used to finance a rising number of multi-section homes to complement

CONTINUED FROM PREVIOUS PAGE

the purchase of single-section units.

Brandom said CountryPlace is licensed to do business in 37

“We also advance up to 80 percent of the gross invoice,

states. The contact person for the REvive program is Steve

including freight, and factory-installed air conditioning.”

Mehrer, director of community lending for CountryPlace. Mehrer can be reached at (972) 763-5102. MHV

Other terms associated with REvive: Patrick Revere is executive editor for the

• Annual five-home purchase minimum • All brands from Cavco, Fleetwood, Palm Harbor, Fair-

MHInsider magazine, as well as the MHInsider

mont, Friendship, Chariot Eagle and Lexington Homes

blog and MHVillager, a lifestyle and resources blog for homeowners and residents. He is an

• Principal and interest payments start

award-winning journalist and writer who has

after the first year

written extensively about manufacturing, real

• Attractive interest rates

estate, management, technology, the building The way REvive is set up allows a community to get new

trades and the labor markets.

homes for an attractive payment, enabling owners to generate a positive cash flow when they lease or rent the home. As implied, if the community rents the home, or sets up a lease-to-own

MH & RV Investors/Owners Community Consulting Services

agreement, the home can remain on the REvive program.

Benefits Smaller Owners And Residents Who Want a New Model Home The new homes from Cavco and all of its brands can fill empty sites, improve the street appeal of the community, replace aging homes or be part of a community expansion program.

“It really is a program regularly requested by community operators who have less access to capital than some of the bigger portfolio owners,” Brandom said. “If you’re an owner who 48 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

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49

T R E NDS / INSIGHT S

Equity LifeStyle Properties Finds Success in RV/MH Property Mix The Chicago-based Real Estate Investment Trust Expands Three Parks in Arizona and Texas

By: Patrick Revere • Photos courtesy of Equity LifeStyle Properties, Inc.

TR E NDS /INS I G H T S

E

quity LifeStyle Properties (ELS) is expanding in interesting ways, bringing more manufactured homes to RV properties in a fashion that creates a destination life cycle for customers.

The company is one of the nation’s largest real estate networks,

with more than 400 properties with nearly 154,000 sites across the country. While ELS has a near-equal mix of manufactured housing communities and RV resorts/campgrounds, it is currently leading the trend of blending the two models into a single community.

Ron Bunce, senior vice president for 150 ELS properties in the company’s western markets, oversees several such blended communities, including three properties in Texas and Arizona CONTINUED ON NEXT PAGE

MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

51

T R E NDS / INSIGHT S

“The business models of MH communities and RV communities are very similar. We saw it as a logical combination of property types because they are operationally similar, as is our customer base among the communities.”

– Ron Bunce, Senior VP of ELS Western Markets CONTINUED FROM PREVIOUS PAGE

that are currently undergoing this type

similar,” he said. “We saw it as a logical

80s who throw a mean fastball. It is truly

of mixed-property expansion.

combination of property types because

something impressive,” Bunce said.

“What we continue to see from our

they are operationally similar, as is our

“There are hundreds of people in the

RV customer is an interest in staying

customer base among the communities.”

tennis club, and we have great pickle ball

connected to their destination property and the relationships they have built

The Expanding Properties

courts and a fitness center,” he said. “There are 50 different club and hobbyist groups at ViewPoint. That’s why our customers

there,” Bunce said. “Traveling by RV and managing multiple destinations can

ELS purchased a pair of Mesa, Ariz.,

either come back year after year or decide

become challenging, leading many to

RV resorts in 2004 from separate own-

to stay for good. They want to socialize,

prefer the conveniences of a manufac-

ers. Both properties are in the midst of

have fun and be creative.”

tured home in the resort they previously

expansion projects, bringing a sizable MH

enjoyed in their RV.”

component to each of the resorts.

Monte Vista Village Resort

Chicago-based ELS became a public

ViewPoint RV and Golf Resort has a

company in 1993, with a portfolio of 41

mix of more than 2,000 sites, includ-

The other ELS expansion property

manufactured home communities. For

ing rolling stock RVs, park models

in Mesa, Ariz., is Monte Vista Village

many years, the company’s core business

and manufactured homes.

Resort, a community with nearly 950

consisted of retirement communities

“Our expansion project at ViewPoint

in Sunbelt destinations. Through its

has added 235 manufactured home sites

extensive property acquisitions over

so far, with another 200 planned,” Bunce

“Our target customer is the retiree or

the past 15 years, ELS entered the RV

said. “It’s a unique community in that it

Baby Boomer group,” Bunce said. “And

business, a property type that contin-

features 27 holes of golf. We have an 18-

we found that a 1,300-square-foot,

ues to be a valuable component of the

hole championship golf course, with an

2- or 3-bedroom home appeals to that

company’s operations.

additional 9-hole executive par-3 course.”

buyer. Many will spend the winter months with us, and some will decide to

According to Bunce, the move to

ViewPoint also offers the resort-style

operating RV communities was a natural

amenities you might expect: swimming

fit for the company.

pools, tennis club and softball fields.

sites, including 115 manufactured housing expansion sites.

stay year round.

“Traditionally, our customers have

“The business models of MH com-

“We have softball players ranging in

been in a time in their lives when they

munities and RV communities are very

age from 55 to 90, including some in their

are looking to sell their home, often in CONTINUED ON NEXT PAGE

52 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

TR E NDS /INS I G H T S

CONTINUED FROM PREVIOUS PAGE

a northern part of the country. They visit

social area, an indoor lodge, a large swim-

development. According to Bunce, proper-

our resort and find the house, community

ming pool with cabanas, tennis courts, a

ties under consideration for expansion are

atmosphere, social engagement and,

fitness center and dog park.”

carefully evaluated for market conditions,

of course, the weather they’re looking

Bunce said ELS purchases homes from

demographic trends, zoning and entitle-

for here,” he added. “Increasingly, we’re

many manufacturers, but with its recent

ments and infrastructure requirements,

now also seeing people who already live

western expansion projects the company

among other elements.

in the Phoenix area coming to us for

has focused on Cavco products for both

those same reasons.”

manufactured homes and park models.

The community shares common space that includes an amenity package similar

In all cases, ELS seems intent on making additions and changes that its customers find favorable. Bunce said the company

The Future Growth at ELS

is able to gauge interest from website

to those at ViewPoint, but rather than golf

activity and social media, but also heav-

courses it offers lawn bowling, billiards,

Acquisitions also contribute to portfolio

ily weighs customer sentiment and

horseshoe pits and extensive crafting

growth at ELS. Through the first seven

satisfac tion through one-on-one

facilities, including dedicated rooms

months of this year, the company acquired

conversations, meetings with home-

for lapidary arts, silversmithing, wood-

four properties in Florida, adding nearly

owners’ associations and responses to

working, pottery and more.

1,900 sites to the portfolio. Of these, three

customer satisfaction surveys.

A Lakeside Village North of Houston

were manufactured housing communities.

“We have a lot of different ways to

The other key element integral to the

measure and ensure we’re responsive to

ELS growth and investment strategy is

our customers,” Bunce said.

CONTINUED ON NEXT PAGE

ELS purchased the Thousand Trails network of campgrounds in 2008.

Among the more than 80 properties in the portfolio was Thousand Trails Lake Conroe, a lakeside campground about an hour north of Houston. The company recently completed an expansion project to incorporate additional RV sites, as well as 50 manufactured home sites.

“Our manufactured homes in the property have been very popular,” Bunce said of Thousand Trails Lake Conroe. “We sold out the first 50 MH sites and we just started a project adding another 67 RV sites.”

Bunce said the property features lake access. Residents bring small watercraft to enjoy on the popular 21,000-acre swimming, fishing and boating lake north of Houston.

“Having access to the lake is very important to our customers,” he said. “We offer a number of boat slips for residents and guests, as well as a boat launch on the

Sunset view at Lake Conroe RV & Camping Resort.

property. There’s also a covered outdoor MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

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T R E NDS / INSIGHT S

CONTINUED FROM PREVIOUS PAGE

Among those measurements is likely

The characteristics of the RV side of

ing quality communities and RV resorts

the company’s solid history of occupancy

the business are also positive. ELS

for our customers,” Bunce said. “We have

growth. Occupancy in ELS manufac-

numbers show there are about 9 million

a lot to celebrate.” MHV

tured home communities sits at nearly

RVers in the country and about 1.5 million

95 percent, and the company has had

RV sites. Industry trends such as the

Patrick Revere is executive editor for

35 consecutive quarters of occupancy

growing popularity of peer-to-peer RV

the MHInsider magazine, as well as the

increases across the portfolio.

rentals are positively impacting the

MHInsider blog and MHVillager, a life-

amount of time RVers spend in those

style and resources blog for homeowners

campgrounds, Bunce said.

and residents. He is an award-winning

“We work hard to ensure we’re providing the lifestyle offerings our customers are looking for,” Bunce said.

Favorable Trends

“Meanwhile, our hybrid RV and MH

journalist and writer who has written ex-

communities are positioned to attract

tensively about manufacturing, real estate,

customers in all segments of the RV-to-

management, technology, the building trades

MH life cycle: from the weekend camper

and the labor markets.

With approximately 70 percent of its

to the snowbird to the

properties catering to Baby Boomers, ELS

full timer and, in many

is well positioned to take advantage of

cases, the former RVer

demographic trends over the next several

who prefers to pur-

years. According to the Pew Research

chase a manufactured

Center, 10,000 Boomers will turn 65 each

home in their favorite

day for the next 12 years.

resort,” he said.

Manufactured home shipments are up

With its very first

50 percent in five years, which mirrors

property purchased in

the success of ELS properties.

1969, ELS will celebrate

“We continue to see a strong home resale market, which is a key indicator of demand for the homes in our communities,” Bunce said.

its 50th anniversary next year.

“We’re very proud of our history of provid-

54 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

January 30–February 1, 2019 Kentucky Exposition Center

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56 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

TR E NDS /INS I G H T S

Park-Owned Homes The Promises and Pitfalls of Park-Owned Homes By: Robert Blum and Alexander Rindner • Photo courtesy of Ricket Properties

A

s relative newcomers to the industry, we notice a wide gulf separating large park owners from those operating on a more modest scale of, say, 200 lots or fewer. One noticeable attribute that characterizes the smaller owners is a tendency to incorporate parkowned homes into their business model as a strategic choice to generate higher annual income.

However, when the time comes for these owners to sell their park, those park-owned homes may represent a challenge for attracting quality buyers. The severity of that challenge will depend on the choices the park owner makes during their tenure operating the property.

We are a highly flexible family office representing something of an

ideal buyer for many smaller park owners. In our ongoing search for acquisitions across Florida and the Southeast, we come across many parks that we cannot acquire solely due to how the park owner has implemented a strategy of including park-owned homes. In this article, we highlight two major pitfalls that small park owners must avoid with respect to park-owned homes, so as to extract maximum value from their park in the long term.

owned homes as rentals. For an owner-operator who is unafraid to roll up their sleeves, the much higher gross income generated by park-owned homes versus lot rentals can be a massive boon to annual returns. For many small owners, incorporating a manageable number of park-owned homes can turn a sleepy real estate investment into a cash-flow machine.

The Big Picture Despite the short-term benefits of

The Promise of Park-Owned Homes park-owned homes, the larger buyThe desirability of including parkowned homes is a matter of personal preference and circumstances.

Indeed, many small park owners possess a talent for leveraging park-

ers to whom a small owner or their descendants will one day want to sell may view the strategy differently. It is well-known that certain buyers will be very sensitive to parks that have very high percentages of park-owned CONTINUED ON NEXT PAGE

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T R E NDS / INSIGHT S CONTINUED FROM PREVIOUS PAGE

homes versus tenant-owned lot rentals, as many buyers prefer the latter due to management or other broader concerns. However, even those buyers willing to consider parks with large numbers of park-owned homes will need the seller to have operated in a way that retains two key attributes: flexibility and autonomy.

Pitfall #1: Purchase Arrangements with Long Terms A buyer of your park likely will want some degree of flexibility when

it comes to park-owned homes. Regarding flexibility, a common pitfall we see small owners fall into is entering into lease-to-own or leaseoption-to-purchase arrangements with residents that have very long terms. In general, these arrangements can be positive in the eyes of a buyer who is sensitive to park-owned homes – they put the residents on a path toward home ownership and the ultimate goal of generating steady lot rental income. However, in order to retain flexibility, park owners must

resist any urge to lock themselves into purchase arrangements with residents that include terms of 15 or even 10 years. It is preferable the term be shorter, between five and seven years or less, even if this means earning less on the value of the home.

Indeed, rather than encumbering a home with a purchase arrangement with a long term, it is preferable that the home simply remain a pure rental.

Some small owners are apparently of the view that, if the term of the purchase arrangement is long, the CONTINUED ON NEXT PAGE

58 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

TR E NDS /INS I G H T S the park that are not owned by residents.

Small owners looking to improve their park with new homes or fill vacant lots might be tempted to have third-party investors outlay the capital required to accomplish that goal. That third-party investor is then responsible for the lot rent, which provides the park owner with a reliable source of income without having to chase multiple tenants.

Yet these benefits will only accrue to the park owner in the short to medium term. From the broader investing community’s point of view, these homes are basically considered owned by the park, but the park owner does not reap the reward of the higher gross income that typically accompanies park-owned homes. In addition, a third-party investor who controls a significant number of homes has a great deal of leverage over the park. Should the park owner want to sell, strong buyers will not be

Despite the short-term benefits of park-owned homes, the larger buyers to whom a small owner or their descendants will one day want to sell may view the strategy differently.

CONTINUED FROM PREVIOUS PAGE

resident will have a greater chance of defaulting and the owner will get to start over again with a new tenant.

Such a view is both inconsistent with the values at the heart of the manufactured housing industry and short-sighted, in that it impinges upon the flexibility that buyers seek in a new acquisition.

Pitfall #2: Third Party Investors In addition to flexibility, buyers seek autonomy over the homes in

interested in essentially partnering with this third-party investor.

Conclusion Park-owned homes can be a great source of revenue for small owner-operators who don’t mind rolling up their sleeves to earn the extra income they provide. They also can drastically limit a park owner’s exit options and hurt the overall valuation of a park.

Small park owners should consider the bigger picture and long-term consequences when they implement a strategy of including park-owned homes in their parks. MHV

Robert Blum

Alexander Rindner

Robert Blum and Alexander Rindner are principals of Springfield Communities, a division of Avery Management, a multi-generation family office based in the New York City area.

Trusted Market Data for 160+ Markets Nationwide From high-level national statistics, to detailed rent, occupancy and sales activity, Datacomp has the information the manufactured housing industry relies on to make informed decisions. We can provide the timely and comprehensive answers you need for success in today’s competitive housing market for over 160 markets throughout the United States.

800.588.5426 datacompUSA.com/JLT

MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

59

T R E NDS / INSIGHT S

The emerging demand for affordable workforce housing may be the first indicator of the ability of manufactured housing land-lease communities to provide for this need.

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TR E NDS /INS I G H T S

The Case for Manufactured Homes as Workforce Housing By: Edward Hicks

I

n 2002, the Urban Land Institute (ULI) assembled a panel of experts to discuss the growing shortage of affordable workforce housing.

Workforce housing is defined by the ULI as housing that is affordable to those between 60 and 120 percent of the area median household income.

Many households in this group do not qualify for federal entitlement programs, yet do not have enough income for adequate housing to support their needs.

The ULI meeting divided into small groups to identify regulatory barriers and possible solutions.

One panel suggested that local governments donate or sell governmentowned land at reduced prices, with the requirement that workforce housing

be built. Another panel urged greater marketing efforts to encourage affordable housing development.

One panel suggested expanding state and local first-time homebuyer tax credit programs to help cover down payments.

Another solution was to offer property tax abatements as a tradeoff for the development of workforce housing, similar to a program in the District of Columbia. The panel said that expedited permit processes for affordable housing projects could reduce costs and make such developments more profitable.

Local building codes for site-built housing often add time and expense to projects, but do little to improve quality or safety of the units.

Manufactured housing – with its faster, semi-automated, protected building processes – can greatly speed this up.

Building permit fees for land-lease communities might only apply to the infrastructure, and not necessarily to the factory-built units themselves.

Another ULI panel suggested that linking fees to unit size would make smaller, more affordable housing more attractive to developers.

Changes to local zoning laws, such as allowing existing commercial properties to be redeveloped as workforce housing, allowing manufactured housing in all but a few high-end residential zones, and approving rezoning requests conditional on workforce housing, could provide development opportunities.

CONTINUED ON NEXT PAGE

When it’s time to sell, ROC USA® will be there.

We were there with financing of $5 million in February 2018 for the homeowners in and the operators of a 56-site Salt Lake County, Utah MHC that is now the Applewood Homeowners Cooperative. ROC USA is: • Paid by the buyer • Active in 21 states • Capitalized to meet all of the co-op’s financing needs ROC USA is a national network of 220 Resident Owned Communities home to 14,000 homeowners, and we’re growing by more than 1,000 home-sites per year. Provided the opportunity, homeowners want community ownership; we make resident ownership viable and successful.

When you’re ready to sell, please contact us first.

Angela Romeo, National Acquisitions Manager aromeo@rocusa.org • 603-513-2791 • www.rocusa.org MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

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One of the panels recommended that localities use their comprehensive plans to link commercial zones with residential zones, fostering less zoning segregation and more affordable housing options. Similarly, if a commercial developer makes a special request for a reasonable exemption from the building code or approval of zoning for manufactured housing, the approval can come with a requirement for workforce housing to be built into the project.

Another suggestion: As part of major redevelopment proposals, local governments could require that workforce housing be a part of the “request for proposal” process.

A result of this could be that financial and density bonus incentives that are part of inclusionary policies could be expanded to cover low- and moderate-cost housing, in addition to affordable units. Other regulatory incentives that could be used include shared parking opportunities, mixed-use zoning, flexible zoning and fee waivers or reductions.

With the relatively low interest rates, home buyers with sufficient down payments and fair-to-good credit scores have been able to purchase new and repossessed homes in many markets for some time now. And some

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Contact Eddie Goff (270) 465–1481

forward-looking, factory-built home manufacturers have been offering housing structures that are built at low cost but also meet the needs of heavy use for families.

Yet still, there is a need for access to families with fair-to-medium credit and minimum down payments, especially in markets where there is good employment.

In the past, this need was provided by a regular supply of new family land-lease communities. However, with the high rate of defaults on home financing that started in the early 2000s, there has been very little in the way of new community development – largely limited to a few senior resort-style communities in select areas.

In many parts of the country, there has been a lack of housing for low- and moderate-income families, in tandem with prolonged job losses and an only recent economic upturn.

Much of the early recovery job growth was tied to the “man camps,” as they’re called, at the oil reserves in North Dakota, south Texas and other areas, which were built and operated under the direction of the production companies.

Long rows of oil-field housing are a great example of how building in a factory can be an efficient solution. And yet there are myriad sectors in major markets that need timely delivery of quality, affordable housing.

Even in less intense workforces, there are shortages in affordable local housing for working families. These housing needs could be met through the judicious use of manufactured homes and housing communities, especially when the owners can provide self-financing or lease-toown programs for consumers with low credit scores and a lack of sizable down payments.

The emerging demand for affordable workforce housing may be the first indicator of the ability of manufactured housing land-lease communities to provide for this need.

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So, how did they do it?

In northwest North Dakota and parts of south Texas, new manufactured housing land-lease communities are being built to meet high family housing demands. In other areas, a number of community owners purchased and installed used and repossessed homes, offering them for occupancy with a “lease-to-own” option. This is based on the landlord’s estimation of the buyer’s creditworthiness.

Monthly home lease payments for lower-cost used or repossessed homes – primarily single-section, post-1976 homes – often were below costs of area apartments, and resulted in successfully filling vacant communities.

One of the most important items for an investor to scrutinize is the availability of home financing when the dwelling unit is sited on a leased homesite. At the present time, shorter-term loan amortizations at higher interest rates than for site-built homes are generally the case.

Lowering the homesite lease terms may offset the potential for higher monthly home payments. Converting the property into land-home combinations for conveyance as real property may be another option. Additional methods may apply, but financing terms on a “par” with site-built homes may be forthcoming.

No matter where it exists, the need for affordable housing for workers with families located near their jobs continues to grow. As viable housing options increase for working families, so too will the breadth, depth and balance of the workforce. Organizations that are willing to push for lower-cost, factory-built homes in combination with some of the newer lease-to-own strategies have been able to meet these vital needs. MHV Edward “Eddie” Hicks, principal consultant with Consultants Resource Group, can be reached by phone at (813) 300-6150.

Hicks has more than 45 years of experience as an MH retailer, manufacturer, developer and real estate broker, assisting clients with their community development, financing and acquisition needs. For more information, email Hicks at easteddie@aol.com, or visit www.mobilehomepark. com, www.factorybuilthome.com or www.fha207m.com.

FOR MORE INDUSTRY NEWS, VISIT

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63

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BU I L DE R /R E TA I L E R

Retail

INSIGHTS

With Gary Adamek • Photo courtesy of Fayette Country Homes

How long have you been operating Fayette Country Homes?

23 years.

What brands do you sell?

Fleetwood, Clayton, Schult, TRU, pre-owned homes.

What mix of customers do you have in regard to percent of homes for private land versus land-lease community?

95 percent private land, 5 percent communities.

Is the average home you sell increasing in size, getting smaller or staying about the same? How much house are people buying?

The size seems to be staying the same over the past five years. Most popular sizes are around 1,200 square feet on single-wides, and 1,600 square feet on multi-sections.

How many homes/sections do you sell annually?

130 homes.

What customer trends do you see in terms of use-of-space and/or lifestyle amenities/materials choices?

Our customers like big utility sinks to wash dogs, because millennials are having dogs instead of kids. Interactive technology within the home, such as programmable thermostats.

Low-E thermal pane windows, and barn doors, large tile showers and granite countertops.

What about working in Texas might surprise industry professionals from other regions?

If you do not own a gun or a horse you can finance one in at closing. LOL.

Why do you feel it’s important to attend events like SECO, Louisville, Tunica?

To keep up on current trends, meet like-minded people, and share business practices.

How have you seen your business evolve over the last few years?

Social media, websites, electronic/Internet marketing. The baby boomers are starting to buy less and the millennials are starting to buy more.

What do you think the next year is going to be like for the industry?

Gang busters. It is our turn… ‘Til the next stock market crash happens.

What do you think is the greatest challenge facing the industry right now?

It’s still the misconceptions about our homes. It ain’t your grandma’s trailer. The industry is doing fewer home shows, but we need to do more public home shows at county fairs, boat shows and garden shows. We need to get the general public in our homes to see what they are like. MHV

How do you assist your customers in the finance of the home? How are most people buying where you are?

A large part of our business is still cash sales, but we walk our customers through the mortgage process, too. Eightyfive percent look for chattel (home only) transactions and 15 percent are land-home.

Fayette Country Homes 751 Huser Blvd.

Schulenburg, TX 78956

What is your average time from order to set up?

www.fayettecountryhomes.com

About 60-100 days.

What is the most common add-on feature in your market?

Porches, a second living room, stainless-steel appliances, granite countertops, large tile showers.

(979) 743-6192 Gary Adamek, Owner MHINSIDER.COM • OCTOBER 2018 • MHINSIDER™ |

65

BUILDE R / RETAILER

Question:

By: Don Westphal, RLA, ASLA • Photo courtesy of Westphal & Associates

How can we improve community image with good home appearance and siting?

N

early all manufactured homes today have an acceptable appearance when set on a subdivision lot or in a land-lease community with the long face of the home parallel to the street. Most of these homes are displayed in shows and sales centers “broad set,” in order to capitalize on that more attractive-looking face.

Unfortunately, many of these homes function poorly and lack curb appeal when placed on the narrow lots found in many subdivisions and most land-lease communities. Since cost considerations related to lot width often rule out the possibility of broad-setting homes in most communities, there are four actions can be taken to improve community appearance with little or no added cost.

First, be certain that homes on corner lots are placed with the front door and yard facing the street.

This consideration must be made in the initial planning of the community and can be accomplished by either spinning corner lots ninety degrees, or making provisions for the

utility risers to accept a home with a reverse floor plan.

Second, require in the community guidelines that all homes have some attractive treatment on the street-facing end of the home. This can be accomplished by requiring one or more of the following: a minimum amount of window area, an eyebrow roof or bay window, a porch or entry covering if the home has a street-facing entry door, or a garage or carport in front of the home.

I have driven through many communities where the end of the home facing the street was a solid wall of vinyl or hardboard siding, and the attractive side of the home was not visible from the street.

Third, see that the placement of homes on the lots results in a uniform front setback from the street. Many communities are designed with the utility risers placed very close to the rear of the homesite. This requires the home to be placed to the rear of the homesite to cover the sewer and water risers. As a result, there are marked differences in the front setbacks and a lack of continuity in the streetscape. Many designers now place the utility risers further forward on the homesite so that the shorter multi-section homes can be placed closer to the street without making riser location adjustments.

66 | MHINSIDER™ • OCTOBER 2018 • MHINSIDER.COM

Fourth, off-street parking should be designed so that landscaping can be placed along the front of the home.

Many communities are designed with the parking in front of the home, making it impossible to landscape there. Some developers design the parking in tandem along the side of the home, to allow for a future carport or garage. This reduces the number of cars parked off-street adjacent to the curb and results in fewer cars in the streetscape.

An attractive streetscape in your community will not happen by accident. Some developers require plot plans for each home placement in the community to make certain that the home and homesite all add to the positive appearance of the community.

Interior appearances might sell the home, but exterior appearances sell the community. MHV Donald Westphal is one of the nation’s foremost authorities on manufactured home community planning and design.

He regularly travels North America to provide his consulting expertise, present on latest trends and lecture on best practices for leading developers, manufacturers and designers.

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