MHInsider™ July/August 2019 - State of the Industry Edition by MHInsider

IN THIS ISSUE: DEMAND FOR FEE-BASED MANAGEMENT IS GROWING • NATIONAL RENT CONTROL TRENDS • INSIGHTS FROM INDUSTRY LEADERS

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STATE OF THE INDUSTRY

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CONTENTS

What Are MH Advantage® and CHOICE Homesm, and What are the Differences? There are a pair of new opportunities available for potential homebuyers, each offered by one of the governmentsponsored enterprises, Freddie Mac and Fannie Mae.

Demand for Fee-Based Management is Growing Many fee-based management companies are seeing an increase in demand for their services from owners of manufactured housing communities.

6 Industry Happenings: Updates from the World of Manufactured Housing 10 Upcoming Industry Events 12 State Executives National Roundup 20 State Governments Push Hard for Rent Control 26 Vacancy Control the Most Onerous Form of Rent Control 32 MHI Continues to Make Manufactured Housing a Top Priority with Policymakers 38 Industry Trends and Statistics 42 Yes! Communities Relies on Foundation of Values to Best Serve Customer Base 44 Q&A with President of Titan Factory Direct 47 Q&A with General Manager for Adventure Homes 52 Clayton Homes Looks to Offer Luxury at the Right Price 54 ESCO Still Supplying the Manufactured Housing Sector 56 21st Mortgage President/CEO Tim Williams Talks Lending Trends 60 Midwest Lender Seeks to Expand Community Partnerships 62 HUD Secretary Ben Carson Sits Down with MHInsider at Housing Showcase 66 RV/MH Hall of Fame Holds Annual Induction Dinner 71 Compliance Officers are Crucial in Dealing with Fair Housing/ADA Standards 81 Have You Ever Been to 'Me'? 84 What's New in Sales Training, and Why is it Important? 88 Protected Class: Source of Income or Source of Concern?

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Associate Publisher

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Executive Editor

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Managing Editor

Matt Milkovich • mattm@mhvillage.com

Contributing Editor

George Allen • gfa7156@aol.com

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Merit Alcala • merit@mhvillage.com

Contributors

Brynn Burger Thomas Casparian Dr. Lesli Gooch Suzanne Felber Matthew Paletz Donna Rishel John Ace Underwood

Cover Images

Courtesy of Zeman Homes. Courtesy of Equity LifeStyle Properties. All IHS photography (cover, pages 62, 63, 64): This work is licensed under the Creative Commons Public Domain Mark 1.0 License. To view a copy of this license, visit http://creativecommons.org/publicdomain/ mark/1.0/ or send a letter to Creative Commons, PO Box 1866, Mountain View, CA 94042, USA.

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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 ©2019 MHVillage, Inc. All rights reserved. Reproduction of MHInsider content, MHI or other contributor content, in part or in whole, is prohibited without written authorization from MHVillage, Inc.

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LETTER FROM THE PUBLISHER

Industry Success

Redefining the Measures of Success By Darren Krolewski

once had a client tell me that if you weren’t getting sued, audited or threatened with death on a regular basis you weren’t doing something right in business. While I’ve actively tried to avoid all three of those, he does make a good point. There’s something to be said about strength inviting challenge. Today, it seems like the measures of success in business are media hit pieces, Congressional investigations, and going viral. As of late, the timing of certain negative publicity targeting the manufactured housing industry certainly supports evidence for an organized, politically motivated assault. While I won’t draw attention to the actors or attempt to analyze their motivations here, it goes without saying that after years of keeping a low profile manufactured housing is finally back on everyone’s radar. Perhaps if you want the good, you have to take the bad. Some in the industry have offered that we ourselves are to blame. They suggest that we didn’t do enough to communicate the positive contributions of our industry during the last few decades. Others lament that we didn’t police our own strictly enough, allowing a few bad actors with unsavory business practices to shape perceptions of an entire industry. The simple answer may be that the recent positive momentum our industry is experiencing has generated attention from those who typically wouldn’t take notice, and taking an occasional gut punch is just part of doing business. Our profile as an industry has certainly been raised. At the recent Manufactured

Housing Institute Congress and Expo in New Orleans, Secretary Ben Carson of the Department of Housing and Urban Development spoke about the critical role of manufactured housing in solving the nation’s affordable housing crisis. During his unprecedented second consecutive appearance, he reemphasized his department’s commitment to

“… manufactured housing is a creative, often underestimated industry that knows how to roll with the punches and persevere.”

working with the industry. We’ve already seen some of those words put into action. We also heard more about the initiatives from Fannie Mae and Freddie Mac as a part of their Duty to Serve obligations. The MHAdvantage® and CHOICEHome™ land-home finance programs, respectively, seek to create opportunities by expanding the reach of manufactured housing to segments of site-built buyers who may not normally consider a factory-built home. During the first-ever Retailer Roundtable that ran on the last day of the conference, Kevin Clayton of Clayton Homes spoke about his company’s efforts to elevate the marketing of the industry with compelling messaging and branding that seeks to

change the way consumers perceive manufactured housing. And just last month, three manufactured homes took center stage on the National Mall of the nation’s capital during HUD’s Innovative Housing Showcase, giving lawmakers and the general public an opportunity to experience the amenities of today’s manufactured home firsthand. Needless to say, these are only a few things to be excited about as an industry. In this, our first State of the Industry edition of The MHInsider, we focus on the progress of manufactured housing as some of the leaders in our industry share their thoughts on what we’ve accomplished and what to expect for the remainder of 2019 and beyond. As evidenced by the articles and interviews in this issue, manufactured housing is a creative, often underestimated industry that knows how to roll with the punches and persevere. That may be our greatest strength. If there are indeed forces out to get us, they’re in for a fight. 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, a dver t i sing and financial services industries — and was a partner in a marketing consulting f ir m ser ving the housing industry.

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

NEWS BRIEFS

Happenings

INDUSTRY

Updates from the World of Manufactured Housing…

Sun Commences Public Offering Sun Communities commenced an underwritten public offering of 3.25 million shares of its common stock in late May. The company expected to grant underwriters a 30-day option to purchase up to an additional 487,500 shares of its common stock. The company intends to use the net proceeds of the offering to repay borrowings outstanding under the revolving loan under its senior credit facility, and for working capital and general corporate purposes. Sun Communities Inc. owns, operates or has an interest in a portfolio of 379 communities comprising over 132,000 developed sites.

YES! Buys Missouri Community YES! Communities acquired a 541-homesite community in Kansas City, Mo. As a result of the acquisition, the YES! portfolio now includes 215 communities across 18 states, containing 56,557 home sites. Terms of the transaction were not disclosed.

Retailer Hires New Executive VP Factory Expo Home Centers named Stuart Pikoff its executive vice president of sales, a newly created position. Pikoff has worked with industry leaders in the areas of sales leadership, employee development, and company growth. He served for 12 years as executive vice president of sales for Palm

Harbor Homes, and was a corporate performance and learning consultant at Clayton Homes. Based in Chandler, Ariz., Factory Expo Home Centers operates 35 sales centers in 15 states. The company has sold and shipped over 32,000 homes throughout the United States, Mexico, and Canada.

Company Acquires Communities Manufactured Housing Properties Inc. acquired the B&D Residential manufactured housing community, a 97-pad property in Chester, S.C. It also acquired Hunt Club Forest, a 79-pad property in the Columbia, S.C., metro area.

San Jose Mayor Promotes ADUs The mayor of San Jose, Calif., proposed $5 million in subsidies and to waive fees for homeowners who want to construct accessory dwelling units (ADUs) in an effort to curb the housing crisis in the South Bay region. The "Yes in my Backyard" program could offer up to $20,000 in forgivable loans for residents who build ADUs and agree to rent control for low-to-moderate income tenants for at least five years.

AFR Partners with Next Step American Financial Resources (AFR), a residential mortgage lender, has joined Next Step Net work ’s efforts to promote the use of affordable, energy-efficient factory-built

6 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

homes by participating in Next Step’s SmartMH program. The SmartMH program connects home buyers with financial institutions and manufactured home retailers to increase access to affordable manufactured homes with fair financing. Freddie Mac has partnered with Next Step to expand the program, while improving access to credit. Based in Parsippany, N.J., AFR serves thousands of mortgage brokers, bankers, lenders, homeowners, homebuyers, realtors and contractors nationwide.

Roberts Buys RV Resorts Roberts Resorts and Communities acquired RV resorts in Texas and California. The communities are Coachland RV Park in Truckee, Calif., and Rayford Crossing in Spring, Texas, with 230 and 115 sites in each community, respectively. With these acquisitions, Roberts Resorts & Communities now owns 17 MH communities and RV resorts, with RV assets totaling 6,500 lots (with an additional 2,700 lots under development). Roberts Resorts and Communities plans to invest over $80 million in expansion projects over the next three years.

HUD Rescinds Carport Letters HUD rescinded its 2017 carport letters, which required carport-ready home designs to go through its Alternative Construction (AC) approval process. continued on page 8

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NEWS BRIEFS

continued from page 6

The Manufactured Housing Institute had been advocating for HUD to rescind its 2017 carport letters since they were first issued, arguing that they were contradictory to statute and current regulations and created an unnecessary and time-consuming hurdle to the production of carport-ready homes. The requirement that carport-ready home designs go through the AC approval process negatively impacted the availability of the carport feature, an extremely popular and sought-after amenity for many consumers, according to MHI. Photo courtesy of CMHI.

area. Spring Valley is 20 minutes from downtown Charleston, S.C., and near two major highways.

CMHI Awards Maria Horton Maria Horton, director of marketing for Newport Pacific Capital and longtime member of the California Manufactured Housing Institute (CMHI), was given CMHI’s 2018 Chairman’s Award. Horton began her career with Newport Pacific in 2005. She holds five individual certifications in housing management, has supported CMHI and worked to advance manufactured housing in California and nationally. She has spent the past nine years as a member of the city of Carson’s rent control board.

Community to Get New Wastewater System Clinton County, N.Y., legislators approved a plan to install a new wastewater Joe Stegmayer, CMHI’s immediate past chairman, system at a gave Maria Horton CMHI’s 2018 Chairman’s Award. mobi le home RHP Buys Two Communities park owned by its tenants. The legisRHP Properties acquired a manlators voted to set up the process for ufactured home community in Maine a $420,000 state grant to be available and one in South Carolina, bringing the to New Beginnings Mobile Home company's total of manufactured home Association in Beekmantown, N.Y. communities to 256 nationwide. This The money will be used to replace was the first purchase for RHP Properties the failing wastewater system for in both of those states. the park’s 54 units. The communities are Pinetree Estates in Standish, Maine, and Spring Valley Mobile Homes for the Homeless in Hanahan, S.C., with 224 and 210 The Los Angeles County Board sites in each community, respectively. of Supervisors approved the County Pinetree Estates is centrally located in Mobile Home Program, an attempt southern Maine near Sebago Lake and to put mobile homes within reach within minutes of the greater Portland of the homeless. 8 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

The plan is to close the gap between owning a home and homelessness by sprucing up existing mobile home parks, finding property to build new ones, and finding ways to put financing within reach of the homeless, according to local newspaper The Santa Clarita Valley Signal.

ADU Group Wins Award The Alley Flat Initiative (TAFI) in Austin, Texas, won an Ivory Prize for Housing Affordability from Ivory Innovations. Selection of the winners was based on their efforts to develop ambitious, feasible, and scalable solutions to housing affordability within three areas of focus: construction and design; finance; and public policy and regulatory reform. TAFI was recognized for its efforts to get the city of Austin to adopt Accessory Dwelling Units (ADUs), often by tucking the ADUs on existing lots in underutilized alleys.

Cavco Names New CEO Cavco Industries named William Boor its new CEO, part of the company’s reorganization of its leadership team. Boor had been Cavco’s non-executive chairman of the board. Acting CEO Dan Urness resumed his previous roles as executive vice president and CFO. Steven Bunger took over as non-executive chairman. Richard Kerley took the position of chairman of the company’s Audit Committee.

NorthMarq Sells Community Portfolio NorthMarq sold a seven-property MH community portfolio, comprised of 754 sites, for $15 million. The properties were located throughout Phoenix, Mesa, Peoria, Buckeye, and Casa Grande, Ariz. The NorthMarq Manufactured Housing team of Don Vedeen, Jared Bosch, and Chris Michl represented both the seller and the buyer in this transaction. Good Living Investments of Denver formed

NEWS BRIEFS

seven entities to acquire the assets. Coeler Trust of California was the seller.

Obituaries Timothy Eugene Haden , 60, of Rocky Mount, Mo., died April 18, 2019. Born Sept. 16, 1958, Haden held several car sales and manufactured home sales positions at area dealerships before beginning work as an inspector for the Manufactured Housing Department of the Public Service Commission. He was promoted to inspector supervisor and then manager of the department, where he served for 20 years.

He is survived by his long-time girlfriend, Sandra Reinhart; brother, Bryan Dennis Haden; sister-in-law, Marlene Haden; niece, Michelle Haden; and nephews, Bryan Haden and Liam Haden. Boyd Early "Smokey" Braden III, 65, of King George County, Va., died March 10, 2019. Braden worked for the county as a building inspector. He also served two terms on the Virginia Manufactured Housing Board. Survivors include his wife, Shirley; son Boyd Early "Bo" Braden IV; brother and sister-in-law Brian and Kathy

Braden; sister Virginia "Ginny Kaye" Braden; mother-in-law Jeannie Perry; brother-in-law and sister-in-law James and Susan Burgess; nephews Adam Burgess (Morlee) and Andrew Braden; nieces Ashley Burgess, Mary Braden, and Morgan Braden; great nephew Jackson Burgess; aunts, an uncle, many cousins, and countless friends. MHV

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Upcoming

Industry Events Multi-State Convention

July 27-29 – Orange Beach, Ala. Perdido Beach Resort Join the Alabama, Louisiana, and Mississippi MH associations for an exciting convention that includes networking receptions, a banquet, educational speakers, entertainment and much more.

RV/MH Hall of Fame Induction Dinner Aug. 5 – Elkhart, Ind. Northern Indiana Event Center Ten new members will be inducted into the RV/MH Hall of Fame. The ceremony is held annually to honor the members of the hall and the work of each industry.

NCC Western Summit

Aug. 14-16 – Phoenix, Ariz. Wild Horse Hotel & Casino MHI’s National Communities Council is expanding its reach with a new event in the western United States featuring education, networking and exhibitors focused on community managers and small owner/operators.

Rocky Mountain Home Association 2019 Annual Meeting and Conference Aug. 21-22 – Black Hawk, Colo. Ameristar Casino & Spa Learn the latest trends and tools to apply to your business. Included will be a night of networking during the Industry TradeShow/Exhibitor Showcase on Aug. 21.

Florida Manufactured Housing Association Annual Convention

Sept. 11-12 – Orlando, Fla. Rosen Plaza Hotel Florida’s largest gathering of manufactured housing professionals. Since 1947, FMHA has been one of the most influential voices in the MH industry.

10 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

28th Annual International Networking Roundtable

Sept. 8-10 – Indianapolis, Ind. The Alexander Hotel Hosted by George Allen, this conference draws hundreds of the leading land-lease community owners and operators for a discussion on best practices and deal making. An MHM class will be held Sept. 11.

MHI Annual Meeting

Sept. 22-24 – Savannah, Ga. The Westin Savannah MHI’s largest membership meeting of the year provides an opportunity to exchange information with industry friends, stay current on housing marketplace trends and attend the board, committee and division meetings. Several awards will be presented.

2019 WMA Convention & Expo

Oct. 7-10 – Reno, Nev. Grand Sierra Resort and Casino Western Manufactured Housing Communities Association’s annual event blends educational programs with entertainment and networking forums.

SECO19

Oct. 9-10 - Atlanta, Ga. Hilton Atlanta Airport The South East Community Owners annual symposium has turned into one of the largest small to mid-sized manufactured home community meetings in the nation.

NCC Fall Leadership Forum 2019

Nov. 13-15 – Chicago, Ill. Westin Michigan Avenue 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.

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state executives

national roundup What’s Happening Across the Country in the Manufactured Housing Industry?

Betty Whittaker Kentucky

Jim Ayotte florida

Dick Bradstreet Maine

Jennifer Hall mississippi

Ronald Breymier indiana

12 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

Frank Bowman illinois

Jay Hamilton georgia

Ken Anderson arizona

Sheila S. Dey california

The MHInsider surveyed state and regional industry associations to get an understanding of what the challenge, promise and unique nature of each market may be. What is the most relevant trend you see occurring in your state/region?

The growing need for workforce housing. Many people that serve the needs of their communities, like health care professionals, police and fire officials, and service workers can no longer afford to live in the communities where they work. Sadly, I am also seeing a trend where some localities impacted by Hurricane Michael are adopting land-use regulations that either prohibit or severely restrict the placement of manufactured housing. Since many of the severely damaged or destroyed housing units were older mobile homes, local governments don’t want these homes to be replaced. For the most part, local government is not open to considering the safety, quality and affordability of today’s manufactured homes. They are stuck in the past and refuse to recognize the industry’s advancements.

Jim Ayotte, Florida Manufactured Housing Association Executive Director Planning and zoning laws are eliminating manufactured housing placement using local zoning ordinances such as “No Homes Less than 17 feet width”, “No homes with less than X number of square feet”, “No Homes with less than one-foot overhang”, etc. Also, customers are demanding more amenities and more creative exteriors.

Jay Hamilton, Georgia

Currently, Kentucky has been going through regulation changes both in the retailer/installer and community areas. Regulatory issues are becoming more of an issue with Kentucky. Unlicensed retailers have popped up as well, and Kentucky works with the regulatory agency to get this stopped. Shipments are steady but not increasing the way we hoped. Kentucky is planning to proactively approach zoning in the coming year in an attempt to allow more manufactured housing in Kentucky’s cities and counties.

groups. Retailers are seeing increased business both in communities and on owned land. After many years, there is finally some progress in the development of land-lease communities.

Betty Whittaker, Kentucky

Manufactured Housing Association Executive Director

Manufactured Housing Institute Executive Director

Richard Bradstreet, Manufactured Housing Association of Maine Executive Director Land-lease communities are being purchased and updated with new homes.

Ronald L. Breymier, Indiana

Our products are gaining acceptance from regulators because of rising prices for site-built homes. We feel the addition of the Advantage/Choice products will add even greater credibility to our industry.

In Mississippi, we still have equal first-time homebuyers and also folks downsizing and buying manufactured homes. Land is still affordable in rural Mississippi, and therefore many folks can sell their larger home and purchase a smaller home and land outright.

Ken Anderson , Manu-

Jennifer Hall, Mississippi

factured Housing Industry of Arizona President

Manufactured Housing Association Executive Director

Radical adjacency. According to Forbes, “A radical adjacency is an acquisition or market move that takes the buyer or executing company into areas where its management has no, or little, current experience.”

Frank Bowman, Illinois Manufactured Housing Association Executive Director

Manufactured Housing Association Executive Director Communities are continuing to be purchased by out-of-state investment

What do you see as the greatest opportunity industry/nationwide during the next year?

The industry’s best opportunity is to break into suburban and urban residential markets with the new class of homes. Restrictions against manufactured housing have never been about construction quality, but about appearance. The new class of homes will allow the industry to compete head-to-head with conventional site-built housing. If we are successful with the new class of homes in suburban continued on next page

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

STATE OF THE INDUSTRY • 2019 continued from previous page

and urban areas, the negative perceptions about factory-built housing will disappear. This will also help fuel the acceptance of traditional manufactured homes and new land-lease communities.

A push for positive zoning changes and the opportunity to get into more cities and counties with the new class of homes and financial support from Freddie Mac and Fannie Mae.

For HUD to step up and ensure the preservation of existing land-lease communities and impress upon local jurisdictions the importance of HUD Code housing in the overall housing mix.

Jim Ayotte, Florida Manufactured Housing Association Executive Director

Betty Whittaker, Kentucky

Frank Bowman, Illinois Manufactured Housing Association Executive Director

Working with the national realtor and appraisal associations to require appraisal certification that includes continuing education of manufactured housing products. And, applying pressure to HUD and Congress to address local and regional zoning that eliminates affordable housing.

Manufactured Housing Institute Executive Director

MH as affordable housing.

Sheila S. Dey , Western Manufactured Housing Communities Association Executive Director

Jay Hamilton, Georgia

To work with local zoning officials to gain parity with site-built homes for the new class of homes.

Manufactured Housing Association Executive Director

Ken Anderson, Manufactured Housing Industry of Arizona President

14 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

The greatest opportunity we have nationwide is an administration that is willing to recognize the industry as a major viable source of affordable housing. This is especially true given the positive view that HUD Secretary Ben Carson has of our housing. We should be able to leverage that to get favorable financing for our product.

Richard Bradstreet, Manufactured Housing Association of Maine Executive Director continued on page 16

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

continued from page 14

The use of manufactured homes for workforce housing. This can be enhanced with conventional site-built mortgages through the MH Advantage and Choice loans offered by Fannie Mae and Freddie Mac.

Ronald L. Breymier, Indiana Manufactured Housing Association Executive Director

You Build It, We’ll Back You Up. Together, we build the confidence that sells homes.

We have new financing programs that are very similar to site-built mortgages now, and we need to continue to educate the public. We have to continue to educate the public on the many amenities our homes offer families today.

Jennifer Hall, Mississippi Manufactured Housing Association Executive Director

What do you view as the greatest industry challenge where you work?

Changing the perception of factory-built housing and changing local land-use regulations.

Jim Ayotte, Florida Manufactured Housing Association Executive Director City and county governments are intentionally zoning out manufactured housing. Also, retail customers’ low credit ratings and the lack of education as to how detrimental maintaining credit is to their future family and lifestyle.

Ron D’Ambra National Manufactured Modular Program Manager

803.917.1946 rodambra@2-10.com

Sheila S. Dey , Western Manufactured Housing Communities Association Executive Director

For the new class of homes to become successful, retailers will need to develop sales centers specifically for that product.

Ken Anderson , Manufactured Housing Industry of Arizona President It’s threefold: 1. Raising rents to meet investors’ expectations. 2. Categorization of land-lease communities as existing non-conforming land use along with the discriminatory behavior of local jurisdictions. 3. Aging infrastructure.

Frank Bowman, Illinois Manufactured Housing Association Executive Director Our greatest challenge is the increasing costs of the product. It is starting to hurt the competitiveness of our homes. We are not a rich state, and even though our homes are priced below site-built housing, many people are still finding them unaffordable. The result is that an increasing number of potential buyers are being housed in the increasing nu mber of subsid i zed work force housing. They are becoming the industry's biggest competitor.

Richard Bradstreet, Manufactured Housing Association of Maine Executive Director

Jay Hamilton, Georgia Manufactured Housing Association Executive Director

Overcoming zoning restrictions so manufactured housing can be a full partner in resolving the affordable and workforce housing crisis.

In my opinion, the greatest industry challenge we face is rent control and the lack of housing statewide.

Ronald L. Breymier, Indiana

16 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

Manufactured Housing Association Executive Director

STATE OF THE INDUSTRY • 2019 I still think we have to overcome the “trailer” image and the “box” image of our homes. We still need to educate the public on how our homes appreciate and the different floor plans available. Zoning continues to be a problem as we begin to compete for more of the housing market share.

Jennifer Hall, Mississippi Manufactured Housing Association Executive Director

What might surprise other MH professionals about the nature of business where you operate?

Florida continues to be a strong growth market for manufactured housing due to the influx of retirees and the demand for affordable housing from young families and service workers. We are educating the general public and public officials, but this is a slow process. I do believe we can educate the public and change perceptions if we make education and public relations a top industry priority.

Jim Ayotte, Florida Manufactured Housing Association Executive Director

Indiana is receiving increased interest in the use of modular and manufactured homes for workforce housing. The Indiana Housing and Community Development Authority has committed a total of $1 million for two demonstration projects in Indiana towns where blighted housing has been removed and modular/manufactured homes must be used to replace the homes for workforce housing.

Ronald L. Breymier, Indiana Manufactured Housing Association Executive Director

How much more local officials are open to talk about MH to fill their workforce housing shortage when I show them the different floor plans and various exterior home models.

Jennifer Hall, Mississippi Manufactured Housing Association Executive Director

FOR THE LATEST INDUSTRY NEWS VISIT WWW.MHINSIDER.COM

Our office is a remodeled train depot built in 1908, and my desk is 15 yards from the track. The train engineers never fail to wave as they come by, eight times per day!

Jay Hamilton, Georgia Manufactured Housing Association Executive Director Because we are currently a Republican supermajority, we have very few legislative issues. Arizona is, however, gradually moving toward a blue state, so we will need to be vigilant.

Ken Anderson , Manufactured Housing Industry of Arizona President

We differ from many states in that we have many people who can find relatively affordable plots of land that they can purchase and put their own homes on. It is still fairly easy to obtain the necessary permits required for land development and home placement, which I understand is not the case in many states. People here still desire homeownership, and most of the powers that be in state and local government realize and respect that and so don't place unreasonable obstacles in the way.

Richard Bradstreet, Manufactured Housing Association of Maine Executive Director MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

“I hope other states do not adopt these policies. It's a huge mistake.” -Chuck Carpenter

20 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

STATE OF THE INDUSTRY • 2019

State Governments Push Hard for Rent Control By Matt Milkovich

arlier this year, Oregon’s governor signed a bill into law imposing rent control across the entire state. The law, which went into effect the day it was signed (Feb. 28), is the first statewide rent control measure in the country. But it might not be the last. Lawmakers in several states are aggressively trying to push rent control bills through their legislatures. If they succeed, it could have serious consequences for the manufactured housing communities in their states. Though Oregon is the only U.S. state capping rents with a single, statewide standard, it’s not the only state that imposes rent control. According to the National Multifamily Housing Council, 17 states do not preempt their municipalities from enacting local rent control policies — but in only four of those states are municipal governments actively capping rents: California, Maryland, New Jersey, and New York (in June, the New York state government passed a rent control bill that included rent caps and eviction protections for residents of manufactured homes). The remaining states prohibit or preempt rent control.

Why Rent Control?

The push for rent control is a reaction to the nation’s affordable housing crisis, which has two core causes: the decline in production that started during the Great Recession, and the student-loan debt that burdens most first-time homebuyers today, said Frank Bowman, executive director of the Illinois Manufactured Housing Association (IMHA). Municipal governments compound the problem with exclusionary housing policies, Bowman said. In order to prop up existing property values, they often restrict new housing — including manufactured housing. Local governments also tend to develop office parks and retail spaces without developing the housing that will be needed by the workers those new businesses attract. continued on next page MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

STATE OF THE INDUSTRY • 2019 continued from previous page

According to Bowman, the appeal of rent control is that it sounds like a simple solution: If you think your rent is too high, just pass a law capping it. But the consequences of rent control are complicated. An abundance of national studies have been published — from both sides of the political spectrum — making clear that rent control does more harm than good. For starters, it limits the supply of affordable housing. Residents of rent-controlled housing tend to stay where they are, keeping that housing off the market. To make up for lost profits, owners of rent-controlled housing tend to raise rents on their non-rent-controlled housing, or to turn the rent-controlled housing into condominiums. Would-be renters end up competing for a shrinking market — and a shrinking market tends to raise prices, Bowman said. “Economically, rent control makes no sense,” said Sheila Dey, executive director of Western Manufactured Housing

Communities Association (WMHCA). “But the problem is political. Economic arguments don’t work with a city council that has angry residents in front of them.”

Oregon

Oregon’s new law, which applies to apartments, manufactured housing communities, and other income-producing properties statewide, caps rent increases at an annual rate of 7%, plus the Consumer Price Index (CPI). Since Oregon’s CPI is 3.3% in 2019, that makes for a rent ceiling of 10.3% for the year — a “very generous” limit, considering that the average annual rent increase for the state’s manufactured housing lots is around 3 or 4%, said Chuck Carpenter, executive director of Manufactured Housing Communities of Oregon (MHCO). But Carpenter believes the generosity is deceptive. It will be easy for future state governments to lower the rent

22 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

limit — and he sees no reason why they wouldn’t do that. The Oregon Legislature battled over rent control for the last two decades, but a recently elected Democratic supermajority pushed the new bill through both chambers “like a freight train.” And that was the hard part. Now that the bill is law, lowering the cap should be easy, Carpenter said. “We will all regret the day they passed this bill,” he said. “It’s clearly a signal that this state is very hostile to property rights and landlords.” There are roughly 1,200 manufactured housing communities in Oregon, containing about 60,000 lots. The push for rent control, however, was driven by drastic rent increases in urban apartments. Lots of people are moving to Oregon’s larger cities, particularly Portland, contributing to the affordable housing crisis, Carpenter said. Rent control proponents seem to think the new law will lead to the

STATE OF THE INDUSTRY • 2019 growth of more housing in the state, but Carpenter disagrees. “In the long run, this will have a chilling effect on investors wanting to provide rental housing,” he said. Carpenter thinks Oregon will become a test case. He knows other states are contemplating rent control measures of their own, and are watching his state closely. Manufactured housing groups in those states have no choice but to fight back, he said. “My advice for other states is to keep fighting, keep educating legislators,” he said. “I hope other states do not adopt these policies. It’s a huge mistake.”

Illinois

of that solution, but they struggle with an image problem. Bowman was at a city council meeting earlier this year, where local business leaders said their workers need houses in the $100,000 to $150,000 range. “We’re all over that. That’s our niche,” he said. “But that city excludes factory-built housing.”

Washington state

Statewide rent control in Oregon is a “disaster” for the housing business, said Craig Hillis, executive director of Manufactured Housing Communities of Washington. And because Oregon is right next door, there’s a good chance rent control will rear its head in neighboring Washington state. The state of Washington currently preempts rent control, but Hillis expects a vigorous statewide debate on the

Like the rest of the country, Illinois is in the grips of the affordable housing crisis. The most consequential effects are being felt in Chicago, where rents are sk y rocketing and neighborhoods are gentrifying, forcing many long-term residents to move, Bowman said. In response, Chicago residents have pushed their state legislators to rescind a statewide ban on rent control and establish regional boards to cap rents. That effort was defeated in the Illinois Legislature in March. Bowman said a coalition of realtor, apartment owner State legislatures are pushing for rent control and property owner asso- across the country, which could limit lot-rent increases in manufactured housing communities. ciations (including IMHA) made “great headway” in educating state legislators about the ill topic in 2020. In the past year alone, the effects of rent control. But Chicago’s presWashington Legislature has considered ence looms large in the state Legislature, 106 housing-related bills. The impetus of and rent control proponents will likely all the activity is the affordable housing try again, he said. crisis, Hillis said. To Bowman, the obvious solution to The top impediment to affordable the state’s affordable housing crisis is housing in Washington is the Growth a greater supply of affordable housing. Management Act, a statewide zoning The greater the supply, the greater the regulation that strictly limits develchance that rents come down. Manuopment. Competition for usable land factured homes can be a crucial part is fierce, and manufactured housing,

which doesn’t generate as much income as apartments or condominiums, is at a disadvantage, Hillis said. “The Growth Management Act is a 20-year-old provision,” Hillis said. “It needs to be updated.”

New Jersey

Rent control used to be a hot topic in New Jersey, but the controversy has waned over the years. Fewer municipalities cap rents compared to a decade ago, said Jane Chady, executive director of the New Jersey Manufactured Housing Association. Chady couldn’t explain the decline, but ex pressed her ow n opinion about rent control. “If you study rent control long enough, you learn it doesn’t work,” she said. Chady doesn’t think what happened in Oregon could happen in New Jersey — at

least not to the state’s manufactured housing industry, which is dominated by communities. “We’re an extremely tenant-friendly state,” she said. “Our rents are low compared to apartment houses. Nobody’s looking at manufactured housing here and targeting it for rent control.” New Jersey isn’t immune to the affordable housing crisis, of course. It’s continued on next page

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

continued from previous page

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an extremely expensive state to live in, but its municipalities are obligated by law to emphasize affordable housing in their zoning regulations. The state also is considering a workforce housing bill to address the affordable housing crisis, Chady said. “If we can get a little bit of zoning relief through this workforce housing bill, it’ll be a better solution than rent control,” she said.

Colorado

An attempt to repeal the statewide rent-control prohibition and allow local jurisdictions to adopt their own ordinances died in the Colorado Legislature April 30, said Tawny Peyton, executive director of the Rocky Mountain Home Association (Colorado’s state association) and the Utah Housing Alliance. The latest push for rent control started before the 2018 midterm elections. Candidates for public office heard about the need for affordable housing on the campaign trail, and decided rent control was the best solution. The attempt was defeated with help from the state’s realtor, apartment, lender and manufactured housing industries, Peyton said. Peyton expects another push for rent control next year. To combat that and other attempts, she said the industry needs to be more proactive — to focus more on communication and education rather than reacting to every bill. The public and lawmakers need to know that, in the long run, rent control does more harm than good. They need to learn alternative ways to solve the affordable housing crisis, like relaxing zoning rules and boosting lending in the industry. And, of course, there’s the perennial need to improve the manufactured housing industry’s image, to rid people of the stereotypes they hold about mobile homes, she said. In the other state she serves, Utah, Peyton said a push for rent control was possible, but so far state officials are looking at other ways to solve the affordable housing crisis.

STATE OF THE INDUSTRY • 2019 California

Statewide rent control like Oregon’s is bad for the industry, but at least it hits everywhere and everyone the same way, said Thomas Casparian, an attorney and partner with the Cozen O’Connor law firm. Without the imposition of uniform rent control, you get a patchwork of different policies (or none at all) in every city and county. That’s the situation in California, Casparian said. Patchwork rent control can distort the manufactured housing market in various ways. Local caps can limit annual lot rent increases to a paltry amount, which can drive the value of the homes sitting on the lots to “ludicrous” heights. Communities in rent-controlled municipalities are selling new manufactured homes for $400,000 and more, said R.C. “Dick” Bessire, president of Bessire & Casenhiser, a property management company. Bessire said he knows of an old beachfront mobile home in Oxnard

that’s selling for $700,000 — because its lot rent is so low. According to Dey, WMHCA’s director, 110 of California’s cities and counties apply rent control to manufactured housing communities within their borders (compared to only seven municipalities that apply rent control to apartments). Rent control in those 110 municipalities runs the gamut from full vacancy control (capping rents even after a tenant moves out of a home) to full vacancy de-control (allowing the landlord to set rents for new tenants at market value). California’s Costa-Hawkins Rental Housing Act limits local governments’ ability to enact rent control, but the act doesn’t apply to manufactured housing communities. This makes the state’s manufactured housing industry particularly vulnerable because it can’t make common cause with other rental industries, Casparian said. Last November, California voters rejected a ballot initiative seeking to

repeal Costa-Hawkins and expand rent control across the state. There might be more rent control legislation introduced in the near future, Dey said. “There’s going to be a real fight,” Bessire said. “The governor is promising statewide rent control.” California’s manufactured housing community owners might prefer statewide rent control to the current patchwork approach, however — if the statewide law ties rent increases to CPI and includes vacancy decontrol, Bessire said. MHV Matt Milkovich, MHInsider’s managing editor, has an extensive journalism background. He was managing editor of two agricultural trade magazines for several years, and before that served as a reporter for local newspapers in Michigan.

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

Photo courtesy of Zeman Homes

Vacancy Control the Most Onerous Form of Rent Control By Thomas Casparian

ent control for ma nu factured housing communities (MHCs) can be substantially different than it is for apartments and other housing. In California, we have 40 years of experience with MHCspecific rent control. Although rent control for other types of housing is strictly limited by California law, the state preemption has never applied to MHCs. Without those limits, every California city and county has been free for decades to enact its own form of MHC rent control, or not. This has resulted in dozens of variations and combinations of a few key tools that are used by local governments to set MHC space rents. What has resulted can provide forewarning to other parts of the country, and can be used to navigate rent control proposals that may be impending in your locale. This article will be the first in a series that will explain the most common elements of MHC-specific rent control systems. If rent control has not yet

come but is being debated in your area, understanding the possible components and their operation can help you learn the most important issues to address when advocating for yourself and other MHC owners. If you are considering whether to invest in a rent-controlled MHC, knowing what is and what is not possible when trying to increase rents will give you your best determination of its potential value. And if you already own a rent-controlled MHC, you may learn that your rents could be higher.

Vacancy Control

One of the most onerous elements in MHC rent control is vacancy control. With full vacancy control, the rent for a space cannot be increased when a resident sells their home to a new resident — the rent for all spaces remains fixed except for annual, uniform adjustments. Vacancy control is probably the worst potential component of rent control, effectively preventing any space rent from ever catching up to the market.

26 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

Over time, it can result in community rents at half of market value or less. Vacancy control also creates a dangerous entitlement that, once granted to residents, becomes nearly impossible to take away. Because of the guaranteed low rent and restrictions on future increases for the space, the selling homeowner can command a premium for their home, effectively capitalizing the future rent savings for the new homeowner into the price of the home. In California, a 40-year-old home in poor condition can sell for $200,000 or more because the rent for the space is extremely low. Yet, the value of the MHC to its owner is drastically suppressed because of the below-market restrictions on rent. Vacancy control provisions effectively transfer the value of the MHC property from the landowner to the homeowner. And once the transfer begins, homeowners will complain that any reduction in rent control will reduce their “equity” in the home they (over)paid for.

STATE OF THE INDUSTRY • 2019 Vacancy control can take forms less than “total”. In some jurisdictions with “partial” vacancy control, rent can be raised a small fixed percentage upon a vacancy, usually 10%. This can make a significant difference over time. Others will allow the rent to be raised upon a vacancy to a fixed reference point, such as the highest comparable space in the community. Those systems leave more room for strategizing, but also can drag on rents. Vacancy control cannot be rationalized by the typical justification given for MHC-specific rent control. The “captive audience unable to move

their home” explanation usually given for MHC-specific rent control does not explain why a community owner should not be permitted to increase the space’s rent to market when the home is sold to a new resident. Full vacancy control is typical in most California MHC rent control jurisdictions, and it is the most pernicious. If rent control is being debated in your community’s jurisdiction, vacancy control is probably the most important component to fight. If the community you own or are considering buying is under vacancy control, understanding

the remaining components of the rent control system becomes critical. The next articles in this series will explain other aspects of MHC rent control systems. They also will demonstrate how, when the rules are fully understood, you can use the system to maximum advantage. MHV Thomas W. Casparian is a trial lawyer and certified appellate law specialist with the national law firm Cozen O’Connor. He can be reached at (310) 3934000 or tcasparian@ cozen.com.

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STATE OF THE INDUSTRY • 2019

What Are MH Advantage® and CHOICEHomesm, and What are the Differences? By Patrick Revere

here are a pair of new opportunities available for potential homebuyers, each offered by one of the government-sponsored enterprises (GSE), Freddie Mac and Fannie Mae. The programs — CHOICEHome and MH Advantage, respectively — have many similarities and some differences. We’re here to compare and contrast the new programs, so retailers and potential homebuyers have a better understanding of how the programs work and which may be the best fit for the unique circumstances of a specific market and individual buyer.

continued on page 30

All photos courtesy of Fannie Mae

28 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

STATE OF THE INDUSTRY • 2019 continued from page 28

What Do the GSE Programs do for Homebuyers?

Under the Duty-to-Serve mandate, handed down to Fannie and Freddie by the Federal Housing Finance Agency, the enterprises are charged with opening up financing and boosting the availability of affordable housing options. CHOICEHome and MH Advantage are results of that initiative, both specific to manufactured housing (among the many measures taken across the affordable housing landscape). These programs, with a price point in the range of $200,000 to $250,000, are not for the low- or very-low income borrower. They’re meant to be an alternative for would-be site-built homebuyers who are daunted by new-construction entry homes that cost $350,000 to $400,000 in many U.S. markets. The loans from each program apply to manufactured homes that become eligible given certain aesthetic, energy efficient and installation requirements. Eligible homes, simply stated, have many of the key characteristics of site-built homes. This achieves two goals: It allows the eligible homes to fit easily into many, if not most, existing residential settings, beside their site-built counterparts. It also allows appraisers to use site-built homes as comparable sales, as needed,

in determinations of value that lead to improved finance terms. For the uninitiated, these changes may mean little or nothing. However, those who work in housing and housing initiatives understand that opening up conventional financing to factory-built homes is a major victory in closing the

“Each program requires the buyer to finance the home, as well as the land where the home sits.” gap on getting affordable options in places where middle-market buyers want to live. Each program requires the buyer to finance the home, as well as the land where the home sits. This means homes placed in a landlease community do not qualify for the new financing terms. However, the same entities, Freddie and Fannie, are continuing to explore chattel financing, which does apply to homes as personal property that can be placed on leased land.

30 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

Are MH Advantage and CHOICEHome Comparable in Flexible, Affordable Terms?

Both the Freddie and Fannie programs provide flexible and affordable features to their lending programs. Each offers high loan-to-value ratios, up to 97%, and the manufactured home loan-level pricing adjustment doesn’t apply. Appraisers can use the most appropriate comparable sale value available, including with site-built homes as necessary.

Who is Lending Using the New Freddie, Fannie Mechanisms?

Any Freddie Mac-approved lender is eligible to participate in the HOMEChoice program, as of May 1. Fannie Mae continues to build on its participating lenders’ list. MHV Patrick Revere is executive editor for the MHInsider magazine, as well as the MHInsider blog and MHVillager, a lifestyle and resources blog for homeowners and residents. He is an award-winning journalist and writer who has written extensively about manufacturing, real estate, management, technology, the building trades and the labor markets.

What Are the Differences Between CHOICEHome and MH Advantage-eligible Homes? Fannie Mae-MH Advantage

Freddie Mac-ChoiceHOME

Roof pitch

4/12

5/12

Foundation

Designed to accommodate all of the following criteria: a masonry perimeter wall; HUD’s Permanent Foundations Guide to Manufactured Housing; and Engineered Foundation certified by a registered architect or professional engineer

Permanent foundation as recommended by the manufacturer and must include the presence of a masonry perimeter or blocking

Installation

Driveway and sidewalk

No overarching requirement

Energy efficiency

Built to meet one of three energy efficiency standards: U-value of 0.076 or less, 2009 IECC, or Energy Star [i]

33/11/22 insulation package, Low e windows, Programmable thermostat

Garage/carport

2 of 3 combination (roof dormer/garage/carport)

Attached or detached garage or carport, whichever is most common for the area

Interiors

Taped and textured drywall; Kitchen and bath cabinetry with solid wood or veneered wood fronts; Fiberglass, solid surface, acrylic, composite, porcelain/enamel coated steel, or tile for all showers and or/tubs in the home

Taped and textured drywall

[i] Manufacturer may seek Fannie Mae prior approval of alternative specifications that it can demonstrate meet or exceed one of these three energy standards. MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

MHI Continues to Make Manufactured Housing a Top Priority with Policymakers By Dr. Lesli Gooch

HI is the only trade association representing the industry in Washington, D.C., whose actions have resulted in an improved regulatory climate for manufactured housing within the presidential administration and excellent support on Capitol Hill. Recent positive actions in Washington are the culmination of MHI’s effective advocacy efforts, including sustained engagement with the administration, HUD, and Congress. Du r i ng h is a dd ress at M H I ’s Congress and Expo in New Orleans, HUD Secretar y Ben Carson acknowledged MHI’s efforts. “I am grateful for the many insights MHI has provided to HUD in the form of its available reports, educational materials, and constructive dialogue,” Carson said. Because of this strong engagement with policymakers, MHI and its members have achieved several crucial successes on behalf of the industry.

HUD Rescinds Carport Letters

After a yearslong advocacy effort by MHI, HUD announced in May that it is rescinding its 2017 carport letters, which required carport-ready home

designs to go through the Alternative Construction (AC) approval process. MHI has been advocating for HUD to rescind its 2017 carport letters since they were first issued, arguing that they are contradictory to statute and current regulations, creating an unnecessary and time-consuming hurdle to the production of carport-ready homes. The requirement that carport-ready home designs go through the AC approval process negatively impacted the availability of this feature, an extremely popular amenity among consumers. MHI’s call to rescind the carport letters was supported by Congress, which at MHI’s urging was included in the 2018 omnibus appropriations bill directing HUD to review the carport letters.

MHCC Continues to Advance MHI Priorities

MHI continued to be a strong presence at the Manufactured Housing Consensus Committee meeting in May. Much of MHCC’s dialogue focused on issues that MHI has effectively advocated for in Congress and with administration officials. These issues included timely updates to the HUD Code and review of unnecessary and burdensome regula-

32 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

tions affecting garage and carport-ready homes, frost-free foundation systems, and the On-Site Completion of Construction requirements. At the meeting, MHCC again unanimously approved a motion stating that “no changes are required to the current [24 CFR Part] 3285 regarding frost-free foundations”, and that “HUD never finalize the proposed IB (interpretative bulletin).” Additionally, HUD’s Office of Policy Development and Research provided the committee with a preview of a report that HUD is required to submit to Congress regarding the OnSite Completion of Construction Rule. This report to Congress is a direct result of MHI’s success in securing language in the 2018 omnibus appropriations bill directing HUD to review the rule and the proposed IB.

MHI Promotes Homes with Capitol Show-and-Tell

Every June, MHI members from across the nation descend on our nation’s capital to discuss important issues facing the manufactured housing industry with their members of Congress. This year, MHI members — representing over 20 states — not only met with more than 100 congressional offices but were an incontinued on page 36

“In recent years, manufactured housing is one solution that has emerged out of the limestone and stepped into the limelight.” -SECRETARY BEN CARSON

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tegral part of HUD’s first-ever Innovative Housing Showcase. This event, which kicked off National Homeownership Month, included three fully furnished manufactured homes on display on the National Mall, courtesy of Skyline Champion and UMH Properties, showing a new Cavco Industries Home. During opening remarks for the event, Secretary Carson highlighted manufactured housing. “In recent years, manufactured housing is one solution that has emerged out of the limestone and stepped into the limelight,” he said. While touring the manufactured homes on display, Carson said he hoped Congress would notice the homes lining both sides of the National Mall, in the shadow of the U.S. Capitol, and work with him to update policies and regulations that make it tough for many to afford their piece of the American Dream. Within a month, President Trump signed an executive order to form

the new White House Council on Eliminating Regulatory Barriers to Affordable Housing. MHI’s 2019 Homes on the Hill Legislative Fly-In attracted top administration officials and members of Congress, who learned about the issues affecting families living in or seeking to purchase manufactured homes. They also saw how today’s manufactured homes are indistinguishable from site-built homes and that they provide a high-quality, attractive, attainable housing solution for families everywhere. HUD’s Acting Deputy Secretary, Assistant Secretary for Housing, and Federal Housing Commissioner Brian Montgomery, acknowledged the great partnership between HUD and MHI. “The advancements that the manufactured housing industry has made since my first tenure as commissioner are striking,” Montgomery said. “Gone are the days of the ‘trailer’ stereotype.”

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He recognized how important it is for HUD to get through the nearly decade-long backlog of updates to the HUD Code, stating that HUD is targeting late 2019 for publication of a proposed rule that addresses health-safety updates, two-story homes, ventilation requirements, and many other revisions. MHI members spoke with Congressional offices about the importance of government-sponsored secondary market support for manufactured housing, expedited revisions to the HUD Code, FHA Title I and Title II Program updates, and extension of the Energy-Efficient New Home Tax Credit. Due to MHI’s comprehensive advocacy strategy and “advocacy prep sessions,” participants offered a consistent message with actionable requests that were well-received by members of Congress. During an Open House hosted by MHI on the National Mall, members of Congress, including Reps. Kathleen Rice, D-N.Y., Marc Veasey, D-Texas, Michael Guest, R-Miss., and Robert Aderholt, R-Ala., walked through homes and spoke with MHI members, learning more about the quality and attainability of today’s manufactured homes. Members of Congress were joined by HUD’s Brian Montgomery, Executive Director of the White House Opportunity and Revitalization Council Scott Turner, and other senior administration officials on the tour. Everyone took time to address MHI’s members, thanking them for their hard work and continued contributions to an industry that they all recognized as a critical component of the affordable housing discussion. Upon the conclusion of HUD’s Innovative Housing Showcase, the homes were delivered to manufactured housing land-lease communities, where families will achieve the American Dream of homeownership. MHV Lesli Gooch is M H I’s e xecut ive vice president and chief lobbyist.

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INDUSTRY TRENDS

& STATISTICS

What’s the state of the manufactured housing industry? Judging by the numbers, the future is promising. The next few pages highlight some of the top-line trends in an industry that continues to offer a crucial solution to the affordable housing crisis.

Competitive Advantage Site-Built Home $111 average price per square foot Manufactured Home $50 average price per square foot

RESIDENT SATISFACTION

90% of people are

satisfied with their homes

Community Living

71% of residents cite

4.2 Million estimated home sites

affordability as a key driver for choosing manufactured housing

32% of new homes are placed in communities

22 Million people live

in manufactured homes

62% of all residents

anticipate living in their homes for more than 10 years

10% of new single-family home starts

76% of new manufactured homes titled as personal property (chattel)

Sources: U.S. Census Bureau, industry analysis, MHI 2018 Consumer Research and other proprietary sources. ©Manufactured Housing Institute. Without the prior written consent of MHI, reproduction, distribution, transmission, caching or other commercialization of MHI copyrighted or trademarked material is strictly prohibited. Used with permission.

38 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

38% don’t anticipate

ever selling their home Data courtesy of

INDUSTRY TRENDS & STATISTICS MANUFACTURED HOUSING PRODUCTION 96,540 homes produced in 2018

+49

% New home shipments have increased

by almost half over the past five years

100,000 80,000 60,000

129 Manufacturing Plants

40,000 20,000

34 U.S. Corporations

2014

2015 Single

2016 Multi

Source: Manufactured Housing Activity Industry Production, Shipments and Trend Report. ©Manufactured Housing Institute. Without the prior written consent of MHI, reproduction, distribution, transmission, caching or other commercialization of MHI copyrighted or trademarked material is strictly prohibited. Used with permission.

Top 10 Manufacturers (by Market Share)

2017

2018

Total

Data courtesy of

Top 10 Retail Markets (by BTA*)

2018 MS Clayton Homes Inc. 50.15% Skyline Champion 15.32% Cavco Industries 13.18% American Home Star 2.51% Legacy Homes 2.20% Adventure Homes 1.85% Live Oak Homes 1.81% Elliot MH MFG 1.66% Jacobson Mobile Home 1.15% Kabco 1.11%

2017 MS 50.49% 16.05% 13.68% 2.56% 2.35% 1.46% 1.70% 1.56% 1.18% 1.05%

Growth -.067% -4.55% -3.65% -1.95% -6.38% 26.71% 6.47% 6.41% -2.54% 5.71%

50.15%

Clayton Homes Inc.

15.32%

Skyline Champion

13.18%

Cavco Industries

Based on official government records as compiled by Statistical Surveys Inc. The current data’s time period unit totals and Market Share will change as historical data is updated from the states. Any use of Statistical Surveys data without written permission is prohibited. ©Statistical Surveys Inc. Used with permission.

Growth Houston, TX ..................................12.30% Detroit, MI .................................. -19.72% Dallas-Fort Worth, TX ................... -4.55 Austin, TX ........................................ 0.22% San Antonio, TX ...........................-9.03% Los Angeles, CA ...........................41.13% . Birmingham, AL ............................ 6.81% Beaumont-Port Arthur, TX .......65.02% Phoenix, AZ ...................................-4.32% Jacksonville, FL ...........................24.28% Grand Total ................................6.34% *Basic Trade Area

Data courtesy of MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

MANUFACTURED HOME COMMUNITY RENT AND OCCUPANCY JLT Market Report National Averages (May 2018 – May 2019)

SITE RENT $$$

535

MONTHLY AVERAGE

ANNUAL SITE RENT INCREASE

ALL AGES $514MO AGES 55+ $579MO

3.9

OCCUPANCY RATE

AVERAGE

ANNUAL OCCUPANCY INCREASE

ALL AGES 91% AGES 55+ 96%

1.0

AVERAGE

3.8% ALL AGES 3.9% AGES 55+ 1.2% ALL AGES 0.5% AGES 55+

Markets with Highest Occupancy:

Markets with Highest Rent:

ALL AGES

Orange County, CA

$1,383

Santa Clara County, CA

100% (0.2% increase)

Santa Clara County, CA

$1,145

Miami-Dade County, FL

100% (0.4% increase)

Los Angeles County, CA

$946

Northern Colorado

100% (0.2% increase)

55+

55+ Santa Cruz County, CA

$1,590

Orange County, CA

100% (0.2% increase)

Orange County, CA

$1,018

Santa Barbara County, CA

100% (0.1% decrease)

Alameda County, CA

100% (0.1% increase)

Santa Clara County, CA

$880

Markets with Lowest Occupancy:

Markets with Lowest Rent:

ALL AGES

Highlands County, FL

$172

Genesee County, MI

63% (3.2% Increase)

Albany, GA (MSA)

$223

Leon County, FL

68% (0.3% Increase)

Hendry/Okeechobee Counties, FL

$224

Lee County, FL

71% (0.2% Decrease)

55+

55+ Greenville, SC (MSA

$223

Monroe County, MI

61% (38.5% Increase)

Miami-Dade County, FL

$225

Gettysburg, PA (MSA)

72% (4.9% Decrease)

Albany, GA (MSA)

$234

Bay/Midland/Saginaw, MI

75% (1.7% Increase)

Markets with Greatest Increase in Occupancy: ALL AGES

Northern Michigan

8.2%

Polk County, FL

6.9%

Elkhart/Goshen/South Bend, IN (MSA)

4.7%

55+ Monroe County, MI

38.5%

Macomb County, MI

13.5%

Sussex County, DE Source: JLT Market Reports. Detailed research on investment grade communities in major manufactured housing markets nationwide, including the latest rent trends, occupancy statistics and other valuable management insights. ©Datacomp. Reproduction in any form is prohibited without written consent. Used with permission.

40 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

9.1% Data courtesy of

INDUSTRY TRENDS & STATISTICS 2019 National Average New Home Selling Price

2019 National Average Pre-Owned Home Selling Price

$75,747

$46,173

4.09%

9.80%

Top 5 Markets with Average New Home Listing Price Growth Above National Average Growth

Above Average

Rochester MN (MSA)

11.28%

1.48%

Phoenix-Mesa AZ (MSA)

11.03%

1.23%

Atlanta GA (MSA)

10.95%

1.15%

St. Louis MO-IL (MSA)

10.86%

1.06%

Pittsburgh PA (MSA)

10.46%

0.66%

Top 5 Markets with Average Pre-Owned Home Listing Price Growth Above National Average Growth

Above Average

New York-Northern New Jersey-Long Island

6.44%

2.35%

Raleigh-Durham-Chapel Hill NC (MSA)

6.42%

2.33%

Las Vegas NV-AZ (MSA)

6.16%

2.07%

Providence-Fall River-Warwick RI-MA (MSA)

5.74%

1.65%

Dallas-Fort Worth TX (CMSA)

5.58%

1.49%

Markets with Lowest Days on Market

Wausau WI (MSA)

Lawton OK (MSA)

Dubuque IA (MSA)

Santa Fe NM (MSA) .................................................................. 34 Pueblo CO (MSA) ....................................................................... 36 Dallas-Fort Worth TX (CMSA) ............................................... 41

Sioux City IA-NE (MSA)

El Paso TX (MSA)

Grand Rapids-Muskegon-Holland MI (MSA).................... 41 Corpus Christi TX (MSA) .......................................................... 46

Source: Based on new and pre-owned manufactured homes listed on MHVillage.com from May 2018 to May 2019. ©MHVillage. Reproduction in any form is prohibited without written consent. Used with permission.

Data courtesy of MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

All photos courtesy of Yes! Communities

Yes! Communities Relies on Foundation of Values to Best Serve Changing Customer Base Steve Schaub CEO of YES! Communities

teve Schaub, CEO of YES! Communities, took some time for a Q&A with MHInsider, providing insight on how one of the largest owners of manufactured home community portfolios stays grounded in its history and uses new technologies to best serve a changing demographic of manufactured homeowners and residents.

What are your biggest challenges operating communities on such a large scale?

Maintaining our culture and identity as we continue to grow through expansions and acquisitions. Our YES culture is the backbone of our operations. Although a company culture will naturally continue to evolve over time, ensuring our foundation, attitude and approach remain is a challenge with new team

“Our engaged team members are our most important asset.”

members and communities onboarding. It is through communication of vision, goals and expectations that we continue to reinforce YES. Consistency of all communities is an additional challenge as we scale the business and continue to grow our community base. Our team strives to maintain a consistent resident experience across all communities through ongoing education, resources and tools, and we are working to ensure that the f low of communication is open and honest. We have developed a panel of field and home office employees who discuss and vet processes, procedures and other business matters. With the creation of this team, we are able to get feedback prior to implementation, which in turn helps us execute on key initiatives.

42 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

What are you most optimistic about?

The next generation of YES Communities, with our expanding technology and communication tools, will continue to provide our residents the avenues to receive the information they need and to convey their requests. Whether making a payment, requesting maintenance, receiving community updates or connecting with their neighbors, the technology we have been implementing ensures that the residents have a seamless and great customer experience.

What’s the secret to good community management?

Hiring and retaining top talent that can not only manage day-to-day community operations, but proactively engage with residents to bring an exceptional

community experience. Through empowering team members to make a difference in their business and welcoming their feedback, a superior resident experience is offered. Our engaged team members are our most important asset. Investing in their development and growth ensures their success, as well as ours.

What major trends do you see coming for communities?

We are seeing a different resident living in our communities. They are a resident that desires a low-cost housing solution in order to contribute a greater percentage of their income towards living a meaningful life. They choose to live in our communities because of the sense of community it provides, as well as the ability they have to spend their income on family, travel, education, etc. Community amenities continue to evolve with changing demographics in many communities. Tennis courts, basketball courts and community libraries are evolving to pickleball courts, sports courts and business centers. Dog parks are now a common expectation with residents owning pets. Social media is a way that residents are now commonly connecting with each other. They are making friends, asking questions, delivering views of their experience of the community.

Community owners are missing out on valuable feedback and engagement opportunities if they aren’t part of the conversation. Social media is here to stay.

What are the biggest obstacles to filling vacant lots in your communities?

As we approach higher levels of physical occupancy in our stabilized communities, filling smaller sites becomes a greater challenge. We must look beyond our traditional 3-bedroom/2-bath homes for smaller 1- or 2-bedroom homes to fill the sites. With the adjustment on home size brings a change in our marketing approach to attract residents that are accepting of these home sizes.

How can we convince local governments to accept new MH communities?

Education is key surrounding our industry. Getting the facts out to local governments about the importance and necessity of the industry will help us collectively gain acceptance. It is through sharing knowledge and stories of our communities, including the amenities, resident activities and sense of community, to local government members that we are able to elicit change. As a unified manufactured housing group, it will be imperative for us to begin working at the national government level, in partnership with MHI, to create an awareness for the need of low-cost housing across the U.S. MHV

“Frankly, we can’t come up with any reason why a community owner would not want to sell to the residents over an outside party.” -Frank Rolfe MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

All photos courtesy of Champion Homes

Q&A with President of Titan Factory Direct Joseph Kesterson President of Titan Factory Direct

itan Factory Direct, a Champion Homes retailer, is a full-service manufactured and modular homes company. Titan helps with home site selection and assists in all phases of purchasing and building, from start to finish. Its wide selection allows buyers to search for new and used manufactured, modular and mobile homes for sale, as well as land-home packages, commercial and oil field housing.

“There is a lack of available land, and even communities, to meet the growing demand for manufactured housing.”

What are your biggest challenges?

Our biggest challenge is an industry wide-challenge in finding available land. 56% of customers that approach Titan do not have their own land, and we’re constantly maneuvering around local restrictions for manufactured and modular home placement. There is a lack of available land, and even communities, to meet the growing demand for manufactured housing.

44 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

What are you most optimistic about?

With housing costs continuing to skyrocket, there is an ever-growing need for affordable housing. It has shed a lot of light on manufactured housing and expanded our reach into several new demographics. This growing need has really put a spark in the industry and shown how important we are when it comes to affordable housing solutions. New financers continue to enter the market,

STATE OF THE INDUSTRY • 2019 making it even easier for families to find competitive financing and realize their dream of affordable homeownership.

What’s the secret to selling homes in your region?

When you partner with the right product, there really is no secret. We’ve partnered with a manufacturer whose quality speaks for itself, and we’re very up-front with our customers. Selling is easy when you can show the value in our homes like our quality construction, our red-carpet treatment of every delivery and our continued support with a strong warranty.

What major trends do you see coming from MH retailers?

The biggest trend will continue to be land/home packages. More and more families will be looking for both, and as retailers continue to search for available land you will also see the demand for more communities enter the market. The customer demographic for manufactured housing is also expanding, so we’re seeing a wider range of home styles and an increase in residential features and exteriors. Home automation is a growing feature, as you see more and more “smart

home” options entering the market. Customers are also self-educating and researching before they purchase, so you’ll see growth in online tools and instant support opening up the channels of communication and taking the sales process to a new level.

What are the biggest obstacles to selling new manufactured homes?

I think a big obstacle is the stigma and misconceptions surrounding manufactured housing. These are not your grandparents’ mobile homes. The advances in construction and design are remarkable, and we’re constantly trying to break through that stigma. Overall though, the biggest obstacle will continue to be the availability of land and communities. There are local restrictions and over-development in areas that challenge the industry every day.

How do you convince homebuyers that manufactured homes are a viable alternative?

speak to are already interested. They have the need, they’ve done their research, and they already know the current housing market prices, so they already see the value in purchasing a manufactured home. For those who are still unsure, we’re able to educate them in both the quality and life of the homes we offer, as well as the long-term appreciation in their resale value. Once we find the right floor plan and the right location, they’re ready to make the move.

In what ways are retailers able to help lenders without chancing regulatory questions?

Being honest, ethical and having good customer communication are the biggest services we can provide to a lender. It is OK to educate our customers on the finance process and answer allowable questions. If we are aware of potential customer issues (buy-for, questionable zero rent letter, etc.) we communicate these to the lender. When we do these things, all parties win — the customer, the bank and the retailer. MHV

There’s really not much convincing needed. The majority of the customers we

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

 YOUR COMMUNITY - Rent: $443/month - Occupancy: 95%

•

 COMPETITOR #1 - Rent: $455/month - Occupancy: 91%

•

 COMPETITOR #2 - Rent: $516/month - Occupancy: 94%

•

 COMPETITOR #3 - Rent: $426/month - Occupancy: 84%

•

We Have the Data

The Nation’s Most Comprehensive Source of Market Data for the Manufactured Housing Industry Serving Over 170 Markets Nationwide Industry professionals trust JLT Market Reports by Datacomp for timely and accurate manufactured home community market data. JLT Market Reports provide detailed research and information on investment grade communities located in major markets, including the latest rent trends and statistics, marketing programs and other useful management insights. JLT Market Reports Include: • Rents • Occupancy • Inventory Homes • Number of Homesites • Amenities • Services

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Download a Free Sample Report at www.datacompusa.com/JLT

All photos courtesy of Adventure Homes

Q&A with General Manager for Adventure Homes Rich Rice General Manager for Adventure Homes

dventure Homes, based in Garrett, Ind., for four consecutive years has won the MHI award for Excellence In Manufactured Housing among manufacturers with fewer than three plants. Adventure Homes is a privately owned, independent home builder with a strong following in the Great Lakes and Midwest regions.

What are your biggest challenges?

The biggest challenge on the sales or consumer side is the availability to finance. On the production side, it’s employment. It’s been very difficult to find and retain qualified employees. There's a

“The biggest challenge on the sales or consumer side is the availability to finance. On the production side, it’s employment.”

tie-in with states and their TARP money, which is money given to the states to help people keep their homes. There’s a circle here. Housing is a primary roadblock in stabilizing the workforce. So we need more stable housing to stabilize the workforce, especially when the unemployment rate is at a historic low. Yet, we need employees to help make homes.

What are you most optimistic about?

The No. 1 question at this year’s Louisville Show is where I think this market is going. With modular, manufactured retail, manufactured for communi-

ties… My answer was, “Let me walk you through our houses”, because you have to have the product that’s needed in the market no matter where the demand is. The market is going to take care of itself… it just depends on what happens with what kind of financing becomes available, and where the buying and selling occurs. We have product available in all spectrums, from a low-end rental that can go to a community to a larger sectional HUD home that can go into a new development. We listen to the customer and we’re going to design for what we’re hearing. continued on next page

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

STATE OF THE INDUSTRY • 2019

continued from previous page

What are the greatest obstacles to building manufactured homes?

The key is in the materials and government oversight. With the government getting involved with the tariffs on China, we know the hard material costs are going to change. Now, we can always pay more, even if it hurts. But if at some point you can’t get the supply of materials at all, that will shut down a line.

What major trends do you see coming for MH manufacturers?

The increase of people participating in trade shows and conferences is some-

thing that will make a big difference. I don’t think people go to industry events like this and go back home intending to operate in the same way. Professionals from all parts of the industry are taking notice in ways I’ve not seen. They really want and need to stay ahead. They can’t go back home and say, “I’m just going to keep making single-section homes”. It’s very hard to operate that way any longer.

What advice would you give retailers selling manufactured homes?

I’m unsure I’d want to define this as advice, but I will say that it shouldn’t matter whether you run one plant or

The industry needs a stable housing supply to attract more workers, but also needs more workers to build the stable housing supply. It's a circular problem, according to Rich Rice.

90, you need to let your production be focused on what the customer wants. You cannot sit in a boardroom with a designer and product development people and expect to make a home that will sell the way you want. MHV

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All photos courtesy of Clayton Homes

Clayton Homes Looks to Offer Luxury at the Right Price Danny Warrick President of Clayton Homes, Retail

layton Homes is the largest builder of manufactured homes in the country, with nearly 50% market share. The company is owned by Warren Buffett’s Berkshire Hathaway, but continues to be run by Kevin Clayton, the company president and CEO and the son of company founder Jim Clayton. With the back ing of Berkshire Hathaway, with 40 manufacturing facilities nationwide, and with the most sophisticated mainstream media-based marketing campaigns in the industry, Clayton Homes in many ways is the face of manufactured housing. The Knoxville, Tenn.-based company, in addition to being the largest organization in the manufactured home business, produces modular homes and park-model RVs, and is continually adding site-built companies and panelized factories to increase efficiency and help “close the gap” between historical residential building practices and what can be accomplished with a blend of approaches.

“Homebuyers desire luxury features and the ability to customize as they would with site-built homes.”

What follows is a Q&A with Danny Warrick, president of Clayton Homes Retail.

What are your biggest challenges?

The industry continues to fight outdated misconceptions around manufactured homes. By utilizing the expertise of our designers and architects, we have been able to experiment with features, style and functionality to provide off-site built homes that are on par with site-built homes – yet at a much more attainable price.

What are you most optimistic about?

One barrier to homeownership has been a lack of financing options for offsite built homes that have comparable to on-site built home financing options, but a solution is now available. We have worked diligently together with other industry leaders to encourage the development of new financing programs that will treat a new class of HUD-code homes like traditional housing and will

52 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

open up our market to a whole new group of homebuyers. These homes will provide a smart and affordable housing solution at a price point that is unavailable for new on-site built homes in most housing markets. (Read up about "new class homes" on page 28.)

What are the greatest obstacles to building manufactured homes?

Homebuyers desire luxury features and the ability to customize as they would with site-built homes. By taking the modern design and high-end materials used in on-site built housing and applying them to the indoor production-line style construction methods used for off-site built housing, Clayton can quite literally “think outside the box” of home design while offering more savings to future homebuyers.

What major trends do you see coming for MH manufacturers?

Living house smart is becoming important to more and more homebuyers

— as builders work on making the most of a home’s efficiencies. Gone are the days where homeowners accepted housing costs that took up much of their monthly budget. Today, homebuyers are willing to give up space but not luxury, seeking lower costs, more energy efficiency, a smaller footprint, more functionality and less upkeep.

What advice would you give retailers selling manufactured homes?

Listen to your customers’ unique housing needs when helping them choose the perfect floor plan, finish and functionality of their new home. Find opportunities to create positive, lasting moments throughout their home-buying journey to deliver an extraordinary customer experience. By doing something generous or meaningful, you can celebrate the moment someone becomes a new homeowner and make it unforgettable. MHV

Clayton's Danny Warrick says the industry continues to fight outdated misconceptions about manufactured homes.

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MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

Photo courtesy of Zeman Homes

Supplier ESCO Weathers Ups and Downs of Manufactured Housing Lewis "Lewy" Shaum Owner and President of ESCO

lkhart Supply Corp. has weathered the ups and downs of the manufactured housing market for 70 years, and is still going strong. Lowell and Lucille Shaum founded Elkhart Supply Corp. (ESCO) in 1949. The business first concentrated on sales of electrical products to contractors in the industrial market, said their son Lewis “Lewy” Shaum, current owner and president of ESCO. Being in Elkhart, however, it was logical they supply mobile home and recreational vehicle manufacturers, too.

“My father was a very hard-working, stern parent and businessman, I learned my work ethic from him.”

Over time, the original industrial accounts moved out of the Elkhart area, and ESCO concentrated more and more on the MH and RV sectors. The “good old days” were the ’70s, ’80s and ’90s, when the MH and RV markets made up nearly 40% of ESCO’s business. Today, manufactured housing makes up less than 15% of ESCO’s market share. That share went down sharply during the industry low in the 2000s and never returned to previous levels, though things have started to improve in the last few years, Lewy Shaum said.

54 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

A Family History

Lewy said his father started as a milkman, delivering milk in a horsedrawn wagon. He eventually became an electrician, first working for a contractor. In 1945, he founded his own company, Shaum Electric Co. ESCO was an offshoot of Shaum Electric, Lewy said. Lewy earned a college degree in industrial engineering in 1968. He had an offer to work for Ford Motor Co. at the time, but decided to work for his parents instead. His father was ill and needed help running the family businesses.

STATE OF THE INDUSTRY • 2019 Lewy fully took over ESCO in 1971. His brother Gary took over Shaum Electric at the same time. Their father died in 1982. Their mother, after staying involved in the company for many years, died in 2008, Lewy said. “My father was a very hard-working, stern parent and businessman,” he said. “I learned my work ethic from him.” His mother balanced the books behind the scenes. But she was a fundamental part of the company. “I always say she ran the business,” Lewy said with a chuckle. Lewy has no plans to step down anytime soon, but is in the process of training his stepson, Zak Eggleston, to one day manage the family business. MHInsider asked Lew y Shaum a few questions about the state of the MH industry.

What are your biggest challenges?

Changing market conditions and staying ahead of the competition.

What are you most optimistic about?

Our ability to satisfy and earn more business w ith current and new customers.

What are the advantages of supplying manufactured homes as opposed to site-built homes?

Although there is a good amount of customization, there are many items that go into each MH that are pretty standard, which in turn makes it easier for purchasing to keep inventory levels where they need to be.

What are the greatest obstacles to supplying

the manufactured housing industry?

Consistently coming up with new products and processes that fit in multiple applications to satisfy each individual customer.

What major trends do you see coming for the manufactured housing industry?

Continued innovation of products going into the homes. From my experiences, builders genuinely enjoy seeing new value-added products. It gets them excited.

If you could give one piece of advice to builders of manufactured homes, what would it be?

Buy more from ESCO... just kidding. I would say keep an open mind and do your best to communicate as much as possible with customers and vendors. MHV

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

Head of Industry’s Largest Lender Optimistic in Face of Change

56 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

STATE OF THE INDUSTRY • 2019

21st Mortgage President/CEO Talks Lending Trends in Manufactured Housing By Patrick Revere

Tim Williams President and CEO of 21st Mortgage

im Williams is the president and CEO of 21st Mortgage, the largest lender for manufactured homes in the United States. A conservative estimate of 21st Mortgage’s market share is 25%. Compared against total shipment data published by the Manufactured Housing Institute, the volume of home loans levied by 21st equals about 15%. Subtract from those same shipment totals the number of FEMA homes, cash sales and loans originated in-house by Clayton Retailers, and the 21st Mortgage market share may be as high as 30%. So, as a matter of understanding the pulse of the lending side of the manufactured housing business, talking to Williams, with his 45 years of MH lending experience, should be viewed as the pinnacle of insight. A former executive vice president of Clayton Homes and the president of Vanderbilt Mortgage between 1974 and 1995, Williams has led 21st through tremendous growth in recent years. The Knoxville, Tenn.-based lender originates about $1.3 billion in home loans each year, and currently services more than 180,000 mortgages valued at greater than $9 billion. During a recent conversation with The MHInsider, Williams was asked about challenges in the industry. His response was to

“We’re better able to serve that market because our origination structure relies heavily on the retailer relationship to bring costs down.”

immediately talk about opportunity, which in his world always takes precedence over challenges and obstacles. “The opportunity is really in the product some of the manufacturers are promoting,” Williams said, referring to what many are calling the “New Class” of manufactured homes, which have characteristics that allow them to sit beside site-built homes and be treated as such in appraisal and lending. (For more information on Freddie Mac and Fannie Mae lending programs to support site-built comparables in manufactured housing, see page 28). “The traditional mortgage lenders can’t very well manage that product,” Williams said. “Their cost to originate is so very high. Many of them are $8,000 to originate a loan, and that amount cannot be put into a GSE pool and it cannot be passed forward. “If you can’t pass on that cost, how are they going to finance that new home mortgage that the GSEs (Fannie and Freddie) both want to advance in the $150,000 area?” he said. “We’re better able to serve that market because our origination structure relies heavily on the retailer relationship to bring costs down.”

continued on next page MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

STATE OF THE INDUSTRY • 2019 continued from previous page

Traditional lenders cannot operate in the same way, because they don’t have a retail environment for their homes, much less the relationships within the retail environment. Among the largest operators lending for manufactured homes — 21st, Triad, and Credit Human, for example — none of them are lenders focused on being backed by governmentsponsored entities. “Traditional GSE lenders do not originate many MH loans, because they only do GSE-conforming product. So if the borrower, the house, or site for the house doesn’t fit in the Fannie Mae or

factory-built homes retain value. There’s skepticism, and misinformation, about an individual manufactured home as an investment. This, despite a recent pilot report held within FHFA’s quarterly Home Price Index summary that suggests manufactured homes appreciate in a fashion that is very similar to the appreciation of site-built homes. True, the general public is less inclined than housing professionals to refer to the quarterly HPI report. Yet, Williams points to a couple of specific ways manufactured homebuyers proceed that may hinder home value appreciation. It has very little to do with the prod-

“That happens every day, over and over,” Williams said. “And I get it, because it’s happened to me.” Many years ago, Williams made a significant investment in expanding and improving a small home on his family’s property. And he had to walk away from the investment for many years, until the deed holder was ready to hand over the property. “It’s a great advantage to not have to pay for land,” Williams said. “But it can be difficult to sell when the homeowner needs a change.” And moving even a single-section home adds another $3,500 in costs to a re-sell. A multi-section home can cost $10,000 to move. The resale of a home, in terms of demand for the dwelling where it sits, along with potential moving costs, should be put on the list of items a buyer considers, even if the retailers or lenders risk losing the occasional sale.

Manufactured Homes in Residential Neighborhoods

Freddie box, then those lenders don’t offer an alternative,” Williams said. “Whereas us traditional MH lenders have alternatives, but we must get qualified to participate with the GSE in order to support the ‘New House’ with lower rates and longer terms that are only available through the GSEs. “And you still have to be profitable,” he added. “You have to cover costs, which are not $8,000 but are more than a chattel loan... you need to be able to build in a profit.”

What About the Resale Value?

People who sell manufactured homes, and manufactured homebuyers themselves, often are questioned about how

uct, and more to do with where the home is placed. “Fortunately, we have about 40% of our customers who buy a home and do it without paying for the land. The downside is you can have a difficult time selling the home,” he said. “If they put it on a private site, like family land, and then they try to sell it, maybe there’s no one to live there... or no one in the family or on the property wants anyone else living there.” There could be debt on the farm, multiple owners who disagree about what to do with the property, or other legal claims that get in the way of a sale on the independently owned home.

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Williams again uses an example from his daily life to illustrate the complexities of integrating manufactured housing throughout the market in a way that can boost the annual percentage of home starts well beyond the 10% ceiling manufactured housing professionals have experienced. “I am optimistic about the new product,” Williams said. “I’m optimistic about manufactured homes getting into better communities where they can sit right beside conventional housing. "You really expect it to be a better house, and we have a great opportunity to help deliver that. Manufacturers have done a great job over the recent years building a better product. “That said, we really do have to start breaking down some zoning barriers,” he said. Most cities in the U.S. make little if any room for manufactured homes, and many explicitly zone to keep manufactured homes out.

STATE OF THE INDUSTRY • 2019 “In Knox County, Tennessee, the birthplace of Clayton, the largest builder of manufactured homes, and backed by Berkshire Hathaway and Warren Buffett, and we can’t get a manufactured home in the city of Knoxville?” Williams said. “If you can do it anywhere, you should be able to do it here. And we haven’t. “Until we get really good at building homes that are certain to be accepted by not just consumers, but by their neighbors, we won’t get the results we want,” he said. “And that takes time.” Beyond zoning for an individual manufactured home, the city of Knoxville hasn’t approved a new manufactured home community since the 1980s. Knoxville is not alone. About 313 new manufactured home communities have been built nationwide since 2002, according to information from the industry leader in data, Datacomp USA. The 2,645 new communities built during the prior 15 years, including 395 communities built during 1986-87

alone, show the stark contrast between then and now. With that, it’s easy to understand why affordable housing advocates are concerned. “We’re reaching a saturation point on communities — mobile home parks — where we will start getting some brand-new communities,” Williams said. “It has to happen, or shipments will hurt. There’s only so much of a market for homes on private land.”

What Else Will the Future Hold?

The market is good, so the alarm bells that may sound when Williams says the word “flat” should be taken in stride. He said 21st Mortgage is able to originate every loan it sees that can be profitably originated. Business lingo might rephrase that to say: They’re not leaving any money on the table. The business is right-sized and sailing forward. However, the U.S. is in the midst — or potentially in the latter stages

— of the largest market expansion in modern history. It’s one that can’t last. The market will shrink, which hopefully will qualify as something less than a recession, great or not. “Our default rate is artificially low,” Williams said. “I suspect many lenders would agree with that. Owners who default are facing the death of a spouse, serious illness or divorce. Typically, unemployment counts for about 30% of defaults. But that’s not happening right now, because employment is so high. Anyone who wants a job has one.” Williams asserts that some lenders will move forward with loans that work today but will be difficult to maintain as the market corrects. Whether confidence is placed on the artificially low default rate or thinning margins, something is sure to give in months or years to come. “You have to plan for it. And you can’t hedge for it, either,” he said. “You'd be wrong if you make that bet.” MHV

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Photo courtesy of Champion Homes

Midwest Lender Seeks to Expand Community Partnerships Bruce Glawe President and CEO of Oxford Bank & Trust

ruce Glawe, president and CEO of Oxford Bank & Trust, answered a few questions for The MHInsider’s State of the Industry issue. Based in Oak Brook, Ill., Oxford Bank & Trust serves about 250 manufactured housing communities in six midwestern states.

What are your biggest challenges?

State and federal regulations always come to mind first. Making sure that our processes meet all government requirements is a key to a successful program. Staying up on all the new rules and regulations as changes are made. The other major issue is finding communities and owners who want a lending partnership such as ours. We spell out that we offer a non-recourse program, but sometimes it takes a few

“Manufactured housing seems to have the market cornered on ‘affordable housing’.”

trips through the process for some of our clients to see Oxford advantages. When they do, it turns into a long-lasting relationship. As we look to expand our reach, Oxford Bank will continue to play a critical role in the success of park owners and communities and in the satisfaction of our customers/borrowers. We plan to move cautiously and expand into states with economic conditions and climates similar to the states we are already in.

What are you most optimistic about?

The business of manufactured housing seems to be strong. We feel that there are many new MHs in our park communities to be ordered and delivered. Our first quarter was very good, and things seem to be the same in the second quarter.

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Manufactured housing seems to have the market cornered on “affordable housing”, and this is a component that continues to drive consumers to our product. The new homes are being built to amazing standards, and this ultimately means our customers are going to be happy with their purchase for years to come.

What makes lending for manufactured homes different from lending for site-built homes?

Since our loans are not conventional mortgages, the process has a fast turnaround from purchase to occupancy. We can typically get a customer approved and closed in as fast as 10 days if the seller and buyer can get our stipulations met in a rapid way. We can normally receive an application and have it approved or denied within three to four hours.

What are the biggest obstacles to lending for manufactured homes?

For us, it is still finding the right partner to do business with and then actually getting a meaningful amount of business from them. Many of our community partners are getting full, and the actual number of homes they have to sell aren’t what they were a year ago. The majority of our lending involves resales, but that is more difficult for us to predict. So, we are seeking to find community partners with higher vacancies and the potential to finance new homes.

What major trends do you see coming for MH lenders?

The consolidation in the industry will be a challenge for MH lenders. Dealing with large REITs is different than dealing with a single park owner. What trends that will spawn at this point is still unknown. Will that entice others to finance manufactured homes, or will it scare them off? Only time will tell.

Manufactured housing has cornered the market on affordable housing, according to Oxford Bank's Bruce Glawe.

How do you educate homebuyers about MH lending options?

Our program is very understandable and simple by design. We make the process easy and transparent for our borrowers. We only offer low fixed rates. These loans are fully amortized, simple-interest loans with no prepayment penalties. We explain to our borrower that paying extra or early will also save them interest. We also explain how a shorter term can save them interest. It’s also very important that they understand how to compare our program to others. We do not charge points, nor do we charge excessive closing costs. If another lender is offering a slightly lower interest rate but they charge points and/ or much higher closing costs, we still may be their best financial option. MHV

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STATE OF THE INDUSTRY • 2019

HUD Secretary Ben Carson Sits Down with MHInsider at Housing Showcase By Patrick Revere

he favorable reception to manufactured homes and other housing solutions on exhibit during the inaugural Innovative Housing Showcase on the National Mall in Washington, D.C., means the showcase likely will become an annual event. “I think we probably will be looking to do it again next year,” HUD Secretary Ben Carson said during a June 3 one-onone interview with MHInsider magazine. “We probably will have a lot more people who want to be exhibitors, but we’ll have to keep it under control.”

Manufactured Housing an ‘Almost Irresistible Solution’

The June 1-5 event coincided with and kicked off National Homeownership Month in Washington, D.C. Secretary Carson, the nation’s top housing official, observed the occasion by touting the affordability, energy efficiency, technological innovation, resiliency and wealth-building capability of manufactured housing. “You already look at the building costs, which are 30 to 40% less (than site-built construction), I mean this is almost an irresistible solution. You just have to get some of the regulatory barriers out of the way,” Carson said.

The Manufactured Housing Institute worked with manufacturers and community owners across the country to provide the resources and access that allowed the homes to be delivered and set up on the northwest section of the National Mall. Skyline Champion Corp., the largest publicly traded manufacturer of homes in the nation, had a pair of homes on the mall. Another large builder, Cavco Industries, worked with home retailer and community owner UMH Properties to show a third home. As much as the Innovative Housing Showcase was a success, it was proposed in late spring and required quick work, a creative approach and diligent attention from MHI, the builders and community owners who participated. “I was thrilled that there were so many people who were interested in this, particularly given the limited scope of advertising that was done,” Carson said. “But that’s one of the reasons we wanted to be right here on the National Mall,” he said. “It’s its own kind of natural advertising. People are going to be walking through here all the time. Also, putting it right in sight of the Capitol. Because we want the legislators to understand… we’re talking about advanced technology that really makes affordable

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“I think anybody walking into some of these manufactured houses… first of all, they wouldn’t believe it was manufactured housing. They say, ‘Wow, this

is beautiful’.”

-Ben Carson

Ben Carson at the Innovative Housing Showcase.

housing a possibility. And we need to start thinking about things in a different way to solve some significant problems.”

‘We Need to Advance the Ball’

In 2018, HUD announced a top-down review of manufactured housing rules. MHI, the national association for all forms of factory-built housing, forwarded approximately 200 recommendations to HUD’s Manufactured Housing Consensus Committee. Carson said MHCC has forwarded a revised list to HUD staff, and progress is being made. “We’ve hired a number of more people in the manufactured housing arena, just so they can deal with it,” Carson said. “The way it’s been in recent years, we’ve had just enough people to tread water. And we need to advance the ball. We’ve made that a priority.” HUD already has notified home installers, community owners and homeowners that it will not enforce previously enacted frost-free foundation rules, and in May rescinded the “Carport letters” that had required secondary approval and inspection for carport-ready homes, a popular feature among homebuyers. continued on next page MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

STATE OF THE INDUSTRY • 2019 continued from previous page

There’s a lot more that needs to be done,” Carson said. “Basically, we have a regulatory office (specifically for manufactured housing) now, and they’re going through all of the different segments of HUD and looking at the list that has been provided for manufactured housing. There’s about 18 things, and we’re just ticking them off one by one,” he said. “So, it’s really only been within the last six months that we’ve really had the personnel that can get things done.”

A New Direction for Housing Programs?

When asked about his objectives for HUD within the next couple of years, Secretary Carson said he envisions enormous change. “What I want to see is our agency, HUD, turn into an agency that really focuses on how to get people out of dependency,” he said. “In the past, we’ve been more interested in how many people we shelter, how many we have in this program or that program. It really should be just the opposite… how many people get out of this program. How many people can you get to a point of self-sufficiency.” One of the pr ime benef its of manufactured homes is that they represent attainable housing. A primary contributor to that attainability is the fact that manufactured housing is the largest form of non-subsidized affordable homeownership. Carson cited research showing that the average net worth of a renter is

$5,000, whereas the average net worth of a homeowner is $200,000. “So that’s a 40-fold difference,” Carson said. “And it’s a major driver of self-sufficiency. “We also need people to start recognizing that… and I’m talking principally about millennials, you don’t have to start out with a 4,000-square-foot, site-built home,” he said. “Now, in order to start building your equity, you can start out with something much smaller. But it doesn’t need to be small and horrible. It can be small and nice.” Carson pointed out that new homebuyers should be encouraged by a 2019 pilot report within the quarterly Housing Price Index, issued by the Federal Housing Finance Agency, that indicates manufactured homes appreciate in value similarly to site-built homes. “So as soon as you buy that house, you can start accumulating some wealth,” he said.

The Promise and Potential of Manufactured Housing

More than 5,000 people, many who had never stepped foot in a manufactured home, or perhaps had misconceptions about homes built in a factory, toured the new manufactured homes on the National Mall during the event. Steve Quick of Cavco Industries spent the first two days of the showcase in the home from UMH Properties, which now is lived in by residents in one of the company’s Pennsylvania manufactured housing communities. There was one

word, Quick said, that continued to ring out among the many exclamations of amazement he heard. That word was, “WOW”. “It’s been very busy, and the response we’ve been getting has been exceptional,” Quick said. “This is a tremendous stage for us to be able to show what we can do.” Secretary Carson agreed. “I think anybody walking into some of these manufactured houses… first of all, they wouldn’t believe it was manufactured housing. They say, ‘Wow, this is beautiful.’ “That’s one of the real purposes, is to sort of burst misconceptions about what manufactured housing is and what it can be,” he said. “And, of course, there are multitudinous models available to people. There are smaller models and there are bigger models. And you can match the façade to almost any neighborhood.” Carson praised the structural integrity and sustainability of manufactured homes, and how “manufactured homes are much more resilient in general than site-built homes”. MHV Patrick Revere is executive editor for the MHInsider magazine, as well as the MHInsider blog and MHVillager, a lifestyle and resources blog for homeowners and residents. He is an award-winning journalist and writer who has written extensively about manufacturing, real estate, management, technology, the building trades and the labor markets.

The Innovative Housing Showcase, held June 1-5 on the National Mall, will probably become an annual event.

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RV / MH

Hall of Fame 2019 Induction Dinner and Celebration

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2019 Induction Dinner to be Held Aug. 5 in Elkhart, Ind.

he board of directors of the RV/MH Heritage Foundation has announced the names of the class of 2019 who will be inducted at the RV/MH Hall of Fame this summer. “Congratulations to the 10 new honorees,” Foundation President Darryl Searer said. “All of them have had or are having outstanding careers and are richly deserving of this high honor.” Searer also applauded the work of the nominating committee, which narrowed a list of more than 60 deserving

candidates down to the final 10. The 2019 inductees include community developers, suppliers, manufacturers, dealers and association executives. The Class of 2019, listed below, will be inducted during the annual ceremonies and dinner on Monday, Aug. 5, at the Hall of Fame in Elkhart, Ind. Register for the annual event at the Hall of Fame's new website www.rvmhhalloffame.org.

2019 Manufactured Housing Inductees Richard “Dick” Ernst Financial Marketing Associates Inc., Texas MH Financial Services/Consulting Dick Ernst is one of the most professional, knowledgeable, and articulate individuals in the manufactured housing industry. He is always available to impart his knowledge of home financing to MHI, the state associations, and industry businesses. Ernst never says “no” when asked to assist MHI at an event, whether it be as a moderator of a panel or a presenter at an educational workshop. Added to that, his vast knowledge of manufactured housing finance has impacted the availability of capital so that more Americans can afford to own their own home. His company, Finmark, created a unique conduit funding program for the Independent Bankers of America. In addition, this program brought 400 community banks into the manufactured housing industry that would not have otherwise provided lending support.

John Carey Modern Home Sales and Midwest Homes, Kansas MH Community Development and Dealer John Carey has given an abundance of his time and energy to the manufactured housing industry. He has served on the Legislative Committee and Political Action Committee for countless years. Carey was instrumental in developing and implementing Kansas legislation, rules, and regulations for the betterment of the industry. He has served on the Kansas Manufactured Housing Association board dating back to 1989 as a director and two terms as president. Also, he received the Distinguished KMHA Member of the Year award in 1997, 2004, and in 2015. No one else has received this prestigious award more than once.

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2019 Manufactured Housing Inductees Leo Poggione Craftsman Homes, Nevada MH Dealer/Retailer Leo Poggione has accomplished every prominent aspect of the manufactured housing retailer profile. Since the inception of Craftsman Homes, he has continuously performed successfully as a top retailer in the Western states. He does this by means of proficient and intrepid “donkeywork”, while attaining customers’ highest ratings. When asked to volunteer for the Board of Directors of the RV/MH Hall of Fame during a difficult period for the organization, Poggione stated he would do whatever is necessary to make the hall succeed. He has also volunteered, promoted and supported the MH industry through many industry associations, serving in the highest capacities.

Raymond Broderick Superior Homes, Pennsylvania MH Community Development and Dealer Ray Broderick is passionate about promoting and advancing the manufactured housing industry. He is an honest and forthright businessman who is well respected by his industry peers and regulators. Broderick has been active in the industry since 1962, working with his father and brother. Since 1979, he and his wife Darla have owned and operated Superior Homes, a manufactured and modular housing retail sales center in Lancaster, Pa. Additionally, Broderick has owned and operated several land-lease communities in the Lancaster County area, and a manufactured housing parts store. He has been an active member of the PA Manufactured Housing Association since 1979, and has served on its board in various capacities from 1991 to present.

Walter “Wally” Comer Adventure Homes LLC, Indiana MH Community Development and Dealer Wally Comer continues to support the manufactured housing industry in so many ways on the national and local level. He supports the growth of young talent coming into the industry, both at Adventure Homes and throughout the industry. Comer is known and respected throughout the industry with his strong personal relationships with customers, suppliers, and even competitors. While many companies support associations financially, he is willing to invest with perhaps a more important asset — his time. He participates in national discussions about ongoing industry issues such as HUD reform and financing reform in meetings with MHI and members of Congress. He participates in panel discussions at MHI events around the country, discussing current problems and possible solutions. Adventure Homes was named MHI’s Manufacturer of the Year for Two Plants or Less in 2016, 2017, 2018 and 2019. In 2019, Adventure Homes also won Western Region Retailer of the Year. 68 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

2019 RV Inductees Randy Biles Pikes Peak Traveland, Colorado RV Dealer Randy Biles, owner of Pikes Peak Traveland, an RV dealership in Colorado Springs, dedicated his professional life to his customers as well as the RV industry. He earned the prestigious RVDA James B. Summers Award in 2008, and RVDA Chairman’s Service in 2011. Biles served on the RV Dealers Association board from 1995-2001.

Jeffrey P. Few Automation & Manufacturing Systems, Indiana OEM and Supplier When it comes to entrepreneurship and innovation, few have equaled Jeff Few. He was first to develop the vacuum table for laminating RV walls. He developed the first bolt-on hitch for towable RVs, to eliminate untrained welders from hodge-podge installation of hitches. Today, the system is used universally in the auto and RV industry. Few was a founding member and president of the Trailer Hitch Manufacturer’s Association in 1972. He used a comprehensive marketing campaign to successfully convince the Senate that hitch manufacturers safely and diligently self-regulate. For more than 50 years, he has contributed to the industry’s greater good through his work with the hitch association and RVIA van conversion committee.

Bruce Hopkins Recreation Vehicle Industry Association, Virginia Association Executive During his 50 years in the RV industry, Bruce Hopkins’ work has impacted every RV manufacturer, OEM supplier, dealer and, ultimately, every consumer. No other person has

HIRING REGIONAL MANAGERS AND PROPERTY MANAGERS!

worked as much as Hopkins to ensure RVs are a safe product, are built to provide a positive consumer experience and can be repaired by a technician with the knowledge needed to get it done correctly. Out of respect for his many years of work for fire safety in RVs, the National Fire Protection Association presented Hopkins with a Lifetime Achievement award.

David Lance Wilson Florida RV Trade Association, Florida Association Executive Director If there is anyone who loves the RV industry more than Lance Wilson, executive director of the Florida RV Trade Association, they would be hard to find. His passion is unmatched in regard to the lifestyle and his commitment to doing everything in his power to better it. One of Wilson’s major achievements is management of the annual FRVTA Super Show, arguably the most successful retail/trade RV show in the country. In 2012, he earned RVIA’s Dave Humphreys RV Unity Award, and in 2005 received RVDA’s Chairman’s Service Award.

Daryl Zook KZ RV, Indiana RV Manufacturer Daryl Zook is a true pioneer in the RV industry, who exemplifies its entrepreneurial spirit. He founded KZ, one of the premier towable RV manufacturers in the industry, in 1972. Over his decades of leadership, KZ continued to grow, moving beyond truck campers to produce a full line of travel trailers, fifth wheels and toy haulers. In 2014, Zook sold KZ to Thor Industries. He and his company earned more DSI awards than any other towable manufacturer.

COMPETITIVE SALARIES, BENEFITS, BONUSES! Send resume and cover letter to info@evergreencommunities.com MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

&7%#6' MHC presents...

28th

Networking R oundtable

for the Owners & Operators in the Manufactured Housing Industry Indianapolis, IN

September 8-10, 2019

Early Registration Discount • Limited Attendance Capacity Keynote presentations, HOW TO seminars, & panel discussions - all focused exclusively on the manufactured housing asset class! A highlight this year will be our Opening Keynote, U.S. Senator Todd Young (R-IN), discussing affordable housing. The event will begin differently this year, as late Sunday afternoon, George Allen (CPM Emeritus, Emeritus MHI member, & RV/MH Hall of Famer) will meet with attendees to identify and discuss contemporary manufactured housing industry and land lease community trends and issues, ending the evening with our Welcoming Reception honoring the RV/MH Hall of Fame. The Networking Roundtable is ‘the place to go’ for hands-on, timely education regarding every aspect of land lease community ownership and professional property management. This year’s agenda includes: • Buying, selling, seller-financing new HUD-Code homes on-site – 2 different protocols • Automation possible in all land lease communities • Land lease community rehabilitation • What does you online footprint say about your community? • Water submetering & remote billing

• Exceed resident expectations: tips from the company that has perfected this function • Premier screening of videos produced on-site in land lease communities • Real estate lenders and chattel capital loan originators panels • Chattel capital source will likely be introduced

contact educateMHC for sponsor levels and Benefits EducateMHC@gmail.com

Manufactured Housing Manager class What is the MHM® Certification? The Manufactured Housing Manager (MHM) Professional property management training and certification program is the only national in-classroom training & certification program geared specifically and wholly to land lease communities in the U.S. To date more than a thousand managers have been trained and certified ‘Get Certified!’ to earn the prestigious Manufactured Housing Manager designation certifying your ability to perform and Wednesday, September 11th excel as a professional land lease community manager. Topics include: Property Management, Leasing & Sales, Resident Relations, Hiring & Training, Marketing, Turnaround & Many More.... 9:00 a.m. - 4:00 p.m. Cost: $395.00

Ed uca teMHC.com

Photo Courtesy of Sun Communities

Compliance Officers are Crucial in Dealing with Fair Housing/ADA Standards By Donna Rishel

ne of the most discouraging issues any consultant has to deal with is the “ostrich syndrome”, evidenced when top management tries to ignore the importance of compliance with federal laws that are, relatively speaking, inexpensive and not terribly time-consuming compared to the dangers of non-compliance. This is especially true when dealing with the issues of Fair Housing and the Americans with Disabilities Act (ADA). The dangers of f ines and lawsuits are very real. Excluding private attorneys, there are over 300 groups in this country actively looking for people claiming violations on one issue or the other. Adding to the risk are thousands of advocacy groups pushing potential and existing residents to file complaints against sellers, agents, and landlords. Indeed, the problems are getting worse. In 2017, there were 28,843 Fair Housing complaints filed with local,

state, and federal regulators. According to the National Fair Housing Alliance, that number is expected to double in 2020. Lawsuits brought by consumer groups are exploding. One major community operator told me he was setting aside $5,000 per month per community

“The compliance officer functions as an independent and objective influence that reviews and evaluates compliance issues/concerns within the organization.” –Donna Rishel to cover Fair Housing/ADA fines and lawsuits. Another operator had spent over $100,000 in attorney fees and settlements before seeking our help. The paid legal feeds we subscribe to are full of lawsuits,

settlements, fines, consent orders, and negotiated agreements.

The Need for Compliance

Struggling through reams of data, I have pinpointed one of the factors that may be a cause of the lack of enthusiasm to make a serious effort to avoid the huge fines being experienced by our industry. Simply put, very few manufactured housing community operations have welltrained and qualified compliance officers pushing their employers to invest in the necessary guidance and training. Compliance officers are normally a different type of person than the typical employee that operators are enthusiastic to hire. The compliance officer functions as an independent and objective influence that reviews and evaluates compliance issues/concerns within the organization. The position ensures the board of directors or partners that management and continued on next page

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STATE OF THE INDUSTRY • 2019 continued from previous page

employees are in compliance with the rules and regulations of regulatory agencies. And that company policies and procedures are being followed, that behavior in the organization meets the company’s standards of conduct. An entity with a competent compliance officer is much more likely to take the steps necessary to put in place professionally developed policies and procedures and make sure employees are well trained in their compliance responsibilities. It is the compliance officer’s responsibility to protect the entity from regulatory risks, as well as risks from lawsuits. Every community operation needs a compliance officer. In fact, federal laws require it. It is important to make sure the person selected is competent. One aspect of a compliance officer’s job is communicating compliance-related issues to employees across all divisions of the organization. Sometimes this requires deciphering confusing or abstract laws or ethics and determining how to establish and integrate best practices. A compliance officer must, therefore, have great people skills and be able to communicate and cooperate up, down, and across the employee chain — and must simultaneously have a firm grasp of the business itself.

Other Qualities Excellent Compliance Officers Should Possess:

• Ethical and principled: These are the single most important qualities of a compliance officer.

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STATE OF THE INDUSTRY • 2019 • Fair and modest: Willing to scrutinize all the facts without making a snap judgment, and interview any relevant employees for their perspective. • P roactive: A honed alertness and vigilance to potential breaches in compliance. This means actively enforcing a mandatory reporting policy and seeking out any weakness in company dealings. • Intelligent and willing to keep learning: Most industries that employ a compliance officer are subject to constantly changing legislation, so staying on top of things is vital. • Diligent: Even when it becomes a hassle, a compliance officer must be willing to see an issue through to resolution. • A strong constitution and extra c onv ic t ion : S ol id b a c k b one and the strength to stand by difficult decisions and be more i n f lue nc e d b y r i g ht v e r s u s wrong than by relationships. Willing

to take the lead in setting the tone for corporate integrity. • The ability to take direction from outside consultants and legal counsel and to interact with them on a timely basis so as to keep up to date with ongoing changes to the laws, rules, regulations, and letters from local, state, and federal sources.

A Necessary Position

The role of the compliance officer is not only required by federal law but is a necessary position in every manufactured housing retail or community operation. When a community operator commits the resources necessary to create such a position or assigns existing personnel, the likelihood of the entity developing protective strategies and making them into an everyday effort will help protect it from fines and lawsuits. Smaller operators may find this role has to be undertaken by ownership; larger operators may find this role is best filled by a smart, dedicated, and long-term employee. Regional or

national operators should consider hiring from the outside, and consider individuals with compliance management experience who are willing to learn the issues specific to manufactured housing communities. The good news is that even organizations that were previously plagued with Fair Housing fines and lawsuits have, once setting up a strong and professional system and putting a strong compliance officer in place, seen the problems disappear. Many communities with strong compliance officers have reported zero fines or lawsuits in the last three years. So, part of the solution is obviously putting a qua l if ied compl ia nce officer in place. MHV Donna Rishel is the Rishel Group’s director of compliance issues and training. A certified compliance trainer, she oversees consulting and customer employee training for Fair Housing, ADA, and a variet y of other issues.

Compliance officers are extremely valuable when dealing with Fair Housing and ADA rules.

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Demand for Fee-based Management is Growing By Matt Milkovich

any fee-based management companies are seeing an increase in demand for their services from owners of manufactured housing communities. One of the drivers of the increase is the growing number of capital investors purchasing these properties — investors who have no experience managing land-lease communities. They need managers who have that experience, said Maria Horton, director of marketing for Newport Pacific, which manages 119 MH communities in 13 states. Fee-based management comes in many forms. Horton defined it this way: “A contractual agreement between ownership and the property management

company for oversight, development and betterment of a community.” Some agreements only require management to collect rents, and report any problems to ownership. Other agreements ask management to handle all issues in the community, and only notify ownership with a periodic financial report, Horton said. “It is truly in the hands of ownership as to what responsibilities the management company will assume,” she said. Fee-based management companies charge clients in different ways. Some charge a percentage of gross rents, others charge a flat fee across the board. Newport Pacific charges monthly, either 4% of gross rents or a $3,000 fee — whichever is the greater amount, Horton said. continued on next page

STATE OF THE INDUSTRY • 2019 continued from previous page

R.C. "Dick" Bessire

Michael Callaghan

Fee-based management can encompass many tasks beyond collecting rents. Newport Pacific’s on-site managers, for example, oversee maintenance projects, issue legal notices for unpaid rent and park violations, and seek legal assistance when necessary. They prepare paperwork for tenant screenings and, when applicable, compile lease or rental agreements. They also do property inspections and inform tenants of items that need to be addressed. If ownership wishes, Newport Pacific can fill vacant sites in a community, either by renting park-owned homes or selling new homes, according to Horton. Fee-based management companies can alleviate labor complications and liabilities for community owners by taking responsibility for all employment issues. For example, all managers and maintenance staff are hired as employees of Newport Pacific, Horton said.

Other Perspectives

MHInsider queried other executives of companies that perform fee-based management services. Their answers are below.

There seems to be more companies providing fee-based management services for manufactured housing communities than there were a decade ago. Do you know why?

Owners are getting older. They can’t keep up with all the new rules

Maria Horton

Mark Kassab

and laws, so they’re turning to professional management.

R.C. “Dick” Bessire, president of Bessire and Casenhiser

We receive several calls a month from community owners and/or investors looking to purchase manufactured home and RV communities who would like to speak with us about managing their community. Most of the investors calling us for management services make their living in other professions and rely on us to manage the day-to-day tasks for their community investment.

Todd Newby, president of Newby Management

The demand is massive. The influx of private equity firms into the space — particularly over the last five years — has opened a huge market for fee-based management. As all the newcomers to the space quickly learn, there is nothing easy about the MH business. It is a highly specialized, management-intensive business that requires a lot of expertise. You really cannot overstate the nuances. The other lever that is often overlooked is technology. I like to comment that running an MH community is like running a car dealership and horizontal apartment complex all in one. You’re managing tenants and a piece of real estate while also acquiring, selling and financing

76 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

Todd Newby

John Rogosich

homes. Good luck finding software on the open market that addresses all those needs! The best operators have built proprietary technologies and systemized platforms that rationalize those needs. Bottom line: You can’t operate these types of complex business models on the back of QuickBooks.

Michael Callaghan, managing partner of Four Leaf Properties

The manufactured housing industry has become more sophisticated. Senior management and community managers now have designations as Manufactured Housing Manager and Certified Property Manager. These designations in turn require operating the MHC at a higher level of expertise, replacing the “mom & pop” mentality. We are closing the gap between apartment and mobile home community living due to the sophistication.

John Rogosich, CEO of MHPI Inc. Many manufactured home communities that were owned by “mom and pop” operators over the past decade are being purchased by private equity groups and investors, thus resulting in a need for experienced management companies. Our company’s growth to approximately 15,000 fee-based manufactured home sites is split almost evenly between large private equity firms and private inves-

STATE OF THE INDUSTRY • 2019 tors. The fee-based management growth has been attributed to the learning curve that owners want to avoid when buying a community. A strong fee-based management company will eliminate the learning curve and result in increased revenues with a reduction in expenses through efficiencies, all of which increase the value of the community.

Mark Kassab, senior vice president of M. Shapiro Real Estate Group:

What sort of services do fee-based management companies provide for manufactured housing communities?

Bessire: For “mom and pop” opera-

tions, we basically do full service. We hand them a statement at the end of the year, and they turn the whole operation over to us. They trust us to comply with laws and maximize returns. We also manage for nonprofits. The bigger owners just want stable management they know they can grow with.

Newby: I can’t answer for other management companies, but we provide a complete management service.

Callaghan: Of course — taking payments, posting rents, managing facilities, maintaining the community — those are all the simple ones. Those are generally done for a percentage of total rents collected. The more complex services involve improving/constructing lots, ordering and setting homes, rehabbing used homes, marketing (digital) and sales management. Those services tend to be more commission-based and can even look more like a joint venture. The market is finally starting to recognize that there is huge value in partnering with people who understand how to in-

fill. With cap rates at their current levels, most rent-paying lots are worth 25-50%

Fee-based management companies can alleviate labor complications and liabilities for community owners by taking responsibility for all employment issues. more than they were just a few years ago. Partnering with a seasoned operator only makes sense when there’s this much demand in the market and still so much capacity. The opportunity cost of letting lots sit idle is simply too high.

Kassab: A strong fee-based manager should be able to provide a turnkey s olut ion t o t he community owner, handling all day-today management operations. This includes the collection of rent and security deposits and bank account reconciliations of expenses. The overall physical appearance of the property, evaluation, and training of all on-site employees, and the implementation of a marketing

strategy to increase the overall occupancy of the property is a fundamental key to success. Investors should look for a management company that manages all the repairs and capital improvement projects, employee oversight, and tenant applications. Of great importance is bringing new homes to the community and renovating/ refurbishing the homes for sale/ rent to increase community occupancy. Creating a web page and having proper flyers prepared for the homes available is essential to a community operation. The strategies used by an experienced fee-based manager will improve landlord/ tenant relations and bolster resident involvement, thereby reducing tenant delinquencies and accounts receivable at the property. A fee-based management company must continued on next page

Thank you!

to all of our Amazing Customers! 1119 Fuller Drive, Garrett, IN 46738 www.AdventureHomes.net 877-510-1955 MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

STATE OF THE INDUSTRY • 2019 continued from previous page

provide the full menu of services in order for an investor to see the value.

Which of those services does your company provide?

Bessire: We’re full service. We also do brokerage work. Newby: As a third-party management company, we provide complete management for manufactured home and RV

human resource management, resident relations, marketing and sales, broker age services, chaplaincy program and emergency services.

a fee and keep the lights on” manager. We want to build a lot of value for our select partners and we want to leverage our platform.

Callaghan: We provide them all, but our primary emphasis is working with operators who need to in-fill lots at a considerable level. We’re unique in that we have an embedded mortgage loan origination company, and a loan

Rogosich: The services we provide are accounts receivable, accounts payable, budget planning, ordering homes, hiring management and maintenance personnel, providing monthly and annual financial statements, and visiting the communities.

Photo Courtesy of Zeman Homes

Kassab: We provide comprehensive services in-house, all included in one fee! The proper operation of any community requires all of these services to be implemented in order for a manufactured community to achieve its maximum potential.

What are the advantages of fee-based management?

Bessire: Professionalized management that maximizes returns for the individual investor or group. They don’t have to take complaints or negative calls from homeowners. Newby: Community owners can benefit from the investment in a community and not have to deal with the day-to-day operations while working in their chosen profession.

communities. Complete management for us includes the following: day-to-day operations, rule enforcement, negotiate and manage service contracts, track insurance for vendors, attend meetings with residents, background check applicants, oversee insurance policies and risk audits, regular management reports, maximize tenancy through proven programs, oversee the rent increase process, full accounting, full

technology platform, that we offer. That enables us to be a turnkey partner — everything from basic property operations all the way through to providing a digital platform for marketing, sales, loan origination and financing. Our primary operating partner is one who needs to bring in a lot of homes, has a lot of growth potential, and needs a comprehensive solution. We’re on the opposite side of the spectrum from the classic “charge

78 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

Callaghan: I think an experienced property manager can out-perform an unseasoned one by 25-50% in the MH market. There are many flavors of MH communities, and there are many ways to derive value — through add-on services, better financing, operational efficiencies — as you move up the food chain. A seasoned management partner can move your property through that lifecycle and help you capture that value as you go. Simplistically, you don’t manage any two MH communities exactly the same way. They all have unique attributes that translate into accretive value if you know how to capture it.

STATE OF THE INDUSTRY • 2019 Rogosich: The advantage of fee-based management is an unbiased professional evaluation of the community. We can maximize the NOI and control the operating expenses. For example, within our company, our manager’s designation and experience will give the communities the resources they don’t currently have.

Kassab: The financial advantage for an investor that utilizes an experienced fee-based manager should result in an increased value for that development. Many regions we manage have vendors that provide services to specific regions and fee-based managers with very distinct market knowledge in the areas they represent. An experienced fee-based manager will be involved with the state association, active with regional and national events that benefit the industry and are ahead of the curve on legislation that can impact the industry. We tell all of our clients, if they cannot see the value of the services we offer through increasing revenues, reducing delinquencies

or reducing expenses, then we should not be hired.

Have you noticed a greater demand for fee-based management from MH community owners?

Bessire: We’ve noticed an increase in demand. Here in California, I probably turned down 20 contracts last year. We only want to run things in a way that makes us feel comfortable. Some people want us to run the community just to make revenue, not to keep up the property. They just want you to get the dollars for them. Newby: From our perspective, demand has been the same for the last several years. Callaghan: The demand is off the charts. I take two or three calls a week from prospects. Unfortunately, many of the new arrivals are just getting started, so they are a little too small

for us. Fortunately, consolidation is still continuing at a rapid rate, and as it continues many of those small guys are amassing large portfolios pretty quickly. The challenge is that those portfolios are typically geographically dispersed, under-resourced and lack economies. So, the demand is accelerating, but with it comes a need for more advanced and sophisticated solutions to address the new challenges.

Rogosich: Yes, there is a greater demand for fee-based management from MHC owners.

Kassab: We started our fee-based management program during the recession in 2008. In the past decade, we have grown to approximately 15,000 pads under fee management in 27 states. The calls seem to come in daily from owners looking for an experienced property manager. MHV

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Sleepy Hollow's clubhouse. The Dilbeck architecture was restored inside and out.

The clubhouse's community room.

Have You Ever Been to ‘Me’? By Suzanne Felber

Photos courtesy of Lisa Stewart Photography

hat is your "Me"? That's a question this Lifestylist was asked at a recent design summit, which made me rethink our industry and culture. How we approach our businesses, especially how we build and develop land-lease communities, is changing at a rapid pace. Are we keeping up with our buyers' expectations? “Adapt. Evolve. Or Become Extinct” is a great quote I heard years ago, which seems very relevant today. As I am writing this, I was contacted by a friend who wants to get a second home in Florida and is open to a modular home, but has no interest in living in a "trailer park”. Last year, there were over 700,000 new millennial households created. Are we an industry, or lifestyle, that they are considering — or is their perception of our industry too negative? Signature Kitchen Suite, the new luxury brand of LG Electronics, has done a brilliant job of setting itself

apart from the competition by branding itself as “True To Food”. Simple, but immediately lets you know that the company is serious about the culinary experience. Design expert and speaker LuAnn Nigara explained that the company has a “You, not a Business”,

“SO, AS AN INDUSTRY, ARE WE SELLING A PRODUCT OR OFFERING AN EXPERIENCE? WE HAVE AN INCREDIBLE OPPORTUNITY IN FRONT OF US FOR GROWTH.” –Suzanne Felber and that the message is very personal. Can you say the same about your brand and your community?

Buyers today are more interested in experiences than things. They don't ask for technology in their homes — they expect to have technology in their homes because it always has been part of their lives. They are used to immediate gratification — pretty much anything they want they can order on Amazon and it will be there tomorrow. Even the definition of luxury has changed — they want to experience luxury instead of owning it. So, as an industry, are we selling a product or offering an experience? We have an incredible opportunity in front of us for growth. Here are five ways to build in the experience consumers want from your communities.

Find Your "Me": What's Your Story?

Today's new buyers are storytellers — they love to share their experiences on social media. We all are looking for continued on next page

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

STATE OF THE INDUSTRY • 2019 continued from previous page

what makes us “me”, and how that makes us interesting and has people wanting to learn more. One of my favorite examples is Sleepy Hollow, a Yes! Community in Fort Worth, Texas. It has a wonderful location just minutes from downtown, centuries-old trees, and a huge old estate home used as a clubhouse. When the owners decided to do some digging and find out the history, they were delighted to find out that Charles Dilbeck, a famous architect, built the home. His signature architecture and the details he is known for were alive and well, just covered over or underused. There were rumors that the house was haunted, too, and instead of running from that myth, they embraced it, made renovations and updated the community. The home/clubhouse became more of a shared space residents could use and be proud of, original art was restored, and every Halloween they have a spooky party that residents and neighbors alike beg to get invited to! Potential residents not only get leasing information and costs when they visit, but are treated to the rich history of the community they will be calling home.

Dog parks: Animal lovers take the welfare of their pets as seriously as they do their own, and they love to have their four-legged family members make friends in their new communities. A fenced area with some benches, relief stations, and access to water are inexpensive ways to add value and community in underutilized spaces. It's also a great way to encourage residents not to let their animals run free through your community. What’s in a name? Everything! Rolling Hills in Battle Creek, Mich., changed its name to The Community of Rolling Hills, and it truly is a community — beautiful entryway, clubhouse and pool. It is selling the lifestyle and community, not the fact that the homes were brought there on wheels. Community gardens/garden clubs: We all know that first impres-

sions are everything. Why not let your residents with a green thumb help with the landscaping and gardens at your community? The Community of Rolling Hills also has a community garden where residents can plant vegetables and share them. It's such a treat to go into the clubhouse and be gifted with fresh-picked tomatoes and cucumbers.

Yes! Communities turned a low-lying area in a community into a dog park.

Technology and social media: Our kids are more techno-savvy than most of us will ever be. Why not reward them for their knowledge and invite them to help others in the community set up social media accounts and answer their technology questions? Encouraging them to be a part of the community, instead of looking down on them for driving too fast or leaving their bikes out front, can be a great way to help them take pride in where they live. Is th is a m i ndset wor th embracing in you r commu n it y? Award-winning communities think so, and continue to look for ways to keep their residents connected. MHV 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.

They thought of every convenience, including a place to leave dog leashes.

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STATE OF THE INDUSTRY • 2019

What’s New in Sales Training, and Why is it Important? By John Ace Underwood

STATE OF THE INDUSTRY • 2019

irtually every company either does, or should, have a training program in place to train staff to perform the organization’s most critical functions in an effective and efficient manner. If you own an auto service station, your ability to fix cars is critical, so your mechanics would need to be kept upto-date as to the changes taking place in the automotive industry. No one reading this article would disagree with that statement.

So, one could use that same logic and reach the conclusion that if your organization depends on sales, your salespeople need to be proficient in selling and need to be kept up-to-date on changes taking place in the world of professional selling. Why is it, then, that so many organizations in the manufactured housing industry, both on the retail side as well as on the community side, seem to not reach that conclusion? Well, there actually is a reason why so many organizations seem to have

“if your organization depends on sales, your salespeople need to be proficient in selling and need to be kept up-to-date on changes taking place in the world of professional selling.” –John ace underwood

given up on training their sales staff. They have previously invested lots of dollars in training, with few results. In short, they gave up training because most training programs didn’t work. What’s changed in the world of professional selling? Why do the sales methods we taught and used 10 or 20 years ago no longer work? The answer: technology.

Technology

Few things have impacted salespeople more than technology. We here at MicroSeminars refer to this as the Tec-Factor. We have come to learn that yesterday’s training techniques no longer give us the results we desire, and here’s why. Whether through email, texting or smartphones, you can usually reach anyone, anywhere, at any time. So can everyone in the world who wants to get ahold of you, your salesperson or your prospects. Virtually everyone is bombarded on a daily basis with more information than ever before, and we have way more things we have to handle, respond to, fix or answer. The problem is, we were not given more time in which to accomplish these tasks; we still get 24 hours a day, seven days a week. This problem is exacerbated, because with immediate access comes the expectation of immediate response. We have grown into an impatient society. Whatever we want, we want it now. Understand that the human mind is adaptive by nature. Give us an environment, and our magnificent minds will adapt quickly. We have been given less time in which to do more things, so we have adapted through what we call multitasking. Actually, multitasking is an illusion. We can’t do two or three things at the same time and do them all well. Think texting and driving. What multitasking really means is that we spend a few minutes on this, a few minutes on that and then a few minutes on something continued on next page

STATE OF THE INDUSTRY • 2019 continued from previous page

else. We’re not doing more than one thing at a time.

The Need to Adapt

As I stated before, the human mind will adapt to its changing environment, and so we have learned to make 10- to 15-minute time segments count. Whether selling or training salespeople, you typically have less than 15 minutes to make your point. The motto today is, “Tell me quick, tell me true; if you can’t, I’m done with you". Now, consider the fact that virtually every sales training program being taught today was actually developed in the mid-1980s. That’s roughly the same time we were introduced to the fax machine. Here is what we can conclude. The way people are taught today does not reflect the way people learn today. Multi-day seminars, often held at remote locations, are all but over.

Today’s sales professionals want to have small pieces of information dripped to them over a longer period of time. They want bite-sized pieces of relevant information they can implement immediately into their sales process and want to begin seeing results. Those given the responsibility of training people need to see training as a process, as opposed to an event. Stop with the “seminars”. We all know that 85-90% of what is covered in a one- or, worse, a two-day seminar will be forgotten before the ink dries on the completion certificate. Don’t fall into the trap of believing that even if the student picks up one or two pieces of good information, it was worth the two days of sitting through the seminar. Just give them those pieces of information in 10-15 minutes and move on. Give them another nugget next week and the week following. Do this over a longer period of time and you have a

Aggressively Seeking Properties to Buy Manufactured Home Communities Land leased communities with 100+ sites in strong markets, nationwide Serious sellers contact:

Richard O' Brien (203) 942-2745 ext. 110 robrien@athenarealestate.com www.athenarealestate.com 86 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

sales training program that reflects how today’s people actually learn. This same technology has had a huge impact on the way people shop and buy, as well. At MicroSeminars, we’re forced to continually study buyer behavior, and we know beyond a shadow of a doubt that people do not shop, and they do not buy, the same way they did even 10 years ago. If your salespeople are still using these now antiquated sales techniques that originated in the mid-1980s, they’re not only inefficient but actually are doing things, by design, causing them to lose sales. If you want to get better results, here’s rule No. 1: STOP doing what DOESN’T work. Your prospects will not give you the time to implement antiquated and counterproductive selling techniques.

Find A New Process

Salespeople need a process for selling your homes or your communities that not only reflects the way their customers buy, but one that moves at the same speed as their customers. As for the customer, technology has taught them one thing: YAHOO — You Always Have Other Options. So, there you have it. The reason most companies don’t invest in training isn’t because they don’t believe their salespeople need training. They don’t believe in investing in antiquated training methodologies and out-oftouch sales techniques. Give them something that w il l help salespeople increase their performance, and you will once again have their attention. MHV John Ace Underwood is the founder of SellingEdge, a consulting firm within the manufactured housing industry, as well as microseminars.com, an online training program focusing on sales management and leadership development. Reach him at johnaceunderwood@ g mail .com , or 520 241-9907.

Photo Courtesy of Zeman Homes

Protected Class: Source of Income or Source of Concern? By Matthew Paletz

STATE OF THE INDUSTRY • 2019

he world of manufactured housing continues to reinvent itself. Over the years, the traditional resident-owned home community model has been supplemented by path-to-ownership programs and exclusive rentals of the homes themselves. Like all housing providers, companies have to make sure applicants are financially equipped to fulfill their payment obligations, while simultaneously avoiding activities that could be construed as discriminatory. Now more than ever, Fair Housing claims are being made and the individuals making them are being granted more protections under the law. In 1968, the Fair Housing Act was passed to outlaw discriminatory real estate practices. It set forth that if an

tance programs. Most commonly, these are in the form of Section 8 vouchers. Section 8 of the Housing Act of 1937 is a housing voucher program that assists very low-income families, the elderly, and other at-risk persons in affording housing in the private market. These vouchers, although mandated by the federal government, are administered locally by public housing agencies known as PHAs. PHAs receive federal funds from HUD to administer the voucher program. The housing subsidy is then paid directly to the landlord. Source of income protection is rapidly becoming common, as more and more municipalities are adopting it. These types of laws are intended to prohibit discrimination based on requiring

"Now more than ever, Fair Housing claims are being made and the individuals making them are being granted more protections under the law." –Matthew Paletz individual falls under the category of a protected class of persons, they cannot be discriminated against. It has been codified in many states through an equivalent law, such as, in Michigan, within the Elliott-Larsen Civil Rights Act. The seven protected classes under the federal Fair Housing Act are: Race, Religion, Color, National Origin, Sex, Familial Status and Disability. States may have additional protected classes, such as Michigan, which also protects marital status and age, and Ohio, which protects military status and ancestry. Not to be outdone, local municipalities have enacted additional protected classes, such as source of income. This means that anyone who provides housing must now take into consideration income from, for example, governmental assis-

employment as a condition of renting or refusing to rent to an individual who is receiving Section 8 or other public assistance. Further, a landlord cannot refuse to consider all regular and verifiable income. Nor can they set income requirements artificially high in order to constructively exclude applicants who receive public assistance. Additionally, more scrutiny is now being given when requiring co-signers or a larger security deposit based on a perceived risk due to an applicant’s source of income. Although accepting Section 8 vouchers is standard practice for subsidized or “affordable housing” providers, this is a relatively new concept for those who have exclusive market-rate portfolios. Thus, a typical response is: “How can this be applicable since there is practicontinued on next page

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

STATE OF THE INDUSTRY • 2019 continued from previous page

cally no contact with HUD?” Well, this inquiry is predicated on the common misconception that these portfolios are not scrutinized by HUD. Regardless of one’s political affiliation, the simple truth is that due to the ubiquitous nature of the federal government, anyone engaging in commerce and availing themselves of the public in the housing arena is ultimately under HUD’s jurisdiction. Another relatively new development for the MH world, as it relates to Section 8 vouchers, is being able to use this subsidy toward the purchase of a manufactured home. The Housing Opportunity through Modernization Act of 2016 (H.R. 3700) opened the door for this. The viability remains to be seen, but it is another example of this alternative stream of money finding its way into various housing markets. Whether these new forms of funding are being used toward renting or purchasing, if a community is operating in a jurisdiction that protects source of income, it must not be ignored. Granted, the practical logistics become challenging. After all, with these funds come additional requirements such as consenting to augment lease terms. This can prove problematic not only from an administrative standpoint, but within the overall software integration

process, as it can become an operational exception that needs to be dealt with. A protocol should therefore be adopted to address these issues and should be incorporated into an overall Fair Housing policy. Training of field personnel should be prioritized, and partnering w ith a sk illed attorney in these matters is paramount. A chain of command should be established and decision making centralized to ensure uniformity to safeguard against multiplicity of outcomes when dealing with these types of requests. Identifying local laws in the cities in which a company’s communities operate should be done right away to see if source of income has been added as a protected class. Finally, a prepared response should be adopted, as this inquiry is ripe for testers posing as potential applicants.

The Bottom Line

The proliferation of Fair Housing claims cannot be understated. With local governments taking their cues from federal and state, additional protections like source of income are becoming more prevalent. Property owners need to make sure their personnel are aware and procedures are in place to create a source of value rather than a source of concern.

Disclaimer: the information contained in this article is only meant to be a basic overview and should not be construed as legal advice. Readers should not act upon this information without the advice of an attorney. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or otherwise be disseminated without the prior written consent of The MHInsider or Paletz Law. MHV Matthew I. Paletz is the CEO of Paletz Law in Troy, Mich. He is a graduate of the University of Michigan and earned his J.D. from the University of Detroit Mercy School of Law. He is licensed to practice in Michigan and Ohio and does so in the areas of landlord-tenant, creditor’s rights in bankruptcy, and n a t i onw i d e Fa ir Housing defense of property owners. Contact him at mpaletz@ paletzlaw.com.

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1-877-406-0232 SPACE & ART DEADLINE FOR 2020 BUYER'S GUIDE: September 13, 2019

PROPERTY MANAGEMENT.

IT’S SIMPLE, WE MANAGE YOUR COMMUNITY LIKE WE WOULD OUR OWN, FOCUSING ON CREATING VALUE. With over 35 years’ experience and as one of the largest private owner-operators of communities in the country today, M. Shapiro Real Estate Group is a proven leader in the manufactured housing industry. Let us show you how we can create value for your community. We currently manage over 10,000 mobile home pads via third party management. • Customized accounting packages. • Hundreds of homes sold in 2018 generating over 6mm in sales revenue.

• Licensed to do business in 26 states. • We manage communities as small as 30 pads and as large as 1,100 pads. • Multi-State MH Association Member. • Winner of the Clayton Homes Platinum Builder Award with Home Sales over $4,400,000 in 2018. Contact us today to learn more.

Call Mark Kassab at 248-865-0066 | www.mshapirorealestate.com 90 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

The Shift: Tiny House Builders Moving Toward Manufactured Homes By Brynn Burger

he tiny house trend began gaining ground a little over 10 years ago. Back then, much like the first RVs, most houses were homemade. This meant that while quality may have suffered, prices were next to nothing. Once contractors and builders began to market the mass reproduction of these small structures for alternative housing, word spread and things began to go from freedom-seeking to red tape. So, why are tiny-house builders beginning to expand their services to selling park model and manufactured homes? An easy answer might be that they are making every effort not to close their doors when money is tight and business is slow. In researching market trends since the tiny-house boom and talking to experts in the movement, these three reasons for the builder switch stand out.

Painful Price Increase

Even five years ago, the average tiny home was selling for $25,000 to $40,000, whereas now most are on the market in the $60,000 to $120,000 range. This is accounting for THOWs (Tiny Houses on Wheels), which means you are buying the house only — no land or property to accompany it. “When building a modular home, there is no trailer cost. The movable foundation can get quite expensive — most starting around $6,000. If you are not going to be moving the home, the additional expense of the state-approved third-party agency may make sense,” said Robin Butler, president of NOAH Certified, an inspection and certification service for tiny houses. continued on next page MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

STATE OF THE INDUSTRY • 2019 continued from previous page

Andrew Odom is a former tiny-house dweller and event planner for the Pink Hill Tiny House Festival and Outer Banks Tiny House Festival. “There are a number of factors contributing to the decline in tiny-house builders. They are as varied as 'no prior business experience' to not understanding what ‘contractor grade’ is. Building a $50,000 house is no easy feat when you are depending on your own resources to fund such an endeavor,” he said. “That doesn’t mean, though, that I think some builders are expanding into park models and more manufactured units in order to stay afloat. In fact, I think they are being rather shrewd by analyzing the

legal issues that still plague the modern tiny-house movement as well as what the public is calling for. Park models — while not being large nor tiny — are a great, legal compromise to an otherwise discouraging situation.” The other major cost in the tiny-home business is hauling the home. Chris Schapdick, owner of Tiny Industrial, provided some insight. “Tiny houses are painfully heavy and moving one around is a big deal. Many people see the house on wheels and assume that moving it around is a breeze,” Schapdick said. “It can be a real shocker to find out what it takes and costs to move or relocate a house.

Many tiny-home manufacturers are moving toward building park model homes, due to rising costs and red tape.

92 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

You'll need a truck that's the same price as what you just paid for the house.” When you take the skyrocketing costs of a build and add that to the difficulty tying down financing or insurance, people walk.

Going Against Government

Most tiny houses being sold by the builders seeking to add park models and manufactured homes to their list of offerings have been on wheels up to this point. So, their decision to expand makes the logistics much easier to navigate. While they may have an investment up front to get these types of houses certified, once that is established there isn’t as much

STATE OF THE INDUSTRY • 2019 headache when a homeowner has land and is building on a foundation. This opens up the market. In addition to the trouble with building homes on wheels, the size of the tiny house makes a huge difference. Many municipalities have legalized ADUs (accessory dwelling units), but they have to meet certain size requirements. Many THOWs are too small because they have been built to meet road standards at a maximum of 8 feet wide and 13.5 feet high.

When it Comes to Code

Code consistency is the nail in the coffin for many THOW buyers, because there isn’t a ny th ing that clearly describes the build standards. In some states, you look to the county, while others look to state or even federal regulations. Some of the considerations are home size, land requirement, and park ing options. The endless regulation causes tiny-house dwellers to make themselves more and more isolated to ensure they a r e n’t k i c k e d off their property or parking space. And the i s o l a t io n c a n become daunting for many. This maze is what keeps many tiny-house-curious people from buying. Because of the masses

saying “no” to buying tiny, many contractors are finding themselves shelling out money to take THOWs to tiny-house events, throwing cash at marketing, all within a business that remains unsteady. So, change seems inevitable.

Tiny-House Turnover

Tiny houses took off because people sought change — to escape the rat race of the 9-5 workday. There was a feeling of spinning wheels and underwhelming results. This idea of freedom remains very tempting to millions. However, few are willing to consider so drastic an option as tiny living. That makes tiny houses a niche market. Chris Strathy is the mustachioed face behind The Capable Carpenter. “I live to help people go tiny. Building a tiny house is easy. Building a tiny home designed for the individual and family’s needs, beautifully and affordably, is not so easy. Any niche business is a difficult one, and I still take on all types of work to keep positive cash flow. In my opinion, if builders focused more on the individual instead of the numbers, fewer construction companies would be struggling.” Though there are many more people speaking out now, most still believe that they cannot successfully raise a growing family in a tiny house. They argue the lack of space, less storage, and inability to feel secure parking makes it feel impossible to raise a family. Parents are worried about school systems finding out their kids live in a home on wheels. These fears make it difficult for builders to maintain clients who want to build a tiny house, build a larger THOW, or even do an interior re de si g n for a n expanding family. Most who bought tiny when they were single are simply ditching the THOW

and buying traditional spaces when they have children. For these and other reasons, manufactured homes over tiny houses is a comeback that cannot be ignored. Bloomberg reports that, since 2009, manufactured housing has been on the rise. Many homebuyers are turning to manufactured homes because they do more than ever and remain very affordable. With the increase in demand for manufactured homes, the demand also increases for qualified tradespeople in the factory. When you pair the lower price with the ease of certifying, insuring, and parking your park-model home or placing your manufactured house on a foundation, the move makes sense for many tiny-house builders who struggle to maintain business. MHV In the time Brynn Burger has been navigating The Mama On The Rocks blog, she has been featured on Scary Mommy, Becoming Minimalist, Love What Matters, Tiny House Expedition, Tiny House Magazine, ADDitude Magazine, Her View From Home, Parent Co. and others.

FOR THE LATEST INDUSTRY NEWS VISIT WWW.MHINSIDER.COM

MHINSIDER.COM • JULY / AUGUST 2019 • MHINSIDER™ |

Industry Events This Summer and Fall NCC Western Summit Geared Toward Smaller Owners, Community Managers

MHI’s National Communities Council (NCC) is expanding its reach with the NCC Western Summit, scheduled for Aug. 14-16 at the Wild Horse Hotel & Casino in Phoenix, Ariz. This new event in the western United States will feature education, networking and exhibitors geared to community managers and smaller owner/operators. Join others within the industry for three days of community insights, educational workshops, ongoing engagement and a local plant tour. Hear leaders in the industry discuss the state of the market, resident relations, effective marketing and much more. A factory tour will be held Aug. 14 at Skyline Champion’s Chandler, Ariz., production facility. It will provide attendees with a walking tour and describe the plant’s construction process. Attendees will have the chance to see homes in every stage of production and watch them go from a bare chassis to a fully built home. The Western Summit will have limited spots for attendees and potential exhibitors. Early Bird Registration ends July 23. For more information, visit www.manufacturedhousing.org.

Networking Roundtable for Owners, Operators of Land-lease Communities

Land-lease community owners and operators from around the country will gather for hands-on, timely education on key manufactured housing industry issues Sept. 8-10 at The Alexander Hotel in Indianapolis. The 28th Annual Networking Roundtable is the place for MH industry leaders to share knowledge, network, and learn from experts. The conference will begin on Sunday, Sept. 8, with a welcome reception and address from industry icon George Allen, CPM Emeritus, followed by two days of workshops. An additional Manufactured Housing Manager training will be held Sept. 11. 94 | MHINSIDER™ • JULY / AUGUST 2019 • MHINSIDER.COM

2019 marks a new era for George Allen, as he is passing the reins of facilitating the event to his daughter, Susan McCarty, and her business partner, Erin Smith. Together, they have cultivated a list of speakers on the cutting edge of industry issues. Most notably, the opening keynote speaker on Sept. 9 will be U.S. Senator Todd Young. Conference session topics include: Affordable Housing Crisis; Buying, Selling & Financing New HUD Code Homes; Management Automation; Sub-metering; Online Digital Footprint and Resident Relations. Registration is available at www.EducateMHC.com.

SECO19 Focused on Small Community Owners

SECO19 will be held Oct. 9-10 at the Hilton Atlanta Airport (with pre-SECO workshops scheduled for Oct. 8). Attendees of the symposium will learn from industry experts and find new products and services to increase their efficiencies and bottom lines. They also will be able to network with hundreds of community owners and managers from throughout the country. SECO (South East Community Owners) started out as a small group of community owners, mainly from the Atlanta area, who would meet for a few hours to discuss problems and issues they all shared. From those humble beginnings, the group’s annual symposium has turned into one of the largest manufactured home community meetings in the nation. These days, SECO retains the same focus — to help community owners be the best they can be and to improve the industry by better management and buying new homes to fill empty lots. SECO, a 501(c)(3) nonprofit organization, is and always has been for community owners, by community owners. Everyone is welcome. For more information, visit www.secoconference.com.

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continued from page 98

in Alabama, under the present day leadership of Hall of Fame member John Bostick; and Jensen’s Inc. in Connecticut. Speaking of doing business over several generations, the oldest independent MH retail sales operation in the United States is owned and operated in Tennessee by Hall of Famer R.C. “Dick” Moore. Five Hall of Fame members, and a set of twins, have penned or co-authored autobiographies: Kristian Jensen Sr.*, “A Danish American”; John Crean*, “The Wheel & I” – describing the founding and growth of Fleetwood Homes; Jim Clayton, “First a Dream”; Darrell and Harrell* Cohron, “The Trailer Twins”; Al Schrader’s riveting “No Respect At All … A PATH TO MILLION$”; and George Allen’s “Swan Song” — in part, a history of land-lease communities and official record of HUD-Code housing shipment volumes since 1955. All these histories are available for purchase at the RV/MH Hall of Fame bookstore. Professional property management is finally making its presence known within the land-lease community sector and RV/MH Hall of Fame via four Certified Property Manager members of the Institute of Real Estate Management: Brian Fannon, consultant and longtime Michigan land developer; Michael Sullivan of Newport Pacific in California, an

Approved Management Organization; Michael Cirillo of Star Management; and yours truly. Christine Lindsey of UMH Properties is one of 15 women inducted to date. She is a Manufactured Housing Manager. Also Kris Jensen Jr., Accredited Community Manager. Two publishers of legendary trade publications, Herb Tieder* of Manufactured Home Merchandiser and Jim Visser of The Journal, are RV/MH Hall of Fame founders/members. Rounding out this group of pioneers is the late Dr. Carlton Edwards*, industry historian and founder/director of the bygone Manufactured Housing Education Program at Michigan State University. There are many more individuals with industry cred every bit as impressive as those just named. Perhaps we’ll fete them in future Allen Legacy columns. In the meantime, there are many businessmen and women who should be considered for induction into the prestigious RV/MH Hall of Fame. How to do so? Simply visit www.rvmhhalloffame.org and print off the How to Nominate form and instruction sheet, then complete and return same to the Hall of Fame in Elkhart, Ind. If you haven’t read the autobiographies listed above, plan to do so during 2019. They’re all worthy reads. And, if you have

THE ALLEN LEGACY

a story to tell, consider doing so this year! Request a free copy of the booklet “Who Will Preserve Your Legacy? Answer: You!” via EducateMHC@gmail.com, or phone the Official MHIndustry HOTLINE at (877) MFD-HSNG (633-4764). George Allen has owned and fee-managed land-lease communities since 1978. He’s a former MHI Industry Person of the Year and a member of the RV/MH Hall of Fame. He has been designated a Certified Property Manager-Emeritus and a Manufactured Housing Manager-Master. He’s also a senior consultant and staff writer with EducateMHC. Allen can be reached by phone at (317) 346-7156, or by email at g fa7156@aol.com. MHV

™

The MHInsider™ is a trusted resource that manufactured housing professionals choose to stay abreast of industry developments and get the information they need to make informed decisions.

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THE ALLEN LEGACY

RV/MH Hall of Famers: An Eclectic Mix of Pioneers, Leaders with Vision and Talent By George Allen, CPM Emeritus, MHM-Master

or m a nu fa c t u re d hou si n g professionals, visiting the RV/ MH Hall of Fame museum and library in Elkhart, Ind., is akin to high school/college grads returning to their alma mater. In each instance, sojourns stir recollections of past glories and achievements, as well as trials and challenges. That’s why we’re so fortunate to have an RV/ MH Hall of Fame! The RV/MH Heritage Foundation was founded in 1972 to preserve the business legacies of hundreds of manufactured housing and recreational vehicle professionals from throughout the United

States and Canada. To date, there have been more than 400 people inducted. Sadly, half of them have died during the past 47 years.

sojourns stir recollections of past glories and achievements, as well as trials and challenges. The following paragraphs focus on the manufactured housing, land-lease

community, and support-sector inductees; (*) indicates those who’ve passed on. There have been five pairs of father/son inductees: Jim (1991) and Kevin (2009) Clayton of Clayton Homes; Ed J. Hussey (1995)* and Ed Hussey Jr. (2008) of Liberty Homes; Kristian Jensen (1972)* and Kris Jensen Jr. (2009) of Jensen’s Inc.; Ralph Scoular (1998) and James Scoular (2008) of Iseman Corp.; Jim F. Shea Sr. (2000)* and Jim Shea Jr. (2011) of Fairmont Homes, now part of Cavco Industries. And there are two instances of tri-generational business ownership, one each from the manufacturing and land-lease community sectors: Sunshine Homes continued on page 97

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