MHInsider™ May/June 2020 - State of the Industry Edition by MHInsider

THE MAGAZINE FOR MANUFACTURED HOUSING PROFESSIONALS

STATE of the INDUSTRY

MAY / JUNE 2020 | MHINSIDER.COM

A Publication of

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CONTENTS HAPPENINGS 8 Industry Happenings CORONAVIRUS IMPACT 14 The Impact of Coronavirus Measures on the Manufactured Housing Industry COMMUNITY 16 Gemstone Communities Shines Among New Owners/Operators 20 BoaVida Sees Gold in the Silver State, Acquires Six Nevada Communities LENDING 22 Talking Consumer Lending with Cascade Financial's Cody Pearce 29 Lending Trends in Manufactured Home Community Financing 32 Q&A with Michael Giordano BROKERAGE 35 How Coronavirus Will Impact the Manufactured Housing Landscape

VOLUME 3 • ISSUE 3 MAY / JUNE 2020 MHInsider.com Publisher Patrick Revere patrick@mhvillage.com

12 A 'NEW LOOK' BUSINESS APPROACH IN WEEKS, MONTHS FOLLOWING CORONAVIRUS DISRUPTIONS

Contributing Editor George Allen gfa7156@aol.com

Senior Graphic Designer Merit Kathan merit@mhvillage.com

Contributors Frank Bowman Bryan Cordill Kevan Enger Lesli Gooch Matt Laird Tony Petosa Steve Tschirhart Donald Westphal

Cover Image Photos courtesy of Clayton Homes and Cavco

38 INDUSTRY TRENDS AND STATISTICS BUILDER / RETAILER 49 Retailer Q&A with Clayton Homes of Victoria 50 Talking Workforce Development with Skyline Champion's President Mark Yost SERVICE / SUPPLY 67 Propane's Role in an Ever-Changing Housing Market 70 Formica is a Household Name, Trending Up 73 Growing Benefits of Water Submetering PLANNING / DEVELOPMENT 68 A Planner's Perspective on 2020 Development Trends for Manufactured Home Communities THE ALLEN LEGACY 98 Read a Good Book Lately?

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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 Notice Copyright ©2020 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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FROM THE PUBLISHER

COVID-19 TAKES CENTER STAGE

For your sake, I’ll get beyond the “test your mettle” metaphors, and just say we’re operating under unique circumstances. Many people are frightened and some are suffering. Most of us are or have been confined to our homes. Circumstantially, we continue work. But, many can’t. The general economy is walloped by coronavirus response measures. Wall Street is empty and markets everywhere are in recovery.

How We Heal Stimulus checks will help but not heal. What will heal is our dedication. We build and deliver great homes and beautiful communities because this is an industry that has its priorities together. While much has changed, our priorities have not. So, for the State of the Industry edition, let me offer a simple list that summarizes our industry priorities, aided by the cumulative notions of our industry leaders in a time of crisis.

Manufactured Housing Industry Priorities

Much has changed, our priorities have not.

Nearly 27 million unemployment claims were filed during the first five weeks following COVID-related lockdowns. Those job losses mean many people will have a hard time making house payments and many more could be out of the market altogether. Your traditional street retailer who provides homes for multiple generations of families in most cases has had to indefinitely close shop. Still, they work, on phone or video, via digital listings. Managers check on residents. There are drive-thru title services. Autonomous inspection and virtual open houses. Advocates knock on figurative doors.

6 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

1. Stay positive, stay focused on practical change for families, students, workers, and individuals we serve 2. Recruit new people, particularly young people, to the industry 3. Bring expertise, knowledge, and influence to local planning and zoning officials 4. Create more valuable and readily accessible financing for factory-built homes 5. Hear the customer and deliver the product they want, in home and community 6. Ramp up production, because the market requires it (people need homes!) Fortunately, this set of priorities is addressed between the covers of our 2020 State of the Industry edition. Absorb, share with a friend, and provide feedback for us. We’re all in this together.

Patrick Revere is associate vice president of publications for MHVillage and publisher for the MHInsider magazine and blog for industry professionals. His background is in print news, language, and communication.

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INDUSTRY

Happenings Homeowners Buy Neighborhood

Mobile Home Ordinance Amendment Passes

Residents at Mountainside Park, a 52-unit retirement community raised $1.9 million for the purchase of their Camden, Maine community. With real estate prices continuing to outpace wage growth in the state, manufactured home ownership remains one of the few affordable options for workforce and entry-level housing. ROC USA worked with homeowners and the community to facilitate the sale, turning the community into the state’s 10th resident-owned community.

The Marshall Village Board unanimously approved an amendment to the local ordinance, allowing mobile home owners to request exceptions to a rule that prohibits the relocation of buildings older than 20 years. Owners can move mobile homes to an existing mobile home community in Marshall, Wisc. However, Marshall’s only community is Evergreen Village. Under the rewritten ordinance, an exception process will allow the village to consider mobile home relocation requests on a case-by-case basis.

Clayton Introduces Solar Panel Technology to Texas Homebuilding Facility Clayton Homes, a Tennessee-based builder of site-built and off-site built homes, has installed a 200 kilowatt solar carport system at its Sulphur Springs, Texas, home building facility. Installed by Solar One, the new solar panel system will allow the company to offset 30 to 40% of the facility’s on-demand electricity use with renewable energy, while providing shade for its team members’ vehicles.

electricals, ball mounts, and cargo management components.

Alaskan Town Moves to Embrace Tiny Homes The Sitka Planning Commission voted 3-2 to change the general code to allow tiny houses and tiny houses on chassis in mobile home and manufactured home parks. The vote was the result of an action plan, first proposed in 2018, directing the commission to review zoning codes to see which ones could be changed to enable tiny homes as a potential affordable housing option.

Lippert Components Completes Acquisition of CURT Group

Manufactured Housing Properties Inc. Acquires ARC

LCI Industries announced that its wholly-owned subsidiary Lippert Components, Inc. has completed the previously announced acquisition of Curt Group for approximately $340 million. Headquartered in Eau Claire, Wisc., Curt is a leading manufacturer and distributor of branded aftermarket towing products and truck accessories. It maintains a product portfolio comprised of thousands of SKUs including hitches, towing

Manufactured Housing Properties Inc. acquired ARC manufactured housing communities in December 2019. Five communities in the portfolio account for 187-pads in Lexington, S.C. This was the company’s fifth 2019 acquisition. It owns and operates 1,134 lots across 18 manufactured housing communities and is actively seeking to expand its portfolio.

8 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

HAPPENINGS

360 Risk Management Partners with Community Risk Solutions

Orix USA Acquires Hunt Real Estate Capital

JCF Housements to Expand in Fayetteville-Lincoln County

360 Risk Management, Inc., a full-service commercial insurance agency in Northville, Mich., has formed a strategic partnership with Kristin Gargano and Community R isk Solutions of Com merce Township, Mich. CRS specializes in insurance and risk management programs and consulting services designed specifically for the manufactured housing industry.

Orix Corporation USA, the U.S. and Latin America business hub for Tokyo-based Orix Corp., acquired Hunt Real Estate Capital, LLC, a subsidiary of Hunt Companies, Inc. Orix USA will combine Hunt Real Estate Capital with its two real estate capital brands, Lancaster Pollard and Red Capital Group, to form a full-service entity with the goal of emerging as a top-tier national commercial real estate lender.

JCF Housements has selected Fayetteville-Lincoln County for its southern manufacturing facility. The company’s capital investment is estimated at $10 million and will create 250 jobs over the next 12 to 18 months. The company will operate from an 80,000-square-foot facility.

Universal Forest Products, Inc. Now UFP Industries Universal Forest Products, Inc. reorganized its operations and now operates as UFP Industries. Not just a forest products or wood company anymore, the company has evolved from a lumber wholesaler to a mixed materials manufacturer and solutions-provider serving thousands of business customers. UFP Industries has approximately 170 locations and 14,000 employees around the world.

Flagship Communities Acquires Southwood Pointe F l a g s h i p C o m m u n it ie s , a n Erlanger, Ky.-based owner and developer of manufactured housing communities, has acquired its second community in Paducah, Ky. The community, Southwood Pointe, sits on 13 acres and its 75 home lots are currently 75% occupied.

Klein Group Purchases Vancouver Island Community Klein Group purchased a 23-pad mobile home park on Vancouver Island for $1.23 million. The sale price was $100,000 above the community’s assessed value.

K2 Partners with Homesite to Insure Manufactured Homes K2 Insurance Services, a subsidiary of Aegis General Insurance Agency, has partnered with Homesite Underwriting Managers, the program business unit of Homesite Insurance Group. Bob Kimmel, president »

Photo courtesy of ELS Properties.

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HAPPENINGS

and CEO of K2, said Homesite’s record of success and innovative focus within the residential property market will allow Aegis General to continue its growth trajectory and industry-leading profitability within the manufactured home and affordable-housing insurance sectors.

Franconia Manufactured Home Park Purchased by Residents Homeowners in Fox Hill Lane Mobile Home Park recently purchased their 39-unit manufactured home community, making it New Hampshire’s 132nd resident-owned community. Homeowners, backed by training and technical assistance from the New Hampshire Community Loan Fund, organized and formed Fox Hill Cooperative Inc. to facilitate the purchase. The cooperative negotiated with owner Joyce Fisher and reached agreement on a $725,000 purchase price.

S2A Modular Seeks to Build Manufactured Housing Factories S2A Modular, creator of GreenLux luxury residences and commercial buildings, has launched a nationwide search for locations to build eight “mega factory” facilities that will drive positive economic impact for regions, cities, and municipalities. GreenLux homes come equipped with a rechargeable home battery system, patented graphene solar panels from FreeVolt Solar, smart appliances, and other cutting-edge components with a patented mobile app platform that controls the entire ecosystem.

Green Courte Partners Acquires Eleventh LandLease Community Green Courte Partners, LLC has opened its fourth investment fund, Green Courte Real Estate Partners IV, LLC. The group also acquired its 11th land-lease community, Highland Manor, a 382-site all-age community located in Independence, Mo., approximately 13.5 miles east of Kansas City.

Woodland Park Planning Commission Discusses Zoning The Woodland Park Planning Commission is discussing amendments to the zoning code regarding single-family uses in multifamily zones. Planning Director Sally Riley went over the proposed timeline for amending the code before a moratorium against these kinds of projects ends in mid-July. A final draft of the ordinance was set to be presented at a joint work session with the Woodland Park City Council. The draft ordinance aligns the definitions for “manufactured HUD homes,” “modular factory-built residential structures,” “mobile homes,” and “mobile home or manufactured HUD home parks” with Colorado definitions. It also adds definitions for “single-family dwelling or residence” and “recreational park trailers”.

Model Nearly Complete for Experimental Manufactured Home Project A model manufactured home is in the works on Franklin Street in Danville, Va., as part of a project to offer affordable housing for homebuyers. Officials hope to build four more of the homes that would be moved to the neighborhood, with one constructed at the corner of Beauregard and

Franklin streets and three more at Lee and Beauregard streets.

DuraLife Announces New Decking Program DuraLife, a leading manufacturer of composite decking and railing, now offers the DuraLife Custom Length Program for its deck boards. The program offers custom-length boards for all DuraLife decking and dock profiles and colors. DuraLife’s unique polypropylene capped composite outperforms other composite and PVC decking, and the Step-Clip® hidden fastening system reduces install time by up to 50%.

In Memoriam: Industry Mourns Loss of Oregon, Idaho Tradesman Nicholas “Nick” Eli Bunn II, 50, who worked in residential remodeling, including for manufactured homes, died Friday, Dec. 20, 2019, at Kaiser Permanente Westside Medical Center in Hillsboro, Ore. He suffered a stroke on Nov. 22, 2015, and his death was the result of a recent illness. Mr. Bunn was born July 31, 1969, in McMinnville, Ore., to David Bunn and Judy (Milton) Mather. He was known for a vibrant smile that captivated and endeared him to everyone he met.

Radco President Passes Away Hala Jawad, Radco president and industry veteran, died on Dec. 31, 2019. Mrs. Jawad had been a valued part of the Radco team for 19 years, where she was promoted to president in 2017. She was recognized for her excellent work with the Department of Housing and Community Development and Radco’s manufacturers. She also was a contributing member of the CMHI Board of Directors. MHV

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 11

CORONAVIRUS IMPAC T

A ‘New Look’ Business Approach in Weeks, Months Following Coronavirus Disruptions by Patrick Revere

odd Su, president and CEO of Advantage Homes in California, spent the early days of the coronavirus lockdown talking to news reporters and hopping myriad Zoom conferences. He operates 1 3 retail stores throughout the state and continues to eye out-of-state expansion opportunities. Business slowed some with the implementation of coronavirus safety measures, but it didn’t halt. His days took on a different look and those changes may endure depending on how far COVID-19 spreads, and the timeliness of a vaccine. “Unfortunately, even though we’re part of the essential business declaration, we just weren’t that comfortable keeping our sales centers open, for the safety of our employees and customers,” Su said. “We were mostly closing deals we’d already begun, working on serving those customers and finishing well. The new business was bound to ramp up before we were able to get back on the sales floor, though, and we took steps to prepare for that.”

How Technology Supports Changing Environment With the corporate headquarters and main sales center in San Jose, the tech culture is rich. “We have increased our Matterport 3D so people get that feel, and we’re writing deals that way,” Su said. “We have some of our sales associates using their phones and doing Facebook Live or FaceTime to walk people

through, and that’s working as well. “We’re encouraging more and more of this, doing weekly training with agents on how to conduct these remote transactions,” he said. Su said development of remote sales structure will remain vital. “We have to morph our industry a bit more to ‘subject to final viewing’ with most of the work done online with DocuSign and other tools,” he said. “This crisis could be six months, two years? We don’t really know. My feeling is this is going to last for a while, and we need to alleviate concern and create the most comfortable environment we can with the technology at our disposal.”

How One National Community Ownership Group Navigates Coronavirus Response Steve Schaub, CEO of YES Communities, said the national organization with 215 properties and over 56,000 homesites, worked out a standard operating procedure to manage communities during the coronavirus crisis while maintaining compliance on varying state executive orders. “We have signs on the doors that convey COVID-19 changes,” Schaub said. “We do have team members on site. With maintenance, we’re letting residents know we’re responding to emergency situations only, like HVAC isn’t working versus a door that’s not closing well, for instance. “For emergencies, we have maintenance going in homes with proper

12 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

PPE, like a mask and gloves. We ask residents to step into another room or even to go outside while the work is being done,” he said. “Our offices have staff, but much less than usual. We have no more than two staff members in our community offices at any given time, but we like most organizations have a large group working from home.” Schaub said rent collection across the portfolio has only been off by a percentage point or two, and that operations for showing homes have been altered to keep business moving. “We put a lockbox on the house and give people a timeframe when they can go in there and view the home, then follow up in an attempt to fill the home as effectively as possible. If we need to have someone else come through the home we change the code, sanitize the door handle and make sure the home is thoroughly cleaned for the next customer.” He sa id Y E S Com mu n it ies has continued to see good new business traffic. “It’s not what it was before all of this coronavirus stuff started, but it’s much better than the first week or two of operating this way,” Schaub said. “People do continue to come and go — home buying plans haven’t changed that much.

Managing Common Areas All indoor common areas are closed, as well as gathering areas

like the pool, pickleball, shuffleboard, and playgrounds. “The parts that we kept open are what we call ‘park light’, which really is a green space,” Schaub said. “We’re letting a parent get out there and kick or throw a ball with their kids, for instance. That’s not a problem at all, but we’re discouraging anything more than that and we really haven’t had any issue with it.” Walking paths and dog parks also remain open, with signs that remind residents to maintain social distancing standards and to make sure they wash

their hands when they get back home. “I always tell people in an emergency situation to look for the silver lining, and we do,” Schaub said. “We’ve performed what I would call remarkably well, and it shows the ability for us to weather the storm in the manufactured housing industry.” Again, technology is at the forefront of weathering that storm. “The ability to communicate with residents via the YES app has been a blessing to us,” Schaub said. “We can send notifications, emails, and receive resident communication through this

technology… we’ve learned from other industries how to do that effectively. “It’s changed the way we approach it forever. We can and should be able to show homes at 8 o’clock on a summer night using a self-guided tour on the prospect’s schedule and then come back to them with a sophisticated follow-up system,” he said. “This all comes into play, from drone flyovers to on-line leasing and bill pay. All this will help make the business better, even when we get through this pandemic and the economy has recovered.” MHV

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CORONAVIRUS IMPAC T

The Impact of Coronavirus Measures on the Manufactured Housing Industry MHInsider magazine surveyed more than 600 manufactured housing professionals from all segments of the industry asking a few questions about how measures to prevent the spread of coronavirus have impacted business. The responses show a nearly even split between businesses being impacted “very much” versus “somewhat” in the first month of operating in the coronavirus economy. Slightly less than 7% of respondents said their business was unaffected. About half of respondents said stay-at-home orders and subsequent labor and supply chain disruptions will have somewhat of a negative impact, while about a third said the changes will continue to impact their operations very much in the months to come.

Looking ahead, 30% of respondents said they’re most concerned about the potential loss of revenue in the months to come. Further detail on what concerns manufactured housing professionals can be found in the graphics below. Survey responses come from manufactured home community owners and managers, retailers, brokers, investors, lenders, service and supply providers, manufacturers, and association executives.

A DEEPER LOOK AT THE SURVEY RESULTS Anticipated Future Business Disruptions that Cause the Most Concern

30%

22% 20

15%

14%

2% 0

Buyer/ Market Confidence

Loss of Revenue

Ability to Conduct Business

General Economic Impact

14 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

Health/ Safety

Availability of Capital

4% Supply Chain Disruption

3% Labor/ Employment Limitations

1% None

a few representative responses What are you doing to minimize the impact of the coronavirus crisis on your business? “Trying to organize to be a more efficient workforce. Staying in touch with our residents and making small allowances to help them stay current on rent.”

“Extra advertising, phone calls, emails, and texting to maintain contact with clients. Updates on my website and other ad platforms to ensure folks know we are here.”

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“Office is closed to physical visits. Virtual home tours, SBA PPP loan to ensure cash flow bump in case of reduced rent payment in the future.”

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What best practices or advice do you have to share? “Show up every day and work hard and smart. Keep a positive attitude with employees and clients.”

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2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 15

David Ruby, owner of Gemstone Communities.

Gemstone Communities Florida................. 15 Indiana................. 4 Louisiana.............. 1 Ohio..................... 13 N.J............................ 1 Michigan...............2 Texas......................3

Gemstone Communities Shines Among New Owners/ Operators by Patrick Revere

Photos courtesy of Gemstone Communities

avid Ruby began his career in private equity before starting his own business in the manufactured housing industry almost six years ago. It’s become an industry theme: so much “new money” coming to manufactured housing, and the news stations and political platforms have been quick to criticize those new players who make mistakes. But new owners and investors who are reticent to inquire and learn are a very small part of the mosaic that makes up manufactured housing. Ruby knows that, proves that, and wants to set the record straight.

The company shows an authentic and sophisticated approach to property management. Gemstone acquired its first three communities in southern Indiana in 2014. Since, it has grown to own and operate 39 communities in seven states across the country. All of those acquisitions happened in about 20 deals. And Ruby isn’t looking to stop acquiring anytime soon. “We see continued opportunity in this industry for growth. There is no shortage of undercapitalized properties that, with hard work and investment, can’t become exceptional communities. We believe we have the right attitude and resources to make that happen," he said.

New and Growing Quickly

Learning the Business

Gemstone started out of a room at Ruby’s home. “My wife would help me send out the residents’ monthly statements. We would cut postcards out of cardstock, hand stamp them and then walk them down to an old blue mailbox at the end of our street,” Ruby said. Gemstone expanded into a spare office at a small law firm run by a friend and colleague. Now, with rapid growth and expansion, Gemstone has moved to a brand-new, state-ofthe-art office building in Troy, Michigan.

Ruby is not one to tout. It’s definitely been a learning curve and a humbling experience for him. He knows he made a fair amount of newbie mistakes in due diligence, received a hands-on education in infrastructure crawling underneath homes in the middle of winter to find water leaks, and has learned to navigate the eclectic personalities on every side of the industry. But, the one thing he always has done, is put the residents first. »

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 17

COMMUNIT Y

sites under management. We more than doubled last year. We acquired five communities on our own, with our own pool of capital, and we did a large deal down in Florida with Chicago-based Inland, one of the nation’s largest commercial real estate firms. That was a purchase of 13 properties and nearly 1,400 sites.”

Staffing Up for Success Ruby said one of the most difficult decisions was when and whom to hire. Gemstone waited about three years to hire its first on-staff corporate employee, which may have been too long, according to Ruby. “It’s hard,” he said. “It’s hard to make that first hire. You keep pushing it. Say it’s an entry-level salaried person, I was looking at that expense on a monthly basis and wanting to push it

just one more month. However, once I finally mentally separated the business bank account from the personal bank account it became easier and things fell into place. You don’t realize how much you need that support though, until you get the first person in, assuming it’s a good hire. It’s absolutely critical. And then it starts to snowball. Today we employ over 50 people and each one of them is absolutely crucial to our success.” MHV

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“A couple weeks ago we had a resident come out with tears in his eyes because we were paving his driveway,” Ruby said. “He told us no one had ever done anything like that for him. It was a big deal to him, not us, but what you learn is that people genuinely want to live in a nicer place and we can help make that happen.” Gemstone sometimes spends more than allocated in deferred maintenance and capital expenses. That is because Ruby views his communities as long-term investments. To date, he has not sold anything. “When you see how some other owners operate, by making bare improvements if any, and aggressively increasing rents, it becomes difficult to justify the purchase. We have acquired some of these properties. We have to pay substantially more than the previous owner paid, even when they’ve owned the property for a short period. Their model is to quickly increase income and 'flip' the deal. And when rents are pushed so quickly it is challenging for us to make the necessary improvements. We balance this challenge with a long term investment horizon. We believe in manufactured housing and we know that if we put the work in we can justify the purchase price,” he said. A good example of the learning curve can be found in one of the first properties Gemstone acquired in Indiana. “The rent roll was a little light, the homes weren’t in great shape and the expenses weren’t exactly represented accurately. We had to hustle, bring in homes, increase the occupancy to make the deal work. It was a good experience. And things are going well now,” Ruby said. “We have about 4,500

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COMMUNIT Y

Photo courtesy of BoaVida Group

BoaVida Sees Gold in the Silver State, Acquires Six Nevada Communities by Patrick Revere

he BoaVida Group, owner and operator of mobile home and RV communities across the country, has acquired three properties in Las Vegas and three in Winnemucca in a single transaction. This continues a pattern of growth that, in 2019, added more than $150 million of properties to the $300 million the company already owns and operates. In Las Vegas, BoaVida purchased the Arrow Palms, La Villa and Las Palmas mobile home parks, adding 214 spaces to its portfolio at a cost of just under $11 million. “These are ‘all-age’ communities, which means we are providing a significant amount of workforce housing that is within 20 minutes of downtown Las Vegas,” said BoaVida’s Eli Weiner. In Winnemucca, the company acquired the 100-space Carriage Court mobile home park along with two apartment complexes in a transaction valued at $6 million. 20 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

BoaVida already owns and operates the Silver State mobile home park in Carson City and Desert mobile home park in Las Vegas, each with 80 spaces. “The rapid pace of acquisition continues through the COVID-19 situation, with the company looking for fewer but larger opportunities this year, probably 20 to 25 parks with a total value of $120 million,” Weiner said. Weiner created an investment fund last year to facilitate the company’s growth. The company acquired 34 communities totaling more than 3,200 spaces from California to Rhode Island. “Our relationships with lenders have been very favorable. Title companies and county recorder's offices are operating," he said. "While the COVID-19 environment slows things down in terms of processing, it also means some buyers are unable to perform and we are ready to fill that gap.” MHV

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LENDING

TALKING CONSUMER LENDING

WITH CASCADE FINANCIAL’S CODY PEARCE »1. It’s early yet in the programs, but what if any type of market change have you seen with the emerging presence of CrossMod/MH Advantage/ CHOICEHome? The CrossMod product is an excellent opportunity for our industry to initiate dialogue and educate the public as well as regulators and policy makers on the quality and affordability of manufactured housing. Within the industry we know and understand that manufactured housing is the most viable solution to the affordable housing crisis in America. However, to continually change and improve the image of manufactured housing is a difficult and slow process. CrossMod is an excellent new segue into the dialogue that needs to be had. Undoubtedly the positive effect of this education will impact all manufactured housing products, not just CrossMods. "Outside of this education, we, as an industry, need to find a way to solve the zoning issues that prevent these and all HUD homes from going into most municipalities. This dialogue was a significant portion of our most recent MHI Financial Services Division board meeting in Nashville. It’s a real issue that MHI and their membership will be taking on.

LENDING »2. What type of advantage do you feel these new programs offer lenders/retailers in the manufactured housing industry that is unattainable by originators and servicers of conventional home finance packages? I think the biggest benefit is affordability followed by speed to build. To be able to have a home built in a factory that rivals site-built housing for significantly less cost per square foot and a much quicker build time is a significant advantage that our industry must take full advantage of.

»3. If we assume these new homes and finance programs that can co-exist with standard R1 site-built homes will pare away at the exclusionary zoning practices our industry has experienced, how long do you feel it might take for a notable change to occur? From a consumer lending perspective, how do you forecast and measure this type of change? This is a big discussion. We need to push on this, presenting to our industry and gathering a task force to explore ways to appropriately approach zoning change. The state associations do a good job of that, they’re the boots on the ground and have relationships with planners and zoning boards of appeal. And MHI really should look to them on this front. We have the federated states division of MHI, made up of state association directors who would be a primary resource for this area of industry activity…. there’s an opportunity to create a set of best practices

that will go into a play book, or a tool kit of some kind. It has been suggested that we urge the federal government to halt Community Development Block Grant (CDBG) funds for local governments that fail to meet a certain threshold of manufactured housing implementation in affordable housing initiatives. But there’s no one approach that’s going to be the ultimate solution. It will be a combination of approaches that will be a solution that works over time. The sticking point is that we’ve been at this type of effort for some time, and we don’t want to look back in another few years and say ‘Man, we should have done more or we should have done this differently.’ The important time to make that positive change is now.

two minutes. This type of technology gives the retailers and communities the ability to sign and execute contracts before the borrower leaves the sales center. Site-built lenders have had this technology for years, our industry has lagged slightly behind but at Cascade we have addressed this and are excited about continuing to develop and streamline the lending process for our clients. We believe that our continued advancements in technology and lending programs will positively impact a boost in unit sales for the retailers and communities with whom we work.

A few years back it would have been

»4. Tell us how your chattel lending programs have fared in the last year or so? Are you seeing an uptick in activity?

absolutely unfathomable to

Although Cascade has provided land/home financing in the manufactured housing industry for over 20 years, we have only been lending on chattel for about three years. So, with our chattel programs we really had nowhere to go but up. We have expanded and developed our loan products to assist retailers and communities in expanding their sales. On top of our wide range of loan products, Cascade has invested significant time and resources into developing technology to streamline the lending process for consumers and retailers alike. With the development of our digital loan application we are getting a full prequalification with income, credit, and other applicable qualification guidelines considered and back to the borrowers and retailers in less than

for manufactured housing...

think that the Secretary of HUD would be advocating

–Cody Pearce

»5. Does the industry in this chattel category continue to be hampered more by the slowto-grow secondary market or is the lean chattel market more of a reflection of so few new manufactured home communities and reliance on growth coming from existing community expansion? As you know, the macro backdrop should be highly supportive of demand for chattel as one of the most attractive solutions to the affordable »

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 23

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LENDING

housing crisis. However, there are several forces at play that are impeding growth. There are many that point to a lack of a secondary market in the financing of chattel loans. In 2019 Cascade executed the first securitization of newly originated manufactured housing loans since 2007. We sold a pool of $174 million in loans to institutional investors. This was a tremendous accomplishment for Cascade, but also for the entire manufactured housing industry. The lack of a secondary market for non-agency and non-government manufactured housing loans has limited lending in our industry. Creating additional liquidity by the closing of our securitization is a huge first step in creating a secondary market. We will likely issue another larger securitization in the third quarter of this year. While our first one was unrated, we are working with rating agencies now to get this next one rated. These initiatives should pave the way for more availability of credit for chattel buyers. That will certainly enable Cascade to assist more buyers in achieving the dream of home ownership. That said, simply improving the financing markets is not enough. The lean chattel market is really a reflection of zoning constraints and a misplaced stigma around the sector. We need a sea change in buyer demand to move the amount of shipments into a place that is consistent with solving the country’s lack of affordable housing.

»6. What does the future hold for you? What do you feel is the key to being a successful

consumer lender for affordable homes? We think affordable housing and the work MHI and its membership are doing will continue to help this industry grow, and as shipments

go up we’re going to be prepared to create and offer better, more efficient programs to help finance those homes. The industry is about to finally break through the 100,000 shipments level and ideally with the right economic factors, push far beyond it. The industry has some very strong tailwinds right now and Cascade takes very seriously our role to create and provide loan products that will support sustainable industry growth.

»7. W hat are your impressions on the overall climate for the manufactured housing industry? Clearly this is an unprecedented moment in history. 2020 started with such strong tailwinds but the current situation with COVID-19 has altered every aspect of growth worldwide, not just in our industry. That being said, manufactured housing was the best solution to the affordable housing crisis in the United States

prior to the current situation, it is the best solution during the crisis and manufactured housing will be the best solution after the crisis. Cascade is dedicated to creating better systems for our borrowers to aid retailers and

communities in fulfilling the demand and we take very seriously our role to create and provide loan products that will support and promote sustainable growth. Additionally, our message is being well articulated, and it’s being heard. A few years back it would have been absolutely unfathomable to think that the Secretary of HUD would be advocating for manufactured housing and that we would have homes displayed on the national mall in DC. It was something we just wouldn’t have thought would happen. And to have Fannie, Freddie and FHFA coming out to our home shows and conferences to educate themselves and the public as they work towards their Duty to Serve requirements has given the industry visibility that we have not previously enjoyed. It’s a testament to the Grit of our industry. We are an industry who rolls up our sleeves, works hard for change and doesn’t take no for an answer. MHV

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 25

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LENDING

LENDING TRENDS

IN MANUFACTURED HOME COMMUNITY FINANCING By Tony Petosa

Since 2000, Wells Fargo has originated more than $13 billion in financing within the MHC sector and has been named Community Lender of the Year 12 times, by the Manufactured Housing Institute. With the consideration that, as we go to print the COVID-19 crisis is being addressed, and lenders are assessing associated economic fallout, we'll provide an overview of what we perceive to be the best lending options currently available for manufactured home communities as well as some emerging trends within financing programs. The MHC sector has enjoyed an incredible run over the past several years as lenders and investors alike have recognized the strength and stability the asset class demonstrates— strong occupancy, solid rent growth, low default rates. Because of these characteristics, we have not only seen investors purchasing communities at historically low cap rates, but we have also seen lenders aggressively pursue financing for MHCs by offering historically low interest rates. So, with myriad lenders pursuing manufactured home com-

munities, it is important for owners to know what to expect in today’s financing environment when dealing with these various financing options.

Fannie Mae and Freddie Mac The agencies have been the first lender of choice for most community owners for quite a few years now. Fannie Mae saw their MHC lending volume increase dramatically after the 2008 financial crisis, and Freddie Mac also has experienced growing market share after their 2014 entrance into the community lending space. In 2019, Fannie Mae provided $2.5 billion in community financing while Freddie Mac provided $1.4 billion. The most notable recent development for the agencies was the lending volume cap structure that the Federal Housing Finance Agency announced in October. The maximum lending cap for each agency was set at $100 billion through 2020 with a noteworthy requirement that 37.5% of their total volume be dedicated to “Mission Driven Business”, formerly known as "Uncapped” business, which happens to include manufactured home communities. Another important item of »

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 29

LENDING

note in the FHFA’s plan is that “Green Financing” — financing for borrowers who commit to implement certain energy and water efficiencies at their properties — will not fall under the definition of Mission Driven Business. Given that Green Financing accounted for as much as half of the agencies’ uncapped business in recent years, we expect they will have added motive to pursue MHC financing throughout the rest of the year as they will need to fill the void that will be left as a result of the exclusion of Green Financing from Mission Driven Business. As such, manufactured home community borrowers should not be surprised to see interest rate spreads quoted by the agencies to be significantly lower than spreads for conventional multifamily properties.

Commercial Mortgage-Backed Securities (CMBS) Lenders In 2019, lenders of commercial mortgage-backed securities, also known as conduit lenders, captured their highest total loan volume since the years preceding the 2008 market crash. Most industry experts expect loan volume to remain strong in 2020, but as it relates specifically to manufactured home communities, we don’t expect CMBS lending programs to be the first choice for most community borrowers, particularly for properties that qualify for agency financing. The CMBS lenders typically will have wider spreads, a more expensive process, and more restrictive loan structures when compared to other lending options. Additionally, their interest rate pricing may be more volatile relative to other lending options

30 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

as CMBS lenders are more closely tied to movements in the general financial markets. However, CMBS lenders do like the community asset class because it provides diversity to the pools they securitize, and they can be a good option for MHCs of lower asset quality, MHCs located in tertiary markets, and for borrowers with credit issues.

Life Insurance Companies (lifecos) Historically, lifecos have been more focused on lower loan-to-value (LTV) transactions, but recently we have seen many lifecos demonstrate more willingness to move up the LTV scale. Still, lifecos tend to be more selective on asset quality when assessing manufactured home communities, and they also prefer large loan transactions, often of $10 million or higher. For these reasons, we don’t envision lifecos greatly increasing their MHC lending volume in 2020, and instead would expect them to pursue higher quality conventional apartment loans, particularly given the FHFA’s mandate for the agencies to originate a material portion of their allotted lending volume on affordable multifamily properties. For those MHC owners who do finance their properties through lifecos, they can take advantage of competitively priced fixed-rate long-term debt (up to 30 years) and the ability to lock in the interest rate at the time of loan application. But, in today’s low interest environment, most lifecos are implementing interest rate “floors" that often results in an all-in interest rate that is higher than the quoted spread to the actual index yield.

LENDING

The Banks

much scrutiny as, if not more than, the performance of the property. Furthermore, we expect banks to continue to focus on properties located in strong infill markets while shying away from secondary and tertiary markets. In fact, regional banks may not be willing to lend on properties located outside of their retail footprint. One way banks are expected to compete for market share throughout the year is by continuing to offer lower closing costs and more flexible structures in comparison to the other financing options discussed earlier. While it may be intimidating for borrowers to have to assess so many different lending options, remember that this is a good problem to have. COVID-19 and overall economic recovery will be at least the short-term focus may impact some of the lending

When it comes to community financing, it can be hit and miss with the banks, and it is difficult to tell at this point whether they will increase their market share in 2020. While some banks have a good understanding of MHCs (i.e. strong credit performance), and will therefore quote aggressive loan terms, others view community financing as “special purpose” real estate and will only lend on a conservative LTV basis and/ or on a short amortization schedule, 20 years in some cases. In contrast to the non-recourse lending options provided by the agencies, CMBS lenders, and lifecos, community owners should be prepared to sign personal guarantees on most bank loans, and the personal credit of the borrower will be subject to just as

options we discussed, but we expect interest rates to remain very low and favorable lending terms to be available for MHCs in 2020. For more information or for a copy of the "Manufactured Home Community Financing Handbook" contact Tony Petosa at (760) 438-2153 or tpetosa@wellsfargo.com or visit www.wellsfargo.com/mhc. MHV Tony Petosa is based in San Diego and is the managing director for Wells Fargo Multifamily Capital where he has worked for 20 years. He originates loans nationally and has opened and managed regional loan origination offices in Florida, Georgia, and Southern California.

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2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 31

LENDING

Q&A

with Michael Giordano Monroe & Giordano is a leading commercial lender in the manufactured housing industry, a mainstay at industry shows, and a partner in large commercial transactions of manufactured home communities nationwide. Principal and founder Michael Giordano took the time to answer a series of questions posed by MHInsider about commercial lending in the industry.

» 1. T ell us how the pipeline volume has been during the first part of the year?

» 4. How are cap rates trending?

We had a very strong 2019 so we expected pipeline to slow in 1Q2020, but it has remained steady. Our clients are continuing to refinance maturing loans early to lock in current low rates and for acquisitions to remain aggressive with their offers.

Still declining each year. High-quality MHC are now in the 4% range in some cases or even less depending on the specifics, even without a value-add story tied to it. RV Parks are now pushing into the low 6% range if rents have room to grow, especially if a large percentage of the occupancy is permanent park model.

» 2. Are you spending more time on properties that are changing hands or refinance/expansion?

» 5. H ow long are properties staying on market in 2020?

Still a combination of both. Quality MH community acquisitions seem to have slowed a bit due to very tight inventory. However, clients are still finding niche opportunities in both the RV space and MH communities in more tertiary markets.

Is that picking up pace or slowing from late last year/ early this year? Not sure on this. Good quality deals are not typically “on the market” like other asset classes and tend to trade off market. Brokers are often still involved but not in the traditional market listing way.

» 3. Is there a particularly hot market or region?

» 6. W here do you see the market going during the remainder of 2020 and into 2021?

The typical 'strong markets' which we consider the sunbelt (Florida, Arizona to California) continue to be strong but as mentioned above, markets that our clients did not typically look at before (Midwest, mountain, etc) are becoming more of a focus to put money to work.

32 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

Probably flat as far as rates and prices. I don’t see much more downward movement in cap rates but I think the rates and return expectations we have been seeing the last couple of years is the new normal. Particularly since we are able to deliver such favorable debt terms and structures which of course is helping to underpin the ability to drive price. MHV

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BROKER AGE

How Coronavirus Will Impact the Manufactured Housing Landscape by Kevan Enger

Over the last several years, the mobile home category has boomed. The convergence of multiple supplyand demand-side market conditions coincided with a historic generational shift to create an unprecedented sellers’ market. This seller’s market had extended beyond expectations and was long-believed to be in its eleventh inning. Will coronavirus prompt a gameover call?

The Market Was Hot For the most part, larger parks in large MSAs were in the highest demand. Hot markets such as California, Arizona, and Florida had the greatest price gains. Cap rates in these markets approached 3% for group buys of larger parks in February of this year, while we were still seeing smaller deals in the 9% range. Our sales data shows an average cap rate reduction of approximately 38 basis points.

The Pre-Coronavirus Landscape

Occupancy Good And Improving Our reports show an approximate 4.8% increase in occupancy over the last two years for the properties we were marketing. A broader view of the category at the market level revealed a slightly lower increase in occupancy but confirmed the upward trend. According to MHInsider’s 2019 State of the Industry edition, national »

By supplementing available market intelligence with our own national data and empirical analysis we have created a moving picture of the community segment. Over the 2018-2019 period, our data shows strong demand for mobile home park communities. That demand continued to drive prices up and push cap rates down.

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 35

BROKER AGE

occupancy rates for manufactured home communities reached 93% for the 12-month period between May 2018 and May 2019. All-ages communities came in at 91% while 55+ communities reported an average 96% occupancy rate. The data revealed an uptick of approximately 1% for the national metric over the same period. Breaking it down, all-ages communities registered an increase of 1.2%, while the 55+ communities gained of 0.5% in occupancy. The occupancy metric is interesting because mobile home parks have historically been a multi-generational hold with limited change over the years. As larger and more sophisticated groups have entered the market, we’ve seen a lot more streamlining and efficiency in the space both on the back and front end of the business. This increase in efficiency contributed to a reduction in vacancy rates particularly in the sunbelt. Increasing curb appeal within the go-to-market trend helps push occupancy rates up. In addition, the national lack of affordable housing combined with more appealing models of manufactured home options has contributed to a boost. Sales Volume At Historical Highs The big driver in the category has been the signif icant sales volume increase. According to a recent Fannie Mae report, 2018 mobile home community sales volumes reached approximately $9.3 billion, highest since the end of the Great Recession in June 2009 — an important point we’ll revisit in the post-pandemic section. The report notes much of the volume was driven by large transactions

and private investors, including privately-owned companies with about 70% of the purchase volume. In addition, institutional buyers accounted for 10% of the volume, but the top spot in acquisition share belonged to Fort Worth-based institutional fund TPG Capital with acquisitions of $387 million. TGP was followed closely by Yes! Communities, a private REIT based in Denver with $376 million in acquisition volume. Internally, our empirical analysis reflects a similar pattern with

As affordable housing, we are recession-resistant and become a more attractive option during challenging economic periods. –Kevan Enger

approximately 75% of our sales going to private investors and groups that include privately-owned companies and/or developers. Deal Velocity Acceleration Other trends were in transaction velocity and market players. We see a marked decrease of approximately 26.6% in days on market. Much of this was due to the large number of buyers entering the market and the heightened interest in the category. A higher number of buyers speeds up the process and increases the competition. For example, last year we averaged approximately 12 qualified

36 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

offers a deal. This allowed us to find the right buyer, at the right price, much faster. As a result, our internal velocity metric increased by approximately 100% year-over-year. And then, coronavirus called a time-out.

The Post-Coronavirus Outlook As we looked ahead to 2020, we saw a few trends developing and were on alert for other factors that could play a role. W hat no one foresaw was a global pandemic. Before the COVID-19 crisis, one of the biggest swaths of uncertainty was around the impact the election, politics, and fiscal policy could have on interest rates. Buyers had been on the favored side of rates. Perhaps in anticipation of potential changes on the horizon or even the awareness of the seller market’s 11th inning feel, our information was showing an increase in sales volume. Six weeks into the year, we had already produced 40% of our 2019 volume and we fully expected this rate of increase to continue with the potential that it would begin to level off toward the end of the year. The New Challenges Approximately a month into the crisis in the United States, the fundamental yet short-term challenges were: 1. Lack of financing options The lack of financing options has already started and it is one of the biggest challenges we will encounter. Acquisitions of manufactured home communities are primarily financed by agencies such as Fannie or Freddie, banks, and the CMBS market.

BROKER AGE

The CMBS market is at a standstill and will remain so well into summer. Banks also hover on pause with stricter parameters for future deals and backing off ones in process. The apparent outliers are Fannie and Freddie and their favorite child â&#x20AC;&#x201D; affordable housing. Recent quotes from the agency are more favorable when compared to those given to multi-family. While agency financing typically calls for less flexible parameters, parks that qualify could jump ahead of the pack in deal velocity. 2. Bottlenecks across the board With the cou ntr y on pause, bottlenecks have formed across the transaction chain. This includes everything from financing and physical inspections to environmental studies and surveys.

As we move forward bottlenecks will ease but continue to create delays if more sporadically through the second quarter. Collections, an area that was expected to be a bottleneck, has so far materialized smoother than anticipated. Owners we've spoken with reported better than expected collections for the month of April. May results were still out at press time. 3. Uncertainty In the face of uncertainty, people tend to wait. We sit squarely in the middle of this phase. We will see uncertainty get factored into deals across the spectrum higher rates and revised resident agreements. This uncertainty is expected to begin to clear out as we move through the rest of this quarter and into Q3 and Q4.

Perhaps our MVP and pinch hitter in this and any crisis is our affordable housing status. As affordable housing, we are recession-resistant and become a more attractive option during challenging economic periods. Go to MHInsider.com for developing information on 2020 market conditions. MHV Kevan Enger i s a partner and manufactured housing director for Capstone MH. He specializes in helping mobile and manufactured home park property owners across the country successfully position, market, and sell their properties to maximize their returns. Capstone has seven offices in five states throughout Florida, the Southeast, Midwest, and Mid-Atlantic.

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MHI is the only national trade organization representing all segments of the factory-built housing industry. We are a trusted partner and industry leader that provides its members with a comprehensive range of advocacy, connections, education and engagement resources. www.ManufacturedHousing.org I membership@mfghome.org I 1655 Fort Myer Drive, Suite 200, Arlington, VA 22209

TOGETHER, WE ARE RAISING THE BAR AND SETTING NEW STANDARDS OF EXCELLENCE.

2020 STATE OF THE INDUSTRY â&#x20AC;˘ MHINSIDER.COM | 37

INDUSTRY TRENDS AND STATISTICS MHVillage and Datacomp combined efforts with industry partners MHI and Statistical Surveys to provide manufactured housing professionals updated annual trends and statistics from across the marketplace.

Competitive Advantage

COMMUNITY LIVING

MARKET SEGMENT

Site-Built Home $114 average price per square foot

4.2 Million estimated home sites

10% of new single-family home starts

Manufactured Home $55 average price per square foot

37% of new homes are placed in communities

RESIDENT SATISFACTION

22 Million people live in manufactured homes

77% of new manufactured homes titled as personal property (chattel)

62%

of all residents anticipate living in their homes for more than 10 years

90%

of people are satisfied with their homes

71%

38%

of residents cite affordability as a key driver for choosing manufactured housing

donâ&#x20AC;&#x2122;t anticipate ever selling their home

Data courtesy of Sources: U.S. Census Bureau, industry analysis, MHI 2018 Consumer Research and other proprietary sources. ÂŠManufactured 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.

MANUFACTURED HOUSING PRODUCTION Produced 94,615 Homes in 2019

MANUFACTURED HOUSING SHIPMENTS 100,000 80,000 60,000 40,000

U.S. Corporations

20,000 0

129

2016

2015

Single

Manufacturing Plants

2017

Multi

2018

2019

Total Data courtesy of

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

TOP 10 RETAIL MARKETS

BY MARKET SHARE**

Manufacturer Clayton Homes Skyline-Champion Cavco Industries American Home Star Legacy Homes Live Oak Homes Elliott MH Inc. Adventure Homes Jacobsen Homes Kabco Builders

2019 MS 49.92% 14.94% 12.67% 2.20% 2.19% 1.96% 1.44% 1.54% 0.92% 0.86%

2018 MS 50.11% 15.36% 13.28% 2.50% 2.18% 1.80% 1.66% 1.84% 1.14% 1.10%

BY BTA*

Growth -0.76% -4.33% -2.95% -2.43% -7.16% 5.66% 6.64% 25.95% -3.49% 5.05%

Manufacturer Growth Houston, Texas .......................-1.37% Detroit, Mich. .........................-12.17% Dallas-Fort Worth, Texas.....11.84% San Antonio, Texas .............. 30.69% Austin, Texas .............................7.77% Denver, Colo. .......................... 54.51% Los Angeles, Calif. ................... 2.16% Birmingham, Ala...................... 7.28% Odessa, Texas ........................ 30.13% Tampa-St. PetersburgClearwater, Fla.........................5.82% *Basic Trade Area

Clayton Homes 49.92%

Skyline-Champion 14.94%

Cavco Industries 12.67%

Other **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.

Data courtesy of

MANUFACTURED HOME COMMUNITY RENT AND OCCUPANCY JLT MARKET REPORT NATIONAL AVERAGES (MAY 2019-MARCH 2020)

SITE RENT

OCCUPANCY RATE

ALL AGES: $528 MONTHLY AVERAGE AGES 55+: $589

ALL AGES: 91% MONTHLY AVERAGE AGES 55+: 94%

ANNUAL SITE RENT INCREASE

ANNUAL occupancy INCREASE ALL AGES: 1.2% AGES 55+: 4.5%

ALL AGES: 3.9% AGES 55+: 4.1%

Markets with Highest Rent

Markets with Highest Occupancy

Orange County, California................................ $1,463 Santa Clara County, California.........................$1,184 Los Angeles County, California.......................... $955

Santa Clara County, California................100% (+.1%) Miami-Dade County, Florida ..................100% (+.4%) Northern Colorado ......................................100% (.1%)

55+

Santa Cruz County, California ......................... $1,587 Orange County, California................................ $1,079 Santa Clara County, California...........................$943

Sarasota County, Florida.......................100% (+3.2%) Ventura County, California ......................100% (-.1%) Medford/Grants Pass (MSA), Ore. ..........100% (+.1%)

Markets with Lowest Rent

Markets with Lowest Occupancy

Highlands County, Florida ...................................$172 Albany, Georgia (MSA) ......................................... $223 Hendry/Okeechobee Counties, Florida .......... $224

Genesee County, Michigan ....................... 63% (+.9%) Leon County, Florida.................................. 68% (+.3%) Lee County, Florida ..................................... 71% (-.2%)

55+

Gary/Michigan City, Indiana (MSA)................... $185 Greenville, South Carolina (MSA)...................... $223 Miami-Dade County, Florida .............................. $225

Gary/Michigan City, Indiana (MSA).............61% (0%) Monroe County, Michigan........................61% (+2.4%) Las Cruces, New Mexico (MSA) ............ 66% (+12.7%)

All Ages

Markets with Greatest Increase in Occupancy All Ages

Southern Colorado ...............................................17.9% Birmingham, Alabama (MSA) .............................12.7% Polk County, Florida ...............................................6.9%

55+ 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. Â©Datacomp. Reproduction in any form is prohibited without written consent. Used with permission. Data courtesy of

Collier County, Florida.........................................33.3% Martin County, Florida......................................... 27.3% Manatee County, Florida.....................................26.2%

2019 National Average NEW Home Selling Price

$77,946.25

2019 National Average PRE-OWNED Home Selling Price

+4.59% $44,040.68

-4.00%

MHVillage.com Listing Data (MAY 2019-MARCH 2020)

TOP 5 MARKETS WITH AVERAGE NEW HOME LISTING PRICE GROWTH ABOVE NATIONAL AVERAGE Growth

Above Average

Las Vegas, Nev.-Kingman, Ariz. (MSA)

6.17%

1.55%

Atlanta, Georgia (MSA)

5.72%

1.13%

Los Angeles-Riverside-Orange County, Calif.

5.36%

.77%

Detroit-Ann Arbor-Flint, Michigan (CMSA)

5.35%

.76%

San Antonio, Texas (MSA)

5.06%

.47%

TOP 5 MARKETS WITH AVERAGE PRE-OWNED HOME LISTING PRICE GROWTH ABOVE NATIONAL AVERAGE Growth

Above Average

Houston-Galveston-Brazoria, Texas (CMSA)

-.49%

3.51%

Toledo, Ohio (MSA)

-.75%

3.25%

Punta Gorda, Florida (MSA)

-2.64%

1.36%

Sacramento-Yolo, California (CMSA)

-3.64%

.36%

Columbia, South Carolina (MSA)

-3.77%

.23%

MARKETS WITH LOWEST DAYS ON MARKET

ShermanDenison, Texas (MSA)

Oklahoma City, Oklahoma (MSA)

BloomingtonNormal, Illinois (MSA)

Corpus Christi, Texas (MSA).....................................................35 Chattanooga, Tenn.-Ga (MSA) .................................................36 Charlotte-Gastonia-Rock Hill, N.C. - S.C. (MSA) ................. 38

Raleigh-DurhamChapel Hill, N.C. (MSA)

Sioux City, Iowa-Nebraska (MSA)

Charleston-North Charleston, S.C. (MSA).............................39 Dallas-Fort Worth, Texas (CMSA)........................................... 40

Source: Based on new and pre-owned manufactured homes listed on MHVillage.com from May 2019 to April 2020. Â©MHVillage. Reproduction in any form is prohibited without written consent. Used with permission.

Data courtesy of

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Barry Shein Breaks His Silence, Talks About the Commodore Difference by Patrick Revere

The Commodore Corporation and its affiliated brands are mainstays among builders that display model homes at manufactured housing trade shows. However, Commodore owner and CEO Barry Shein tends to shy away from the spotlight, pleased that his companies and homes get the attention. MHInsider magazine managed to catch up with the elusive executive for a short conversation during his commute between company headquarters in Goshen, Ind., and the home building facilities in Pennsylvania.

A Little Bit Different Shein never wanted to operate like the others. Commodore and its brands — Colony, Manorwood, MidCountry, Pennwest, and R-Anell — build 6,800 floors per year and provide those home to retailers and homebuyers in the upper Midwest to the east and up the Atlantic seaboard. “Yes, our business model is a little different,” Shein said. “We always want to do something a bit different than the public companies. We do what they choose not to do. We stay away from the really low entry level and we stay away from the high end custom homes. We look at the meat of the market. “Our specialty is in engineering, allowing us to customize efficiently,” he said. “In-house we do all of the production prints, this creates a great amount of flexibility and option packages for our customers.” In the effort to keep the design and construction of homes keyed in on the market served, Commodore leadership asks each plant to operate largely on its own. “We give a lot of responsibility and authority at the plant level,” Shein said. “The home office is here to serve the plants, not vice versa. We want each one of the plants to be an entrepreneurial effort.” »

44 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

Barry Shein, second from right, holds a Platinum Builder award bestowed upon Commodore Homes of Indiana by 2-10 Home Buyers Warranty during the 2020 Louisville Show. From left is Chris Parker, of 2-10, Commodore President Bob Bender, 2-10's Ron D'Ambra, Shein, and Don Strick, vice president of sales and marketing for Commodore.

2020 STATE OF THE INDUSTRY â&#x20AC;˘ MHINSIDER.COM | 45

BUILDER / RE TAILER

Investing in Automation

Looking Back on His Career

Commodore Corporation picks its spots to upgrade machinery and advance production. It’s most likely to expand with an existing factory, and turn to interior upgrades that can be phased over time, rather than build a new factory. It doesn’t take actuated overhead infrastructure to more effectively move a home down the line.

Shein graduated from the University of Miami in 1961 with a degree in accounting. He worked for the Internal Revenue Service for five years, and also served in the Army Reserves. He spent some time at Griffen Industries, a fabricator and provider of floor coverings, and moved to TrammelCrow, one of the largest commercial developers in the country. During his tenure at TrammelCrow, Shein served as controller and vice president of the Atlanta market, which involved oversight of projects that included Cumberland Mall and Riverbend Apartments, now called Walton on the Chattahoochee. In 1977, Shein went to work for Equity Financial and was involved with Mobile Home Communities, now Equity LifeStyle Properties, run by the iconic Sam Zell. “He was known at that time as the ‘Grave Dancer’, and that’s kind of stuck because he bought a lot of distressed properties,” Shein said of Zell. “He is a genius. I imagine the greatest deal maker I’ve known. He’s really a down to earth guy, he’s really easy to talk to. I will always remember and appreciate the time I spent there.”

We always want to build a better house. Not a more expensive house, but a better house. That’s our mantra. –Barry Shein

It doesn’t take actuated overhead infrastructure to more effectively move a home down the line. The use of CNC machines, for instance, allows Commodore to produce a better countertop in less time, with less waste, and with a greater amount of consistency from home to home. CNCs and gantry systems provide automation at a price tag that’s far less than the price tag for a fully automated factory. “You can use a machine instead of a worker stooping over, bending their back with a nail gun,” Shein said of the gantry implementation. “It’s not anything that’s fancy, but it’s very effective.”

Enter Commodore Corporation Shein worked with Zell for 10 years. It was during that time that Commodore became available. “With Zell, I was primarily in charge of an office building portfolio and the mobile home portfolio,” Shein said. “Commodore borrowed money from one of Zell’s companies, Great American Mortgage, and actually defaulted on that loan.” Zell’s team, including Shein, gathered enough people and funding to carry Commodore into bankruptcy

46 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

and attempt a restructuring. It was only a matter of who was going to run the operation. “I remember ‘Hey, Barry, you run the mobile home portfolio, you must be the guy.’ I became chairman of the bankrupted company and reorganized. We released all of the top management and brought in a new president and I stayed in Chicago as chairman. That was at the end of 1987.” Commodore wasn’t really an active part of the Zell group of companies; it was something they obtained almost by accident. The company was restructured to save production jobs and to keep that pipeline of homes to market. “By then, my life had changed a bit. I was married, and didn’t want to travel as much," Shein said. "I asked Sam if I could do something else. He offered half of Commodore, and I bought it. I bought the second half in 1992.”

Change and Re-Growth Commodore at the time of the bankruptcy had 20 plants. Shein said “We ate off the seed corn”, indicating desperate measures were at hand to save the company. “We ended up with five plants,” he said. “We expanded Goshen and closed Syracuse, Ind. We built the new plant in Shippenville, and then we built the Pennwest plant,” he said. “We also closed another archaic plant in Danville, Va., and we bought R-Anell out of bankruptcy.” During bankruptcy and the years immediately following, Commodore built all HUD-code homes. Now the mix between modular and manufactured is even. Commodore has two plants that are all mods, R-Anell and PennWest. Commodore of Indiana is primarily

BUILDER / RE TAILER

Mods. Midcountry Homes, Commodore Homes of Pennsylvania and Colony Factory Crafted Homes plants are primarily HUD. “We’ve made our money, and we’ve grown our company staying under the radar. We don’t want to challenge the gorillas. We don’t have a huge corporate staff,” Shein said. “We have a group of people who run this as a family company. We care about our people, and our relationships with communities, dealers, and builders.”

Building Relationships One Home at a Time Commodore Corporation pays special attention to its vendors, dealers, and home buyers. They build each home k nowing the importance of the purchase to the homebuyer. They strive to have Commodore's reputation for quality homes at a fair price. “We always want to build a better house. Not a more expensive house, but a better house. That’s our mantra,” he said. “And all of the other stuff matters, too. I am very proud of our website. We’ve put a lot of time and attention into making it user friendly. “We think sometimes the millennials might know as much about our homes as our dealers by the time they go in to actually see a home,” Shein said. “And that’s a good thing.” Commodore has been blessed with big-time talent, Shein said. Chief Operating Officer Bob Bender is the public face and future of the company. “He will take Commodore to a whole new level,” Shein said of Bender. “I have full confidence in that.” Senior Vice President of Marketing and Sales Don Strick and Senior Vice President of Engineering Nader To

masbi are integral to the company’s success, he said. As for Shein, he winces at retirement plans. “I guess I’ll retire when Bob shoves me out the door!” Shein exclaimed. “In the meantime, I am shifting a lot of the responsibility in giant chunks to Bob.”

Company Culture Shein said the company’s top-flight team organically built the culture and continues to intentionally drive it by nurturing and advancing core values. “This is all fairly new, and it’s something we came to,” Shein said of the core values. “A decade or so ago, we had a mission statement like everyone else.” Commodore’s Core Values • Relationships matter • Create teamwork to win

• Integrity • Trust • Curious to be better • Diversity of thinking and debate “That’s what drives us,” Shein said. Commodore Corporation pays membership dues and provides sponsorship support to both MHI and MHARR, as well as to the independent Manufactured Housing Buying Group run by Dave Roberson. Shein and his wife Cari get great pleasure by giving back to the community including to public and private education as well as South Bend Symphony and other local charities. MHV

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2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 47

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BUILDER / RE TAILER

Retailer Q&A

with Clayton Homes of Victoria Shari McLellan of Clayton Homes of Victoria collaborated with MHInsider to provide some insight on the retail environment in South Texas. » 1 . How has business been to this point in 2020? Has it fallen shy of, met, or exceeded expectations? Here at Clayton Homes of Victoria business has exceeded our expectations. We are always trying to create a great customer experience that allows our location to grow. Suzanne Felber with The Lifestylist Brands has done an incredible job staging our homes. Staging our homes gives the customer a visual of what living in the home would look like. By this location utilizing Suzanne’s great eye for staging, we are able to create a better experience for our customers and sell more houses.

» 2 . What is the product mix? Manufactured versus mods, single section versus multi-section? e carry a variety of homes from W eight of our factories. SE of Fort Worth, Waco 1, Waco 2, TRU, Savannah, Sulphur Springs, Bonham, NXT of Athens. Many of the manufactured homes that we display can be built as mod homes. We carry many single wides and double wides so that the customer can view a variety of homes.

Photo by Lisa Stewart of Lisa Stewart Photography.

» 3 . What are your customers asking for most regularly in home design? How do you communicate the needs for those features to the manufacturer?

Customers routinely ask for the farmhouse look and a house plan that has an open concept. Our factories also listen to customer needs and are always upgrading and redesigning to keep up with modern times. There are many things that the customer can choose for their house to make it their own. We sit down with the customer and help them pick the upgrades and colors of their new home.

» 4. What types of challenges are most evident selling homes in your state? Is there a solution in the works? T he biggest challenge that we have selling in our state are city restrictions. Our local cities frown on having manufactured housing. We are always willing to comply with city ordinances but more and more cities are opting out of the manufactured homes inside the city limits. A solution that may work would be local citizens going to their city council meetings and trying to prevent the city from restricting manufacture homes.

» 5. What about doing business in your state may surprise folks in other geographies? We offer affordable housing with an incredible product and still have that “mobile home” stigma. By educating the public we have overcome many obstacles that have been put up and we continue to make a better product year after year. MHV

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 49

BUILDER / RE TAILER

Talking Workforce Development with Skyline Champion’s President Mark Yost by Patrick Revere

Picture the president of a major U.S. corporation that employs 7,000 people and runs 38 manufacturing facilities nationwide in an off-hand conversation about business. What is that person likely to say? If you ask Mark Yost, president of Skyline Champion Corporation, the conversation won’t be about personal career achievement or positioning a brand or product. The conversation is about a rare opportunity for the person this particular president is talking to. “I’ll meet someone at a rental car facility in a state where maybe I don’t have production or retail,” Yost said during a recent interview with MHInsider magazine. “As I am meeting this person, I sense they have a good presence about them. I ask if I can talk with them for a moment and

50 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

Photos courtesy of Skyline Homes

encourage them to look into our industry and ask them to go to work for one of my competitors.” Yes, you read that right. Mark Yost is recruiting talent to his competitors.

The Need for New Talent Yost runs the largest publicly traded manufacturer of homes. But he sees the bigger picture. The bigger picture is a housing crisis and increasing demand coupled with an ever-growing population of retirement-age talent. “I see an industry that has phenomenal talent in every area, and that talent is getting to the point of retirement. And because the industry has been suppressed for so long there really hasn’t been an opportunity for a whole lot of new people to get in,” he said.

To combat the deficit, Yost actively engages with individuals and organizations to spread the word about the industry mission of building, placing, and promoting much-needed attainable housing. “We are solving something that people today are very passionate about. And that is attainable, affordable, sustainable housing,” Yost said. “It clears up the number one cost burden anyone has, and when you can fix the cost burden of homeownership, it helps pay for all of those other costs, in feeding families and providing health care and education.” A grassroots effort is needed in every state, to talk with career counselors, high school students, and young people attending trade institutes about the career they can have in manufactured housing. He also points to the men and women coming out of the armed services who are looking for a great opportunity in the private sector. “When you get out and are looking for something, chances are wherever you want to live there is going to be a manufacturing plant, a retailer, a community,” he said of the enlisted. “Anywhere you want to live there likely is an opportunity for you. All it takes is one or two people talking among themselves,” Yost said. “If you talk with most people about how they got into the industry, they typically say ‘A friend of my suggested…’. “Quite a few people who are the patriarchs of the industry, that’s the way they entered,” Yost pointed out. “Many times it was something that they received as a friendly tip, they anticipated being in the industry for a few months or a year, and here they are 30 years later in a position of leadership that they love.”

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Host a Trades Event for Young People Last year, Champion hosted a day at one of their home building facilities. Students from a local high school came in to construct a small home that would be a prop for a holiday celebration. Champion donated the materials and had experienced builders help with the project. “Those students work hand in hand with our people and they have a great experience and go away saying ‘Well, maybe I should do that’. And that person can be a part of a company and part of an industry,” he said. “We’re a very entrepreneurial industry, and many millennials, in particular, are looking for an opportunity to create their own future, and I don’t think there is a better industry out there to help people do that.” MHV

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2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 51

NATIONAL ADVOCAC Y

MHI 2.0 is Growing the Market for a Better Future by Lesli Gooch

t MHI, we believe that manufactured homes are the Telling our story is key to setting the record straight and future of housing in America. introducing people to the benefits of owning a manufactured The launch of MHI 2.0 in January saw a change to home. Here in Washington, D.C., MHI is using every opour organizational leadership structure and a new strategic portunity to interact with the U.S. Department of Housing approach for elevating our industry. MHI’s strategy to and Urban Development (HUD), the administration, and grow the manufactured housing market encompasses Congress to share our story, with great success. So far in three areas of opportunity where our association can best 2020, HUD has made a number of changes and proposals support the industry’s efforts to create more to its regulation of manufactured housing to options for Americans in need of quality, alleviate federal, state, and local regulatory affordable housing. barriers to this affordable homeownership MHI is delivering The need for high-quality, affordable option including calling for a deputy assistangible value housing has never been greater and mantant secretary of manufactured housing and ufactured housing presents one of the most updating the HUD Code. and results for its viable, common-sense solutions to creating As a member of the President Trump’s members so they more affordable housing stock throughout cabinet and the nation’s housing spokesman, the country. MHI, along with our industry HUD Secretary Ben Carson is an advocate can stay ahead of and state association members, has laid for what manufactured housing offers – the groundwork for this unprecedented quality homes, built with the features the momentum time by consistently challenging federal, consumers want, at affordable prices. In and thrive. state and local barriers that limit access Congressional Committee hearings, in to manufactured housing. Growing the media interviews, and in conversations –Lesli Gooch market for manufactured housing is the about affordable housing, Secretary Carson core mission of MHI 2.0, and we’d like to is constantly reminding the country about share with you our pillars for ensuring the success of that the value and sustainability of manufactured housing. mission and securing a better future for housing in America. These actions by Secretary Carson and HUD are a direct result of MHI and our members effectively telling the Tell Our Story positive benefits of manufactured housing as an affordable We don’t have to tell you that the people and companies homeownership option. who make up this industry are some of the best in the world— MHI also tells our story through communications to our you’ve experienced it up close at our meetings and events. members. Every week, MHI publishes a newsletter to our You also know our industry makes some of the most finest federated states division, updating them on happenings homes in the country. Yet, misconceptions about manufacaround the country and in Washington, D.C. We also provide tured housing have created challenges that remain difficult our members with valuable research, we interact with to overcome and continue to affect how our industry is the media, and provide analysis on new information as it handled by regulators. becomes available. Keeping the industry well-informed, through distributions like our bi-weekly MHI News & » 52 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

2020 STATE OF THE INDUSTRY â&#x20AC;¢ MHINSIDER.COM | 53

Community-Owned Home Condition Rating: Excellent Market Value: $67,468

Community-Owned Home Condition Rating: Fair Market Value: $41,259

Community-Owned Home Condition Rating: Good Market Value: $56,835

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NATIONAL ADVOCAC Y

Updates, is crucial to ensuring our members are prepared with the most up-to-date, accurate information available to help share our industry’s story.

Engage Our Members To keep our members updated and engaged, MHI facilitates numerous networking opportunities throughout the year, including member-only meetings, industry-wide events, and educational programming. In 2019, more than 2,400 industry leaders attended seven MHI events designed to create connections and involve our members. Through these events, MHI is able to engage with its membership and hear first-hand about what is happening in the industry. These member interactions are an important part of MHI’s effective strategy to grow the market and we welcome the opportunity to discuss the issues that are important to our members. For a full calendar of events and offerings, visit our website at www.manufacturedhousing.org.

Develop Our Team MHI understands that growing the market requires highly knowledgeable and qualified people at every touchpoint throughout the manufactured home buying process. Because MHI represents every segment of the manufactured housing industry, we are constantly expanding our offerings to ensure our members have the tools and resources necessary to succeed. We offer members a variety of educational opportunities and accreditations through the Manufactured Housing Educational Institute (MHEI) – each tailored to suit individual segments of our industry. From installation to community management accreditation to the latest issues and trends, our organization is committed to providing the tools to ensure our industry is providing consistent, exceptional service. In December, MHI and MHEI announced the launch of our Accredited Community Manager (ACM) 2 course. This curriculum builds upon the information and resources learned in ACM 1 and offers additional tools needed for success. The program is offered both in-person and online and provides guidance for managers on how to keep sites full and treat residents fairly. To learn more about MHI’s educational offerings, visit https://www.manufacturedhousing.org/education/. MHI also holds a variety of educational workshops and makes presentations at dozens of state association meetings and other industry events across the United States. We also offer webinars to expand and grow industry knowledge on a diverse range of topics including fair housing, government

affairs initiatives, and much more. Further, MHI offers a variety of ways to keep members informed about our work in Washington and issues relevant to manufactured housing—including a bi-weekly newsletter exclusively for members, and webinars on key industry topics. MHI is delivering tangible value and results for its members so they can stay ahead of the momentum and thrive. We are committed to creating opportunities for members to learn about the latest topics impacting the industry by presenting engaging speakers and panels, offering educational programs and conducting cutting-edge research. In addition, MHI is making it possible for the industry’s collective voice to be heard so that policymakers at the federal, state and local levels partner with us to help the industry prosper. If you have questions, please reach out to MHI’s Advocacy and Communications Team at mhigov@mfghome.org or (703) 558-0675. MHV Dr. Lesli Gooch is the CEO of the Manufactured Housing Institute, the national trade organization representing all aspects of the factory-built housing industries.

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2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 55

NATIONAL ADVOCAC Y

The Value of Manufactured Homes Industry Professionals Team on Comprehensive White Paper by Patrick Revere

C Next Step President Stacey Epperson.

Clayton Director of Communications Audrey Eason.

ommunicating something you’re passionate about can be a difficult task. This is particularly true when your topic spans multiple industries and is based on places that tens of millions of Americans call home. This is precisely the task Audrey Eason of Clayton and Stacey Epperson of Next Step have completed with a white paper entitled “Off-Site Built Homes: An Evolving Industry that Meets Today’s Affordable Housing Needs”. Epperson and Eason began having a conversation and conceptualized what the white paper might be in 2018. “It’s not a secret that off-site built housing is a great solution for affordable housing,” Eason said. “The real opportunity was to create a document that aggregates information about the important role off-site built housing plays in the industry. It’s about making something that’s accessible and easy to use when talking with the public or even a developer who’s not considered off-site housing.”

NATIONAL ADVOCAC Y

What the White Paper Covers The white paper on off-site built homes includes information on manufactured homes and modular homes. It focuses on the current prevalence of factory-built dwellings, how they fit the changing marketplace demands, and the sustainability of new homes. “We wanted to touch on everything, but something that really spiked our interest when talking with Next Step was about the opportunity for appreciation. Manufactured housing appreciates over time in a way that mimics site-built homes,” Eason said. “That’s why we wanted to highlight that particular point.” In mid-2018, the Federal Housing Finance Agency published in its quarterly Home Price Index report with a pilot report on manufactured housing that showed the factory-built product does appreciate in value in a manner that is similar to standard site-built homes. “Each time I speak, particularly outside of the industry, I am asked about appreciation,” Epperson said. “We have

information now that’s so solid and recent, that we really can capture people’s attention.”

The Case for Urban Infill? Clayton and Next Step, which are long-time collaborators on a series of initiatives, are working together to organize a schedule of presentations at events within and outside the manufactured and modular industries. Eason and Epperson said they felt with the development of CrossMod™ homes that can be placed seamlessly in many urban areas alongside all variety of site-built homes that the timing was particularly good to reframe the conversation. “I really see the opportunity with CrossMod because it aligns so well with what Next Step has been preaching for a long time, specifically about the benefits of a permanent foundation, energy-efficient features, and consumer-friendly financing,” Eason said. “We believe and have proven that you can go into suburban areas with this product, build a great product and help improve the neighborhood,” Eason added. “It takes some time because there initially is a little bit of ‘not in my back yard’ sentiment for affordable housing specifically surrounding manufactured housing. But it’s great to go through the process and watch how people’s impressions can change.”

Where is The White Paper Going? U.S. Department of Housing and Urban Development Secretary Ben Carson and his staff received a copy of the “Off-Site Built Homes: An Evolving Industry that Meets Today’s Affordable Housing Needs” white paper during a tour of a home building facility in Alabama earlier this year. “We’ll take it on the road with our different stakeholders across the country,” Epperson said. “We participated with the Aspen Institute this year and played a role in an affordable housing research project they are working on. “The change I’m seeing nationally right now with funders, think tanks, thought leaders, the conversation has shifted,” she said. “The door has opened to really engage deeply on making manufactured housing more available.” MHV

Photo courtesy of Clayton Homes

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 57

STATE ADVOCAC Y

Photo courtesy of Skyline Homes

Ask the State Director MHInsider sent out some questions to Pennsylvania Manufactured Housing Association Executive Vice President Mary Gaiski to learn more about what the trends are in her state. From new financing programs to installation guidelines, here are her responses.

» 1. W hat type of questions do you most often field from retailers who are interested in the new CrossMod home, and Fannie and Freddie financing programs? When the Fannie and Freddie financing programs were first introduced we fielded a few questions and most related to confusion as to labeling the homes that would

comply for this special financing as a “new class of manufactured home.” The confusion was because homes that would qualify for financing under these programs have been built in Pennsylvania factories and distributed into the Mid-Atlantic and New England markets since the inception of the federal HUD-code. Additionally, retailers in the state have been placing manufactured homes on

58 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

private property and adding site built enhancements such as basements, attached and unattached garages, decks and full landscape packages, again since the inception of the federal HUD-code. We have financing available for these transactions through our local community lenders and credit unions. So the short of it is that this is nothing “new” in Pennsylvania. Our struggle here continues to be

Discover the Credit Human difference the lack of chattel lending sources. More questions have been raised now that there is a proposal to brand these homes as “CrossMod". Again, this is due to the confusion that the name creates. Pennsylvania is home to over 30 factories that build modular homes. Our modular homes are built to the IRC and typically do not have a steel frame under them. Ninety-eight percent of our retailer base sells both manufactured and modular homes on the same sales center. Mods go on private ground and site-built enhancements are added such as basements, attached and unattached garages, decks and full landscape packages. So the questions and concerns the association office is fielding at this time is related to the extreme confusion the use of “CrossMod” is creating in the marketplace. One concern is the added liability of leading a consumer to think they have purchased a modular home when in fact the home is a manufactured home. A greater concern is that by putting these homes on a higher pedestal than a manufactured home that does not have the added enhancements, public officials, lenders, appraisers, and consumers may begin to question the validity of all manufactured homes.

»2. W hat types of issues are taking you to the state capital these days? Issues we are working on at our State House includes: 1. Aligning state mortgage licensing laws with the federal changes, 2. We continue to monitor rent control initiatives and even more so since we have had a lot of turnover in ownership of communities in the state and the new owners are not shy about raising the rents, and, 3. We are asking DEP for

relief from EPA’s consecutive system rule for communities that would like to submeter the water and charge residents based on actual usage versus including it in the base rent, this could turn into a legislative initiative.

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»3. W hat do you see as the biggest opportunity within the industry in your state? One of our biggest opportunities is to make sure the industry is well-positioned to address affordable housing concerns that are plaguing not only our state but the nation. Manufactured housing needs to be fully involved in the conversation at the local, state, and national levels. We have made some headway here in the state with participation in roundtables at the local and state level, and plan to continue our involvement in the conversation.

» 4. Can you detail for us a new initiative or campaign you have underway in 2020? Right now we are working on helping the industry transition from a state-based installation program to the HUD program. Beginning in January 2020 we took over the hosting of the initial training programs and once the Oct. 1 deadline is met for the initial transition, we will need to make sure adequate continuing education programs are available to the installer community. At the same time, we are working with our building code inspectors making sure they understand there are no changes in the program, other than the compliance form, and that they need to be asking for a HUD license versus a state certification. MHV

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2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 59

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STATE ADVOCAC Y

Why Rent Control? By Frank Bowman

llinois House Bill 255, a bill repealing the current rent control prohibition statewide, has reemerged in the second year of the current General Assembly and has been reassigned to the House Judiciary Civil Committee. This bill only contains seven words that simply repeals the Rent Control Preemption Act. Doing so would allow any and every municipality in the state to enact rent control ordinances as they may see fit. Rent control is seen as an easy fix. It is a type of feel-good solution. Think your rent is too high? OK, let’s just pass a law capping it. Problem solved, right? Of course not, but it sure sounds good when you are struggling to make ends meet or, in the case of legislators, looking for votes in an election year. Housing policy is complex and housing affordability has become a nationwide problem. But why rent control? Is it even possible to regulate our way out of the current situation? At the heart of the affordability issue is the dramatic decline in overall production of housing during the last 20 years, along with a tendency for today’s first-time homebuyers to postpone family formation, and carry

significant student loan debt, making qualification difficult, or even having a preference for renting as to avoid being burdened by a mortgage as many of their Boomer parents may have been. Adding immensely to the problem are the many local jurisdictions that have successfully developed big-box retail centers and commercial office parks with thousands of new jobs and made no provisions for housing any of the workers at the varying wage levels needed to fill those jobs. So, in short, the housing problem comes down to choice, job opportunities, wages, and availability. Wages have simply not kept pace with the increased cost of living either. According to Mike Kang at PayScale, Inc. real wage growth between 2006 and 2019 has fallen by 9% when accounting for inflation. It is concerning that real wages have not kept up with inflation. Yet the cost of owning properties has increased dramatically. Recent reports suggest that rent is stagnating in many primary markets. Many would-be renters are inevitably priced out of those primary markets and have begun a subsequent migration to secondary markets. »

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 61

STATE ADVOCAC Y

Photo courtesy of Rickert Properties

So Who Wants Rent Control, and Why? Renters receiving disability, social security, or relying on other entitlement payments often explain their situation as struggling tenants, that they pay more than half of their income on rent and see rent control as a solution to their situation. It is hard to fathom that any of today’s self-proclaimed progressive legislators still believe that rent control is a

good idea. Instead of looking backward and rehashing failed policies from 80 years ago, they owe it to their constituents to adopt progressive solutions that work for all, not just a vocal minority who are already in place and attempting to resist the natural change occurring around them. And, in the long-run, rent control will curb development because it acts as a disincentive for builders and developers who rely on a reasonable profit margin. This means fewer homes still, which means great rent increases, which is the problem rent control is supposed to help, not exacerbate.

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Factory-built housing is uniquely positioned to provide the much-needed affordable workforce and senior housing. In fact, over 80% of all new single-family homes available for under $150,000 are being built in a factory. We can do more. However, there are several public policy obstacles standing in our way: Many local jurisdictions have adopted overly prescriptive housing policies and exclusionary zoning practices that effectively ban manufactured and modular housing as an affordable alternative for their residents. The placement of age restrictions on manufactured homes in many communities has fundamentally erased the equity many residents have built in their homes. And these restrictive policies have often been adopted without any required notice to the residents and homeowners. Further, significant new investment is being made to acquire and improve existing land-lease communities thereby preserving these existing developments by making needed infrastructure improvements and providing the amenities today’s residents want.

STATE ADVOCAC Y

Rather than imposing rent control further driving down supply and imposing significant program costs on municipalities that can ill afford to adequately manage them, we recommend that the General Assembly work to increase affordable housing opportunities for Illinois residents by: • Removing barriers to development by prohibiting overly prescriptive local housing policy and exclusionary zoning practices. • I ncentivize the preservation of existing affordable housing developments and land-lease communities. • E xplore the use and addition of Accessory Dwelling Units (ADUs) on existing residential property for family

members or additional development and increased local tax revenue. • Removing barriers to development and incentivizing preservation will create more flexibility in housing choice, allowing young families and our aging population to a home that they can afford. • L ocal jurisdictions are holding us back. Rent control is the last thing that should be implemented as housing policy. MHV Frank Bowman is a former manufactured home community owner and operator who currently serves as executive director for the Illinois Manufactured Housing Association.

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100 Years Later,

Rinnai Continues To Lead By Steve Tschirhart

A century ago, advertisements in magazines and newspapers implored homeowners to install the latest and greatest appliance: gas-powered water heaters. One ad says a gas water heater “stops ALL waiting and fussing when you want HOT WATER.” Another declares: “Just turn the faucet and enjoy an inexhaustible supply of hot water.” No coal, ashes, or dust with these modern marvels. Hot water on demand without compromise — what will engineers think of next? It turns out the answer is, “Something even better.”

A Tankless Task Technology marches on in every industry, including the home appliance industry. Leading that march? Georgia-based Rinnai Corporation, manufacturer of the number-one selling brand of tankless gas water heaters in the United States and Canada. Founded 100 years ago, Rinnai’s leadership lineage reaches back to the debut of gas-powered water heaters. The company’s role in producing tankless water heaters stretches

64 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

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back nearly as far. In 1921, Rinnai & Co launched their first tankless water heater product. To put that in perspective, World War I had ended just three years prior. The quality and reliability of their tankless water heater products assured Rinnai’s leadership in the field from that point on. It’s a position the company retains to this day.

Water Heaters Get Smart When it comes to today’s homes, “smart” is in. Programmable thermostats started the trend. But now there are smart light bulbs, smart window shades, even smart toilets. It only makes sense, then, that something as essential to comfort as water heaters join the club. Rinnai offers tankless water heaters with both Amazon Alexa and Google Home support. As a result, water heater control is as easy as saying, “Alexa, tell Rinnai I want to take a shower,” or “OK Google, tell Rinnai I need hot water.” Rinnai also provides a mobile app for both iOS and Android devices that allows for even greater control, including built-in schedules for multiple on/ off recirculation periods throughout the day and a vacation mode users can activate remotely. “Tankless is what we’re known for, and we’re continuing to drive changes, making installation easier and creating these user interfaces for a product that’s not really known for that,” said

David Federico, brand director for Rinnai America. “We’ve taken that to the next level for control with an app… for instance, when your kid is showering you can set the water at 97 degrees, and when you need to wash dishes you bring it up to 120 degrees.” The interface also provides error alerts for plumbing problems that otherwise may go undetected for long periods of time, Federico said. Consumer spending on smart home systems tops $100 billion, so it’s a strong market for the company. As for what the future holds …

The Next Hundred Years Rinnai’s plans for the future include continuing to offer homeowners with solutions that promote comfort and health. They anticipate achieving that through technologies that continue to emerge and evolve. If the past is any indication, homeowners will one day look back on this period with the same nostalgia that arises from reading yesteryear’s ads touting the amazing properties of gas water heaters. Maybe something like, “Can you believe there was a time when you couldn’t talk to your house and have it turn on the shower for you?” MHV Steve Tschirhart is a former real estate association executive who now focuses on writing about manufactured housing and real estate.

FOR SOME, TECHNOLOGY CAN MOVE TOO FAST That’s the case when it comes to mobile home manufacturing and tankless water heaters, such as those provided by Rinnai. The reason: many manufactured housing professionals see the rules laid out by the U.S. Department of Housing and Urban Development (HUD) as antiquated in the era of tankless water heaters, smart home technology, and other advancements in home manufacturing. The result is that while tankless water heaters can be installed in manufactured homes, HUD-approved installation is limited to aftermarket providers. Such a guideline prevents a new home from all of the latest options available. Fortunately, HUD is aware of the issue and is working to revise the HUD code to include provisions for new technologies.

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 65

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Propane’s Role in an Ever-Changing Housing Market Providing efficiency and power off-the-grid, on-the-grid, and everywhere in between By Bryan Cordill

Propane and appliance technicians make residential calls for service to fill tanks and check systems. Photos courtesy of the Propane Education & Research Council.

Factory-built housing has come a long way over the years. But amid all the changes, one thing has remained the same — propane’s ability to provide clean, efficient energy to factory-built homes in a wide variety of applications. Known for their mobility and affordability, prefabricated — or “factory-built” — homes have a long history in the United States. In the 1950s, on the heels of World War II, this classification of homes really took off and found its footing in the market. Builders quickly realized the benefits of building entire homes, not just prefabricated walls, in facilities and found this to be a profitable and efficient way to meet the housing demands that rose during this time. The portability of the homes and the fuel made propane the fuel of choice. » 2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 67

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Many factory-built homes were created for trailer courts, mobile home parks, and mobile home communities that can oftentimes come with negative stereotypes. Modern manufactured and factory-built homes are now almost identical in appearance to site-built homes. These homes are built to meet tight federal standards for quality, safety, and durability. Today, they’re seen as an affordable, eco-friendly, modern alternative to custom site-built housing and builders are seeing more value in building these types of homes than ever before. Manufactured housing has experienced a major upsurge in production in the last few years and in order for builders to compete in this market, prioritizing home performance, comfort, and affordability is key. And it’s best achieved by incorporating reliable, efficient energy sources like propane.

‘A New Class of Manufactured Homes’ Welcome to the new generation of factory-built homes: CrossMod™. CrossMod is a term coined by the Manufactured Housing Institute to capture the essence of homes that bring added quality and innovation that buyers often feel only

can be found in off-site built homes. These new homes have the exterior aesthetics to fit in nearly any residential neighborhood, but bring the benefits and value provided only by the factory construction process. As housing affordability challenges continue to grow, families of all economic backgrounds are searching for attainable, high-quality homes that avoid an unsustainable financial burden. According to MHI, CrossMod homes placed on a permanent foundation and qualify for conventional financing help challenge exclusionary zoning ordinances, and are virtually indistinguishable from higher-priced, standard site-built options. With this new “hybrid” home, the industry has the potential to bring manufactured housing to areas around the country that have little or no exposure to off-site built homes.

How and Where Propane Can Help Creating quality, affordable homes involves an integrated, whole-building design — including the energy source powering the home’s appliances and major systems. By incorporating propane, builders, home retailers, and ultimately homeowners, can count on the energy source for better performance and higher efficiency. Propane’s versatility extends to a wide variety of residential appliances including water heaters, furnaces, clothes dryers, ranges and ovens, fireplaces, and standby generators. Plus, with propane, homeowners will see cost savings the entire time they own their home. Propane-powered appliances have lower annual energy costs compared with electric counterparts. For example: Propane tankless water heaters have 50% lower annual energy costs compared to electric storage tank water heaters. 68 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

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Homeowners with propane can see $80 to $120 savings in annual energy costs compared with electric cooking appliances. Propane clothes dryers have 20% lower annual energy costs compared with electric models. Plus, propane has a place in all parts of the country, not just where natural gas isn’t available. It gives community owners the chance to build gas neighborhoods on land that they’d previously thought to be less desirable because natural gas wasn’t available. Using propane can actually lower their cost for land while increasing the sales price because it isn’t electricity dependent. And in some communities, building with natural gas simply isn’t possible or cost-effective. Propane offers a versatile, scalable source of gas that works with nearly any type of community or location. And for larger or more dense communities, community propane systems offer a seamless energy option that operates just like a traditional natural gas system. Community propane systems deliver propane gas through a network of underground pipes that connect to

the homes with individual gas meters. A tank, or tanks, are installed in a central location below- or above-ground in a low-visibility common area. And because each home is separately metered, the homeowner only pays for the propane they use after they use it — just like with natural gas. Beyond powering appliances in the home, propane also can power community amenities such as backup generators, heated pools, clubhouses, and gas lamps. Propane is truly a whole-home energy source that works well for the growing CrossMod market. As the housing market continues to change, and the demand for manufactured housing continues to grow, building professionals who are well-versed in energy-efficient methods and appliances will set themselves up for success. To learn more about energy-efficient propane appliances, visit Propane.com/Residential-Construction. MHV Bryan Cordill is director of residential and commercial business development for the Propane Education & Research Council. He can be reached at bryan.cordill@propane.com.

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2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 69

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FORMICA IS A HOUSEHOLD NAME,

TRENDING UP by Patrick Revere

Formica Corporation and the mainstay material it created — laminate — have a 107-year story that in its highs and lows is somewhat of a mirror to the experience many have felt in manufactured housing. It’s always been there, it’s always been valuable, it’s always been affordable, and through intention and necessity, it’s been in a constant stage of reinvention. Swap out the phrase laminate and Formica for manufactured and mobile homes, and the accuracy is uncanny.

Formica had a "model home" booth at the 2020 International Builders Show in Las Vegas. Photo by Lisa Stewart of Lisa Stewart Photography.

70 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

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Leanne Ford is a Pittsburgh-based interior designer who has been featured in some of the top style and design magazines, and stars on the HGTV show “Restored by the Fords”. She also is a spokesperson for Formica’s bent toward utility, design, and versatility. “My favorite question is ‘That’s Formica?’,” Ford said during a media tour at the International Builder’s Show in Las Vegas earlier this year.

Leanne Ford from the HGTV show "Restored by the Fords".

“Formica really had its heyday in the ’60s, and though it’s always been here and been relevant, it seems to be making a comeback in the popular consciousness,” she said. “People have largely had this pre-conceived idea about what Formica is when really it can be anything you want it to be.” All for $3 per square foot.

Find the Look with the Value Renee Hytry Derrington is the Formica Group’s vice president of design. She said the company has long been known for residential kitchens, though approximately 70% of the company’s global business is in the commercial sector. “It was a clean surface, it’s a bright surface,” she said, one that really caught on in the post World War II boom in America. They started by photographing or scanning natural materials — like different kinds of wood and stone — and have moved to artists creating watercolor designs, for instance, that they then scan and turn into a laminate surface for horizontal or vertical use. Hytry Derrington started at Formica in 1989. “We were strong in manufactured housing in the 80s,” she said. “At that time, color was coming into the kitchen more readily, and it was being used on countertops as well as cabinet finishes. That’s coming back with some of the FENIX® Collection, which is from a partnership out of Italy, in very sophisticated, soft touch colors,” she said. Real scale versions of exotic granites and marbles came into the market in 2009, with the 180fx® collection, to help designers and contractors who yearned to maintain a certain look but were working on a reduced budget. “For me, it was the perfect storm from the technology side and how that translates to print,” Hytry Derrington said. “And now, 10-plus years later, it was time for us to further express our individuality.” Recent editions of the line include Watercolor Porcelain and Watercolor Steel, which are handpainted by an

on-staff artist then scanned in fullsize and high resolution before being printed, pressed, and finished. “Formica laminate is an iconic solution for stylish, creative looks that can go in any home on any budget,” Ford said. “The amazing array of patterns and colors offered allow us to showcase fresh ways to use laminate beyond the kitchen and throughout the home.” In June of 2019, Formica was purchased by Broadview Industries from the Netherlands, Owen Serey, head of public relations and communication for Formica, said. “Broadview is also the parent company for Arpa and its industry-leading FENIX, from Italy, and Trespa, which is a Dutch company that does exterior cladding and decorative facades,” he said. “It’s been wonderful to share our combined design knowledge and innovative technologies to further strengthen each company’s place as a global design leader.” MHV

Formica designs in vertical and horizontal application. Photo by Lisa Stewart of Lisa Stewart Photography.

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 71

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Growing Benefits of Water Submetering

by Matt Laird

Community owners and managers often ask the question, “Should we submeter our water services to the homes?” There has always been a great financial case to do so, and with new advancements in wireless communications and data analytics, the question has become: “How fast can we get our park submetered?” A clear benefit to community owners is to subdivide the increasingly large utility bill from their local water utility and distribute these costs to the people consuming the water. The return on investment here is generally less than one year, immediately improving the owner’s cash flow and increasing property value.

Technological advancements in meters and their reading systems now allow owners to: • Pass on greater water costs due to improved accuracy of the meters. • Improve customer service to their residents by automatically alerting them to wasteful water usage, empowering reduced consumption and cost savings. • Identify leaks in individual homes - notifying homeowners the day the leak is detected, allowing a further reduction in the resident’s individual bill. • Identify large and very costly leaks in the park’s piping infrastructure, that, when fixed can drastically reduce the park’s utility bill and improve the value of the property. »

2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 73

SERVICE / SUPPLY

In our experience, it is common for the community’s overall water usage to decrease 25-30% after the installation of submeters. Primary contributors to reduced water consumption are the identification of leaks in homes and in the park’s infrastructure, plus the conservation efforts of the residents and homeowners who are now directly responsible for individual water usage and cost.

Conservation Results from Accountability The conservation efforts go beyond the savings alone. Let’s start with the normal billing profile of a park immediately following the installation of meters at homes where the typical water use is 2,000 to 4,000 gallons per month, though a small percentage will use as much as 10,000 to 20,000 gallons per month. In general, the homes using much more water respond to their first individual water bill by immediately fixing a leaking faucet. Other good examples of home water leak fixes are repairing the toilet that’s been left running, or disallowing the open water hose to run down the gutter when a car is being washed.

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In-Home Leak Detection, Quantification, Automated Alerts The main benefit of leak detection, enhanced data, and usage alerts goes to the residents. However, the goodwill community owners get also is very valuable. The newest meter reading systems provide not only the total water used but also measure the actual flow rate at all times during the day. In looking at the water consumption for a particular home, it is noticed that two gallons of water is used every five minutes from 1 to 4 a.m. This is a time that we would expect no water usage, so there is a very probably a leak of about 0.4 gallons per minute. Although it is a minimal flow rate, that continuous leak for 1,440 minutes per day and 30 days per month, uses nearly 20,000 gallons of water per month. Depending on the area of the country, the leak will cost the homeowner $100 to $250 per month. New water metering systems automatically email the park owners of conditions, allowing them to alert the resident or homeowner to stop or repair the leak that day. Otherwise, that homeowner is likely to find out about the leak when they receive a massive bill at the end of the month. Nearly everyone has heard the sound of a running toilet, then you jiggle the handle, and it is quieted for the time being. The problem reoccurs anytime the toilet is flushed again with an enormous amount of water wasted! New system analytics recognize the pattern of a flapper leak and notify the park owner via email so the problem can be fixed.

Irrigation Waste Another major water waster that faces park owners is irrigation, or more precisely, over-irrigation. Misprogrammed sprinkler controllers have been identified as major water wasters. Water is used at such a high flow rate in sprinkler systems that it takes little time for a major bill to pile up. It can be a substantial amount, increasing the bill from 3,000 gallons per month to more than 20,000 gallons per month. MHV Matt Laird, CEO of Metron-Farnier, and its subsidiary companies, Metron Sustainable Services and Transparent Technologies, has 30 years’ experience in water metering. He holds a B.S. in Aerospace Engineering and a M.B.A. in Finance, both from the University of Colorado. Mr. Laird has been a member of the AWWA serving on the National Water Committee for 15 years.

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PL ANNING / DEVELOPMENT

A Planner’s Perspective 2020 Development Trends for Manufactured Home Communities by Donald Westphal

Photo courtesy of Tharakan Consulting

wners and operators of manufactured home communities are seeing interesting developments in three areas of the business. • New Greenfield Projects • Community Expansions • Older Community Upgrades

Greenfield Projects The need for new communities is great in most parts of the country. After years of vacancies in communities, most desirable existing communities are at or near capacity, resulting in an increasing demand for new projects. Unfortunately, zoning new sites is difficult. Sewer and water availability in desirable locations where zoning is attainable is rare. Many available zoned sites are in undesirable or

difficult locations. And public opposition to new communities continues to come from the “trailer park” perception. Construction costs are rising, but so is the value of the finished project. As a result, it is important to take advantage of unique ways development costs can be minimized by using knowledgeable manufactured housing community planners and engineers.

Community Expansions It is often easier to expand an existing community than to start anew. Zoning in many cases is less difficult since it is an expansion of an existing use. And hopefully, the existing community is well managed and cared for and will generate minimal opposition. If not, it is important to bring it up to respectability before seeking approval to expand. The expansion also can provide an opportunity for existing » 2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 77

PL ANNING / DEVELOPMENT

residents to upgrade to a new home in the expansion area, allowing for the removal of less attractive older homes. New home sales in the expanded community provide an additional profit center for the owner. Additional utility services may be available from the local supplier or attainable through the expansion of the existing on-site facility. The addition of new sites to the existing community may not require a significant increase in overhead, another benefit to expansion. Care should be exercised to the disruption of existing residents caused by construction activities. Also, some upgrade in the community amenities is advisable to minimize resident concerns.

Community Upgrades Upgrading an existing community is a win-win for the owner, the residents, and the industry. The community already is properly zoned and in a great location. Making the community more attractive and livable should be welcomed by residents and neighbors alike. On the negative side, some communities have rezoned undesirable properties making the addition of newer homes difficult. However, many of our more progressive state associations have tackled this

78 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

matter and made the practice unlawful. Often municipalities require reconfiguration of home-sites to conform to the existing regulations regarding setbacks and lot sizes. Fortunately, many states allow for lot reconfigurations to reflect the rules that were in effect when the community was originally constructed. Michigan and Indiana are two states with that advantage. Many times, residents become concerned about their future. However, if the owner has the foresight to get its image in order first — entrance upgrades, street improvements, refreshed structure appearance, and landscaping — it can stimulate residents to upgrade their home and home-site appearance. Revisions to the community’s “Guidelines for Living” in a reasonable time frame will assist in that effort. All three of the options discussed, if properly done, will give the industry a much-needed image boost and ready the market for expansion. MHV Donald C. Westphal, Associates, LLC, winner of 7 Community of the Year Awards, has a 50 year history of planning great Manufactured Communities and is still enthusiastically serving the industry. Learn more at www.dcwestphal.com.

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As a publicly traded REIT (NYSE:UMH), we have been providing quality affordable housing since 1968. Our portfolio provides high profit margins, recession resistant qualities, reliable income streams and the potential for long-term value appreciation. • • • •

$1.4 billion in total enterprise value 122 communities, 23,000 homesites, 8 states Housing approximately 18,000 families 6,600 total acres, 3,400 acres in Marcellus and Utica Shale regions Financial Information as of 9/30/2019.

UMH Awarded 2019 Land Lease Community of the Year and 2019 Interior Design Award by the Manufactured Housing Institute For more information, visit www.umh.reit or contact ir@umh.com

continued from page 82

THE ALLEN LEGAC Y Anyone with three decades of experience in manufactured housing recognizes the name of the late Lonni Scruggs. You know, the “Deals on Wheels” guy! And if you’ve been in the MH business for just two decades, you’ve likely read, even have a copy of his second book, “Making Money With Mobile Homes”. Lonnie is the one who taught us all about “Lonnie deals” and how to affect them. Lonnie said “These are homes I can still buy for $2,000$3,000 and sell (on contract) for$4,000-$6,000. These are the ones where I make the most money, with the highest yields, with the least amount invested. And with the lowest risk.” He also is the guy who challenges his readers and small investors to “Never Let The Mail Carrier Pass Your House Without Leaving A Check!” Then there are the quiet heroes of manufactured housing. Theo “Ted” A. Boers, founder of Datacomp, has a couple pithy books under his belt. He’s best known for “Three Simple Rules” (“Guaranteed to Improve Your Finances!”) authored in 2003 for his three children, to help them avoid financial problems. The three rules? Spend less than you earn, save now and buy later, and no debt!

Together, we build the confidence that sells homes.

You Build It, We’ll Back You Up. Ron D’Ambra National Manufactured Modular Program Manager

803.917.1946 rodambra@2-10.com 80 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

Nine years later, Ted penned “Demons of Poverty”, one entrepreneur’s experience with addressing poverty in Haiti. I know firsthand, this book contains valuable advice for nonprofit and missionary organizations. A couple gems: “Poverty is not just a money problem” and “Do things with people, not for people.” One of my all-time favorites is Jack Holefelder’s “Passing the Torch, Will Your Family Business Survive?” Does the name Holefelder ring a bell? It should. In a recent edition of MHInsider, his family was identified as “fifth generation owners of a (circa 1930s) land-lease community” in Pennsylvania. Anyway, back in 2006, Jack, a Vietnam veteran, penned this insightful 64-page book, still available online. His advice to entrepreneur families? “Don’t put off till tomorrow what you should do today!” Now here’s a somewhat different take on sharing helpful advice with friends and associates. Longtime New Mexico-based land-lease community owner Doug Ottersberg, in 2005, prepared and packaged six CDs under the title “Secrets of a Mobile Home Millionaire” — his guide to setting up one’s business and making money using OPM (other people’s money) by investing in manufactured housing. Doug markets this attractive CD package via in-person presentations on the basics and techniques of self-improvement. How many of you know my friend, and fellow community owner Charles "Chuck" Irion from Arizona? He’s an accomplished author of murder mysteries (“Murder on Aconcagua and Murder on Kilimanjaro” for starters), plus some strange titles – one of which is his “Roadkill Cooking for Campers”, “The Best Dang Wild Game Cookbook in the World” — so he says. I’ve known Chuck for decades, and today he travels the world as a philanthropist and NGO volunteer. Staffers at the Manufactured Housing Institute have turned out credible and popular titles. Bruce Savage, former VP of Communication for 15 years, penned “The First 20 Years!”, a history of MHI’s National Communities Council division, from its inspiration in 1993 through its formal history between 1996 and 2016. And along the way, former general counsel, Rick Robinson, has been turning out compelling reads, beginning with “Alligator Alley”, and most recently, page-turning thrillers like “Advance Man” and “Opposition Research”, for a total of 15 books to date. Bruce’s book is available from EducateMHC; Rick’s books from Amazon.com. Who will pen the next 20 years of the NCC division’s history?

THE ALLEN LEGAC Y A release that received far too little fanfare when it appeared in 2014 is Bob Vahsholtz’ “Dueling Curves”, subtitled “The Battle for Housing”. Here the author makes his case that the production efficiencies of factory-built housing between the mid-1940s and now have positioned the per-square-foot cost of manufactured housing at half that of site-built housing! The book is a detailed history of this 70-plus year contretemps (for the latter housing type), and description of how manufactured housing evolved through the efforts of Richardson Homes, Schult Homes, and other early pioneering firms. Former land-lease community owners, too, are turning out interesting titles these days. Take Ralph Cochran for example. Two decades ago, he was one of the rising stars in the property portfolio consolidation wave, changing the nature of the realty asset class. When his portfolio of land-lease communities was dissolved, he co-founded and grew a classical Christian School, and now consults in that arena via Schola Inbound Marketing. His 2019 book? “Story Marketing for Christian Schools, The Expert’s Guide to Growing Enrollment”. Know what? The creative and helpful writing heartbeat continues. I know of new titles already hitting the market,

penned by manufactured housing aficionados past and present. For example, Glenn D. Esterson’s “The Mobile Home Park Manifesto, Ethical & Profitable Investing in Non-Institutional Grade Land Lease Communities”. It’s a collection of real estate broker war stories, so to speak, along with much practical advice related to the book’s subtitle. And it is available from amazon.com. I even have a few titles out there: “Chapbook of Business Management & Wisdom”, “Chapbook of Prayer, and Collection of Figurative Language & Figures of Speech – a guide for writers”. These, in addition to the dozen or so authored about manufactured housing and land-lease communities Now, how ‘bout you? Have a book I don’t know about? Let me know via gfa7156@aol.com. MHV 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 at (317) 346-7156 and gfa7156@aol.com.

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2020 STATE OF THE INDUSTRY • MHINSIDER.COM | 81

THE ALLEN LEGAC Y

Photo courtesy of Zeman Homes

Read A Good Book Lately? By George Allen, CPM Emeritus, MHM-Master

nly 10 autobiographies have been authored throughout the 70-year history of the manufactured housing industry and land-lease community asset class. During 2018, I read and summarized them in a two-part booklet titled, “Who Will Preserve Your Legacy? Answer: You!” The booklet concludes with instructions on how To pen one’s memoirs. So, start your reading with 10 autobiographies! The booklet is free for the asking, via gfa7156@aol.com

And here are 10 additional books, in different genres, also authored by industry and asset class notables. Do you remember the first manufactured housing book you read? I do. It was Gary W. Pomeroy’s “How to Successfully Sell New and Resale Manufactured Homes”. This 200-page casebound listings text was published 43 years ago – the year following implementation of the HUD code. And frankly, that book was my inspiration to adopt and use the terms “manu-

factured housing” and “resale” from that day forward. Gary, at the time, was VP of Marketing for Golden West Homes, and – get this – the Western Manufactured Housing Institute, now CMHI. Here’s a remarkable takeaway from this book: “What is our product? It’s not a 14 wide or a 20 wide or a 28 wide, it’s not a double wide, it’s not a single wide, it’s not a triple wide, it doesn’t have a tag-along. It is a home, a home, a home!” And still is! »

continued on page 80

82 | 2020 STATE OF THE INDUSTRY • MHINSIDER.COM

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MHInsider™ May/June 2020 - State of the Industry Edition

Articles inside

Growing Benefits of Water Submetering

A Planner's Perspective on 2020 Development Trends for Manufactured Home Communities

Lending Trends in Manufactured Home Community Financing

Propane's Role in an Ever-Changing Housing Market

BoaVida Sees Gold in the Silver State, Acquires Six Nevada Communities

Retailer Q&A with Clayton Homes of Victoria

Industry Happenings

Talking Consumer Lending with Cascade Financial's Cody Pearce

Gemstone Communities Shines Among New Owners/Operators