The power to the park was lost when Duke Energy’s lines that serviced the park burned out. To run new lines, the company has to obtain a boring machine that can dig under roads. Duke thinks it will take about a week to get the power turned back on.

Robert Love is a longtime resident of the park, but is having great difficulty coping with the loss of the power. “I’m on oxygen, but I’ve got no electricity. I’ve had to rely on two small oxygen machines, but they’re running low, and I’ve got to find somewhere I can get electricity for them. I’ve already lost over $500 of food in my freezer”

Residents are trying to cope by staying outside their homes, or visiting neighbors who have generators to cool off for a while.
Frank & Dave’s Opinion Of This Story:

This article is a great example of the hypocrisy of the media concerning mobile home park owners. If this was a master-metered power system, owned by the park, the paper would be all over the owner and how terrible they were to let this happen. In this case, Duke Energy receives not one criticism.

The other lesson to be learned here is the risk you run when you own a park that is master-metered for electricity. Imagine if the power being out was your fault. You’d have every tenant in the park threatening you. Do you really think the tenant lost $500 of food  in their refrigerator? What does he have in there, lobster and caviar? But that’s the kind of threats you’d have, too. So before you buy a park with a master-metered electrical system, make sure that you can mentally handle situations such as this.

Barry gave “Four Key Strategy Areas” that, if adapted by a community owner would have a big improvement on the   bottom line and the growth prospects for the community.  The four key areas are things anyone can do now without a lot of cost, but the clincher is changing the     mindset.  As you read Barry’s list, think about what kind of a community business you would have if you adapted even one of these.

1)  Market Niche Focus

When you bought your first community, were you more knowledgeable then about where your customer was coming from?  Were they coming from apartments?  What was their reason for moving into your community?  Where would they have lived if they weren’t in your community?  Are community owners as up-to-date on housing choices in their local markets as they need to be in order to compete?  Maybe not, suggests Barry.  We need to address the new realities of the housing market. Has our niche changed?  Do rents need to go up or down?  Has our market changed?  To rent sites and sell and rent homes, the community owner needs to adapt to a changed and changing marketplace.  In my market, for example, the demand is for rental homes, but not so much for buying homes.

2)  What is My Plan?

Barry says that we need to be realistic and figure out if we can afford to address the new market realities.  What he is suggesting is that community owners need to know the following about their customer:

• What is the credit profile of the customer I am willing to finance?
• Can they make a down payment?
• What is the age of the home?

What is the plan for the capital to finance the homes?  Two important things Barry noted are:

• Community owners need to be in compliance with the law to finance homes.
• Many owners are running out of cash to finance homes.

(In conjunction with financing of homes, Warren Buffet noted in his 2009 annual   report that unless reasonable financing becomes available, manufactured housing demand will continue to shrink).  To finance homes we need systems that are effective, efficient and compliant.  Do our homebuyers know that they are building equity in their home and how much their equity is? Do they know, assuming their buyer passes the tenant screening for the community, they can sell their home and move on?  On this last point I’m    guessing probably not.  Residential real estate agents do this all day for site-built homeowners, but in the community business, residents don’t get much support from anyone when it comes to figuring out their options, equity being one.  Which may be one reason for the customers’ not buying in a community to begin with.

3)  Resident Pride

We need residents that feel proud about living in the community and want to stay.  This can be accomplished by having management structures in place to retain existing residents.  The retention system needs to include activities for residents and keeping the appearance up.  The rules need to be enforced firmly but politely.   Residents that are under water on their home’s value are no more stable than a renter.

4)  Financing Homes
Community owners need to get creative and think of ways to raise capital to buy more homes and finance them.  The Manufactured Home business is starved for  capital for the consumer to purchase a home.

There is plenty of capital piled up on the sidelines and investors are looking for investment opportunities.  For a well run income producing operation, there are investors.  One idea is to take on a partner, perhaps in a minority position.  Barry said that today a chief worry for the communities is that community owners may not be able to afford to keep up their communities. In addition to rising real estate taxes and operating costs, the cost to buy, fix up, market and finance homes in communities may mean that some, perhaps many, owners simply won’t be able to afford to be in the community business.  Hard choices about selling their community may be in store for some.

MONEY IS COMING BACK TO REAL ESTATE

Dr. Peter Linneman, Chairman of the Wharton School of Finance and economist for NAI states that not only is the money coming back to real estate, but that:

• Multi-family real assets will rebound first, before office, retail, industrial.

• We are at the top for cap rates.  Translation—prices have hit bottom.

• Little has changed in the economy in the first quarter of 2010 but the psychology of the recession has changed.  It’s been said that investors and consumers are mentally   either in fear or in greed.  During the boom years spending and taking risks were the so- called greedy behaviors. When the recession set in, greed quickly turned to fear.  Thus, the tightening of credit. According to Dr. Linneman, how people feel has changed.    Investors and consumers are edging from fear to courage, and from inaction to more  aggressive behavior.  The pendulum is beginning to swing toward greed.

• No new multi-family, including communities, are being developed.

• Pent up demand is and will continue to build.  One reason is the millennium generation coming out of college.  Because it is so tough for young people to find a job in the current economy, many are moving home or doubling or tripling up with friends.  Once they get jobs, they will be moving into their own homes.

• Inflation will be a factor.  As household formation picks up, rents will increase and so will home prices.

• Another recession will occur in 7 to 10 years.  Dr. Linneman says that when debt is cheap and/or easily available it mostly benefits sellers, not buyers.  If you are an owner that is wondering when is the best time to sell, you may want to think about…

      a) selling soon before capital gains taxes go up and interest rates go up, or

      b) waiting for another 7 to 10 years for the next “bubble” and sell at the top of that cycle.

• Interest rates will rise faster than cashflow. Prices of real estate will not go up as fast as interest rates.

• Real estate taxes will go up.

Distressed Buyers

CNBC, the cable business channel held a conference in Vancouver this year. They said that there are more distressed buyers than distressed sellers, meaning there are more buyers wanting to make investment in real estate that produces a cash flow than there are properties available.       Certainly for the park and community business there is a dearth of parks and communities available for investors to  purchase.

Water Usage & Water Cost

A midwest community owner knocks on doors in his community with a plumber in tow.  He asks the resident if he and the plumber may check the faucets, toilets, etc. for leaks. They fix the problem on the spot and charge the resident.

Switching From Investing in Communities to Apartments

A long time investor in communities said recently that he is now buying apartments, not communities.  The simple reason is financing.  Investing in communities is nearly impossible if there are community owned homes.  With apartments, the lender doesn’t lend on the real estate and not the apartments.  It’s a one stop shop for getting a loan.  With rehabbing, selling or renting homes and financing homes, he says that a manufactured home community has become a tougher business.

Murder Headline Misleads Readers

The following was a “Letter to the Editor” in the Cedar Rapids Gazette:

Regarding this March 11 headline, “Man Charged in Mobile Home Death”

I wonder why the editors focused on the type of residence in which the death occurred. Had the alleged murder occurred in a single-family home of traditional  construction style, would we see that in the headline, “Man charged in single-family home death”?  I think the implications being made here are rather irresponsible and are attempting to lead the reader to some unsubstantiated  conclusions. If there is a point the editors would like to make regarding crime and             socioeconomic status or lifestyle or  whatever, the opinion page is the proper place for such discourse, not the front page. In addition, I believe it was a young woman who died, not a mobile home.

Homes Moving Out

A community owner reports that some residents are getting heavy handed when it comes to getting the community owner to buy their   manufactured homes.  He says that a few residents have threatened to move their homes out if the community owner won’t buy their home

Joanne M. Stevens, CCIM

Park and Community Specialist

NAI Iowa Realty Commercial

Brokering mobile home parks & manufactured home communities throughout the U.S

Under a new state ordinance, cities must allow RVs to be in mobile home parks. Cities are allowed to regulate RVs that are used as permanent residences for safety or health reasons. RVs in parks must be connected to sewer and water.

The case began in 2006, when park owner Paul Lawson appealed a city code citation for someone living in an RV in his park. That resident still lives there, but in the ensuing years, has traded in his RV for a mobile home.

Frank & Dave’s Opinion of This Story:

There are two morals to this story.

The first is just how pathetic the legal system is. It took 5 years to resolve what should have been a simple case – so long, in fact, that the state law changed in the interim  and even the person who the case was based on moved on from an RV to mobile home. The only thing worse than the U.S. legal system is… well, we can’t think of anything.

The second moral is how even the State of Washington has been touched by the love of the mobile home park as affordable housing. With RVs now being made acceptable for all parks, it opens up yet another door to improved occupancy at mobile home parks.

If you live in a mobile home in a colder climate frozen pipes should be at the top of your list of concerns.  It is best to keep an eye on them because as you know mobile home plumbing hangs directly below your structure and above the ground.  That means your pipes are normally the same temperature as it is outside.   

There are a few things you can do to protect your pipes.   First, monitor your homes skirting to ensure it is secure around your home.   Next, make sure there are no missing sections, the skirting blocks cold air from going underneath your home.  Third, you should also check to make sure the slope of your sewer lines are at least at a quarter inch grade per foot.   Meaning if one end of your pipe is touching the ground and is 10 feet long at the other end it should be 2 1/2 inches higher than the ground.   If a pipe is anything less than a 1/4″ grade, water will sit in the pipe, freeze and potentially cause the pipe to crack.   Another major concern is where your waterline comes up out of the ground.   This is where your home is connected to your park’s water supply.   This line is very important and needs to be protected.  A break could cost you hundreds to thousands of dollars in water damage and inconvenience of not having any running water. 

There are also a few items that are important additions to add to your plumbing system.  The plumbing under you home should be wrapped with insulation to protect it from the cold.    Another recommended addition you should install is heat tape or cable wrapped around your exposed pipes below your home.   Heat tape will help prevent your pipes from freezing.   It is required to be plugged into a receptacle that is located underneath your home.  Unfortunately if you’re heat tape stops working the only way you will know is when there is a water break. 

There is another option; you can install a device called Current Alert.  It plugs into a receptacle underneath your home as well as into the heat tape/cable.  There is a box that contains a light indicating all systems are functioning correctly.  There is also a light and buzzer that sounds when there is an issue with the system.  It is a good idea to install the alarm box where it is visible.  Crawling under your home during the colder months is no fun task.  Current Alert monitors heat tape on plumbing systems and alerts you immediately when something is not working allowing time to prevent a potential catastrophic failure.

It is recommended that all these systems be turned off during the warmer seasons, once the potential of a freeze is gone.  Disconnecting these systems will extend their life span.  Heat tape usually lasts approximately 5 years depending on the brand and quality.  It is important in the fall to remember to reconnect during the colder seasons.  To verify the tape is working, you should be able to feel that it is warm after several minutes of being plugged in.
If you have any questions or would like more information on the Current Alert device

e-mail info@handymanandmore.com or visit www.currentalert.net for more information.

If not, then why, as a community owner, do I get asked all the time by banks, buyers, residents – even at cocktail parties – how long a manufactured home is expected to last? Is the correct answer “forever”, or are manufactured homes truly temporary and disposable?

The construction process

A manufactured home is made predominantly out of wood and metal. A stick-built home is also made out of wood and metal. So why is one permanent and one temporary? Sure, the manufactured home is lighter than the stick-built home. This is mainly due to the absence of any masonry (bricks, fireplaces, etc.) and the fact that, by design, the framing is reduced. But the actual materials are the same in a manufactured home as in a stick-built one. Do these materials ever wear out? I live in a 200 year old house. Other than the stone walls, it is made of wood and metal. And I don’t have any doubts it can go another 200 years. I grew up in a house that was 50 years old, and it’s still standing today. In fact, I never hear of anyone who had to abandon a home because the wood and metal finally wore out. It just doesn’t do that. Properly cared for, the components that make up a manufactured home should last forever.

So what about the design? Well, the design is not temporary in nature. If anything, the manufactured home design would imply a longer life span than a stick-built home. Rather than a foundation which can shift and crack over time, the manufactured home is on a metal chassis that should last forever. Additionally, the simple roof design, if kept up, keeps the possibility of moisture intrusion lower in the manufactured home. No, there is nothing about the design that would imply a lack of longevity.

Use and ability to wear out

You live in a manufactured home. You live in a stick-built home. What’s the difference? The regular course of business in a home is to get up, go to work, come home, cook dinner, watch some T.V., go to bed. How is this going to wear out a manufactured home any quicker than it does a stick-built? Many people point to the rowdy lifestyle found in some one-star manufactured home communities. But with the exception of this subset, which would tear up a stick-built home with the same speed, where is the damage going to come from to destroy the manufactured home? From turning the door-knob too many times? From walking the same path from the living room to the kitchen over and over?

I can’t see where the stress is coming from to render a manufactured home temporary and a stick-built permanent.

Obsolescence

At some point in a manufactured home’s life does it wake up to find that it is obsolete? How can that happen? As a dwelling, the general pattern of American tastes has not changed that much over the last 100 years or more. Most people expect bedrooms, bathrooms, kitchens, living rooms, closets and the like in their homes. Are we expecting one day that all consumers demand an in-home movie theater and start to abandon all homes that do not have one? And if that did occur, why would they only abandon the manufactured homes and not the stick-built?

If we’re going to be picky, let’s remember that the manufactured home business has only been around since about the 1940s. And HUD code homes since 1976. But there’s a ton of stick-built inventory that is from the 1800s – almost 100 years earlier. If something’s going to go obsolete, it would be that older stick-built housing, right? I live near St. Louis, and there are thousands of dwellings there built around the time of Abraham Lincoln, with tiny bedrooms and bathrooms that were installed later after the outhouse went out of fashion. I think we should be reviewing those in a conversation of housing obsolescence before we even bring up manufactured housing, don’t you?

Maintenance cost

Well, maybe the problem is the cost to maintain manufactured homes, or the existence of replacement parts. But wait a minute. Manufactured homes are normally built with metal exteriors. That’s going to hold up a lot longer than a frame house. And the average roof only needs to be coated with roofing compound every so often – no shingles to replace. And the foundation looks good because there is no foundation. To level a manufactured home takes a couple hours. To level a stick-built home takes a fortune.

On the interior, you’re talking about paint and carpet. The same as a stick-built home.

Sure, I worry about my Dodge Durango one day not having parts available, but that concern is ill-founded with manufactured homes.

Government intervention

I hear all the time that old manufactured homes will one day be phased out. By who? Cities often have codes now that require certain dates or earlier on new homes coming into manufactured home communities. But that does not apply to homes already sited in them. Those are grandfathered.

And let’s be honest. There is a ton of single-family stick-built inventory out there that does not meet current code, either. One of the challenges of remodeling older stick-built homes is not triggering an end to all of the things that were grandfathered, such as inferior wiring, plumbing, setbacks, fire-codes, and the like.

Nope, manufactured homes are not likely to be outlawed.

So where does the “temporary” concept come from?

I suspect from two different sources.

First, the U.S. Government. With every modern weather catastrophe, FEMA rushes in with manufactured homes as temporary housing until real stick-built homes can be built and re-built. So they have created the impression that manufactured homes are not worthy of being lived in over the long term. They re-stress this point at least once a year during hurricane season. And they blast it all over the media.

The government did the same thing in the industry’s formative years, offering it as “temporary” housing at military bases and, later, colleges on the GI bill. So they have been promoting this negative publicity for virtually the entire history of manufactured housing.

The other source is manufactured home dealers, themselves.

They constantly advertise and promote the concept of “trading in your old home for a new one”. Just like a car. So the suggestion is that your manufactured home is only good for a few years, and then time to get a better model. When was the last time you saw Pulte or Lennar make this sales push?

The dealers also ruin things by putting old, destroyed manufactured homes out on their lots, or in fields next to dealerships, for all to see. These homes are normally trade-ins that are in such poor condition that nobody would ever buy one. But by putting them there in public view, it tells everyone who passes by what a disposable product it is – that it just completely falls apart over time. If these homes were at least skirted and painted it would be different. But the dealers seem to have no problem leaving them there, leaning over to one side with the windows and doors missing and insulation blowing out from underneath.

Can you imagine a new car dealer having old wrecks rusting near their entrance?

Conclusion

As always, the urban legend of temporary, disposable manufactured homes is the result of poor marketing and public relations by the industry, not based on fact.

I am sorry to say that I have never seen any literature at any dealer, internet site, or association headquarters that tells the story of why manufactured homes last forever. So why would be expect anyone to know any better?

But then again, what would I expect from a manufacturing and retail industry that can’t seem to ever do anything right? Thank heavens I’m in the community side of the business.