All Forum Posts by: Brian Spear

The real issue is redevelopment & constricting the supply of MHCs. More MHCs are torn down each year than are newly developed. Dr. Esther Sullivan was mentioned earlier, and she points out the issues with redevelopment in her recent book.

Anyone interested in investing in MHCs should pick it up and read it. After turning the last page, the majority of investors would understand that investing in MHCs is a good thing for society at large - as it helps preserve the country’s affordable housing stock.

Dr. Sullivan’s research chronicles the hardship families face when manufactured housing communities are redeveloped, which occurs when the highest-and-best use of the land is no longer a MHC. When original owners sell to redevelopers, residents are evicted and forced to relocate.

The point she drives home is exemplified in one of our communities in GA — Country Oaks. Had we not gone in, increased rent, & improved the community, it would have eventually been redeveloped into a higher-and-better use. At that point, all residents inside the MHC eventually would have lost their homes to redevelopment. 

Affordable housing is in short supply, and we should all do our best to keep the current stock that has been developed. 

To disparage MHC residents is distasteful. When my parents divorced decades ago, my father moved to Gary, IN (where crime & poverty run rampant) & my mother chose to live a mobile home on the south side of Chicago. This was a much preferred living arrangement for her & her children. We had our own home, lawn, shed, etc. These are items we wouldn’t have had in a shoddy apartment. My mother has a degree in accounting, so her financial acumen is quite alright. We had simply fallen on hard times. The lower entry cost of the MHC allowed us to get back on solid footing. And it is the fundamental reason why I ultimately chose to explore providing more affordable housing throughout the country.

The land-lease model brought forward in MHCs can be a mutually beneficial scenario. If it wasn’t mutually beneficial, mobile home parks wouldn’t exist. Both sides of the table in this discussion want the same thing — affordable housing. We simply disagree on how best to preserve it. This is not a win/lose situation. Community operators can generate solid returns while still providing residents with a phenomenal, affordable product.

Reach out to:

• IMA Corp
• Stanford & Associates
• Mobile Agency
• Meadowbrook Insurance Agency

For quick turnaround, you'll likely have the best success with Mobile Agency. 

At scale, vet all parties. 

Every day, we deliver affordable housing and a great quality of life for thousands of residents of all financial backgrounds. Our team strives to provide safe, clean, quiet, affordable housing for our residents at below market rents. SCI is not funded by large private equity firms.

We understand that no one likes rent increases. But like other community owners (resident and investor owned), SCI needs the flexibility to cover annual cost increases for utilities, taxes and infrastructure repair in order to maintain quality community standards. Restricting the community owner’s ability to cover these costs can often have harmful unintended consequences for the residents the community is trying to serve.

At Akron Mobile Home Park, we have taken a gradual approach to increasing lot rents to the market rate over several years in an effort to alleviate the burden on our residents.

Shedding more light on the topic of affordable housing in general... 

Our team was recently introduced to an enlightening “Ted Talk” on Mobile Home Parks, given by Dr. Esther Sullivan. While the speech was neither pro nor anti manufactured housing industry, it did share some phenomenal insights.

Early in the speech, Dr. Sullivan shares data on America’s Affordable Housing Crisis. The country simply does not have enough affordable housing units, and the new supply of affordable housing units is not keeping up with new demand. As such, we need to place an emphasis on preserving the current stock of affordable housing that is already on the market. Unfortunately, more mobile home parks are redeveloped into a higher-and-better use every year than are newly constructed. Both sides of the aisle want the same thing – affordable housing. However, one side fails to realize that by artificially constraining the lot rent of a community, the owner is perpetuating the community’s eventual demise. Those landlords that choose to artificially subsidize communities via suppressed lot rents do not generate sufficient reserves to set aside for inevitable capital improvements to the community’s infrastructure and aesthetics. Eventually, the community begins a downward spiral, and becomes an opportunity in the eyes of a redeveloper intent on maximizing the value of that parcel. Typically, this results in the loss of hundreds of affordable housing units. This cycle has played out numerous times:

• Mobile Home Park Residents Lose Homes
• Midfield Mobile Home Park Residents Lose Court Battle
• Loss of Another Tempe Trailer Park Highlights Lack of Affordable Housing
• Mobile Home Park Residents Face Homelessness

In an effort to preserve our country’s affordable housing, it is our duty as community operators to keep Lot Rents in line with the market rate. This approach ensures that we have the ability to appropriately maintain a community, ensuring its long-term viability.

Just wanted to provide the BP community with some context on this thread...

Our team provides affordable housing for residents in multiple states, and unfortunately sometimes we run into unruly residents.

One such resident is Shawn Sheedy. He is currently protesting a rent increase, and travelled from NY to FL to personally harass my family and I last week. He was part of a group of six of our residents looking to drum up trouble at their landlord's corporate office. They not only went to our office, but also the personal residences of myself and Kevin Bupp. We were forced to call police & provide them with a 'Cease & Desist' in an effort to stop the harassment.

Our attorney has advised that we do not engage with them in any manner. So in lieu of responding directly to the resident(s), I figured I'd touch base with the BP community to provide some insight.

@Adam Bradley you're welcome. And apologies to BP for the 'promotional' reply, which was removed. Was simply trying to answer Adam's question... 

@Lane Kawaoka

@Lane Kawaoka Certainly check out all of the resources @John Jacobus mentioned. MHU is a great for anyone looking to get a better understanding of the niche. We send our internal team members to attend the weekend bootcamp. It's a great way to get someone up to speed on the macroeconomics of the industry. 

Additional educational content:

• George Allen Blog
  • He has been an educator in the Manufactured Housing space for decades
  • He puts on a roundtable once/year where industry professionals share insights 
• Park Place Education
  • I don't know Tony Ferris personally, but he shares his experience in the industry
• MHI Conferences & Meetings 
  • Best place to meet & great executives in the industry.

@Mark Robertson  Kudos on your great work over at CrowdDD. You're helping individuals achieve their goal of financial freedom by sharing the experiences you've learned over time. 

We are here! We've been dealing with some technical issues on the back end and are working on building a new site - it is in the works. 

@Gulliver R.

The Rent Credit is derived from an arbitrary % that you create based on your business model. To be clear, it is separate from the Lot Rent. For example, if your monthly Lot Rent is $200 & your monthly House Rent is $400, the total monthly amount due from a resident is $600. 

In this scenario, should you choose to credit 75% of the house rent, a resident would accrue 300 Rent Credits per month. 

Should you choose to credit 50% of the house rent, a resident would accrue 200 Rent Credits per month. 

Operators typically credit between 50%-100% of the house rent. Variables when determining the percentage are below:

• age of home
• condition of home
• star rating of community
• business model of operator 

Again, please speak with an attorney regarding any of the aforementioned info. As mentioned earlier in the chain, Dodd-Frank prohibits park owners from seller-financing chattel. Seller-financing, lease-options, and rent credits can be seen by the courts as one and the same if you don't have the proper language in your contract(s). 

@Gulliver R.

I pm'd you more specific info... 

In general, we try to have residents accrue Rent Credits at a pace that will allow them to acquire a home within 5 years. 

Also, you should refrain from using the terminology 'down payment' when implementing the Rent Credit program. This can be misconstrued as seller financing... Residents will pay the first month's house & lot rent in addition to a security deposit -- just like a standard rental.