All Forum Posts by: Ken Rishel

@Mike G. 

Thanks for the kind words.

To those who do not know me:

I started in this industry in 1975 and started building communities soon after getting involved. The largest community was 1,000 sites which we sold for almost $40 million. I have been a developer, a retailer (into our own communities), and a lender both in my own communities and later in other peoples communities. Since 2006 I have built and led a nationally recognized consultancy that has served over 8000 entities. We have helped many operators start or fix their captive finance operations, helped community owners and retailers deal with their state and federal compliance issues, and trained thousands of sales personnel in how to sell legally in a post SAFE Act world. Currently we are helping land lease communities with their compliance burdens related to Fair Housing and ADA.

I was appointed by the Governor of Illinois to set up and run the Illinois Manufactured Housing Quality Assurance Board, I was selected as the Manufactured Housing Industry Person of the Year(2013), my consulting company was selected as Service Supplier of the Year in 2011 by MHI (our national trade association), I have served three times on the Board of Directors of the Illinois Manufactured Housing Association and also served as Chairman in 2014, and have been the featured speaker over 200 times at industry events. I have also served on the Board of Directors of the Louisville Show. I was a founding member of the MHI Dodd-Frank Task Force along with Tim Williams of 21st Century Mortgage. I am also a Life Member of the RV/MH Hall of Fame Foundation.

OK. If you did not know who I am, now you do. What I promise is this: I will never post information that I am not absolutely certain is correct. Frankly, I don't post very much here any more, but when I do, I will stand behind what I write.

As Mike G. stated, there are, unfortunately, people who post here with incorrect information. Sometimes it is to make themselves feel more important than they are, sometimes it is because they are selling some sort of snake oil solution, and sometimes because they are trying to help but they are working from incorrect information themselves.

This BP forum can be a valuable resource, but read carefully and judge what is being presented. If it seems too good to be true, it probably is. Look for credentials on those offering advice. Ask very specific and good questions if you expect quality responses. Here is an example of a badly worded email I received which almost caused me to trash it without responding:

I saw you have many posted regarding "Safe Act" with MH owner financing.

I was a traditional W2 investor for the past 8 years. Just got out of my Nurisng job last year and became a full time REI. Really thinking about doing MH owner financing to have some cash flow. Can you please give me advice on which state is safe to do these MH owner financing to get my feet wet?

Thoughts?

 You should seriously consider joining the Texas Manufactured Housing Association for many reasons, not the least of which they have the forms you need. And, Texas has some very specific regulations and forms for handling the just the sale, along with advance notifications that Texas requires. 

Lending in Texas legally is far easier and cheaper than many other states. That said, you will need to be, or hire, (legal in Texas) a contract MLO and have a chattel lending license from the state of Texas which is pretty easy and cheap compared to most states. The lending agreements for Texas are different that for other states, as are the related lending documents. In addition, even for a few loans, you need a formal Compliance Management System to cover over 20 federal laws, some of which has additional requirements for Texas.

This is all doable. Because Texas is easier and cheaper, there are lenders there doing only a few loans a year and still are completely legal. You too can do this.

 Interest on the loan is deductible.

 Hey. I never stated that manufactured homes are built to higher standards than modular homes as a general rule. There are certain limited cases however where the wind zone standards for manufactured homes exceed the state standards for wind resistance. Florida is a prime example of this.

What I was trying to say is the both manufactured and modular homes can be of equal quality, and that in certain cases, a high end manufactured home can be a better home than a modular selling for a cheaper price. e.g.: If I buy a Cadillac manufactured home and a Chevy modular home the HUD Code home will be a better house because of exteriors, insulation, wall thicknesses, interior finish and fixtures. None of this should be confused with structural quality comparisons.

By the way, I haven't bought a HUD Code since 1995 that weren't built with 2x6 walls. Yes you can buy 2x4 walls but you can also order 2x6 wall for HUD Codes.

While private land is not my area of expertise, it would make sense to me that if the rehab covers certain areas of the home, the answer would be yes. People are constantly rehabbing very old mobile (pre HUD) homes in the Florida Keys and getting higher and higher prices for them.

Come ON! There is so much misinformation in this post. Why do people that do not know what they are talking about post like experts?

Modular and Manufactured Homes are two entirely different structures built to different standards. They are both built in a factory, but one is delivered on a flatbed and the other on its own frame and wheels. Manufactured homes are commonly called "HUD Code homes" because the building code is federal in standard and is performance based, while Modular homes are built to state building codes.

With both Modular and Manufactured homes, there are varying standard of quality. Both have cheaper and smaller versions that can be bought in the 40-50K range, and both have homes that run 200-300K. A very few larger ones can ran as high as 500K. Many manufactured homes have higher quality standards than less expensive Modulars.

To the issue of depreciating value with manufactured homes placed in a land lease community. The truth or fallacy of that statement depends on the community in which they are placed. I built a community in 1976 where most of the HUD Code homes are still there. They are selling for 6-7 times for what the original buyers paid for them. This community has changed hands several times but the management style has stayed consistent so the value of the homes have risen. This is not an isolated experience. That said, there are many poorly run communities that contribute to ongoing depreciation as do smaller sizes and original poor quality of the home. (Homes less than 1200 square feet generally depreciate or fail to gain strongly in value, even in "stick built".

Most banks do not understand manufactured home chattel lending and tend to avoid it. That is why there are specialty lenders and why many larger community groups have created their own financing arms.

 over 500 pads

 Not anymore. At one time I owned 12 investment grade parks and some smaller parks but I sold the last one in 2017. We have also sold most of the consulting company and only work now in a couple of areas. We are still the largest consultancy dealing with Fair Housing and the Americans with Disabilities Act working with land lease community owners and we are still consulting with Lonnie Dealers who need a legal lending method.

I rarely bought pre owned homes anyway. Marc likely has the best advice for you.

Sorry.

The question I would be asking myself is why they are preventing the inspection.

 Why not deal with the manufacturers direct?

Your question of price is difficult because you have not addressed the quality of homes you want to buy, or, where you plan to place them. There are wind zone standards that can make a big difference, as well as insulation and snow load zones.

Several years ago, I bought a number of Muti section homes from a high-end at over $100 K. About the same time friends of mine were buying multi sections from Clayton for under $40K. It sort of depends on what kind of home your market research indicates you should be handling. 

FYI: There are at least three manufacturers building HUD homes that routinely end up retailing for well over $300K.