Billionaire Warren Buffett speaks about “value investing,” plus only investing in concepts that can be easily understood, and make sense. Buffett believes in well managed firms. Those concepts from the 3rd richest man on earth are proven to work just fine. Others methods he deploys are arguably less savory.
Billionaire Sam Zell and Buffett differ on numerous items in their public political stances. But Zell and Buffett both agree that manufactured homes make good sense. As Zell has said about investing, “If everyone is going left, look right.”
Zell’s Equity LifeStyle Properties (ELS) continues to do deals in manufactured homes and communities. Ditto Buffett, Sun Communities, Legacy Housing, and numerous others. Their reasons are similar to this extent. Each firm believes in the long-term opportunities in affordable housing. Nothing is more proven in that sector than manufactured homes.
That said, much of the public and investment world just doesn’t realize that, not yet anyway. Thus the ongoing value of Zell’s mantra.
Suits and Opportunities
It is commonplace for sizable operations to have one or more attorneys – ‘suits’ – on staff or on retainer. With affordable housing in high demand, why haven’t more industry pros recognized Zell’s lesson of being contrarian and “looking right” – doing something different than others are doing – as an obvious part of the solution for accelerating sustainable growth for MHVille?
There are independent operations in manufactured housing that tell MHProNews that most of the business that they do is with 21st Mortgage Corp. That’s not a surprise, given the fact that Berkshire Hathaway owned 21st and Vanderbilt Mortgage are the top two lenders in the industry. But what that factoid suggests ought to be a wakeup call to the industry’s other lenders and all of the industry’s musing professionals. It’s this. Conventional housing routinely gets better credit score buyers than manufactured housing attracts. Why is that? Perhaps more to the point, why is it that some manufactured home pros can attract better quality credit or cash buyers, while others don’t?
Every week, on MHProNews there are any number of reports that shine a light on the opportunities and obstacles that face the HUD Code segment of the factory-built home industry. But perhaps the greatest obstacles are arguably from within, and it was MHI member Frank Rolfe of RV Horizons who said that on more than one on-the-record statement.
Investors Asking the Right Questions
We get periodic contacts from a range of investors who often ask the right questions. Some, after seeing the modern HUD Code manufactured home product first-hand are blown away by the value proposition. Which again begs the question, why isn’t our industry doing far better than it is? That’s a question that outsiders looking in – pondering investing – are asking us on a regular basis.
It is also a question that every operation already in manufactured housing should look in the mirror and ask itself.
Certainly, there are those who’ve flocked after smaller to mid-sized manufactured home communities (MHCs), with the ‘big boys’ often going after larger communities or portfolios whenever possible. That’s fine, it works. But that’s a fairly limited box, especially when compared to the growing multifamily housing sector.
A community executive, seeing our recent report on Michigan – linked further below – speculated that some of the slowdown there was due to the higher cost of installations kicking in there. Our publisher and industry consultant L. A. ‘Tony’ Kovach replied, but isn’t the spread between conventional housing and manufactured homes – even with a costlier installation – still huge? The community executive replied in the affirmative, and acknowledged the point Tony made.
So the question stands, given the affordable housing crisis, what gives? Why are total sales nationally or in the various states so relatively modest?
Ask the Manufactured Housing Association for Regulatory Reform (MHARR) that question. Why isn’t the industry doing better than it is, given the quality and value of today’s HUD Code homes? MHARR – the Washington, D.C. based trade group – has answered that quite specifically. They point to the obvious failures of the Manufactured Housing Institute (MHI) in their post-production advocacy. They also note the game by MHI that MHARR has colorfully dubbed the “Illusion of Motion.”
Ask independents privately if they trust Clayton Homes (e.g.: CMH) or 21st Mortgage, and they may point you to Heath Jenkin’s experience, what happened to hundreds of retailers, or other experiences like those in recent reports, further below.
The fact that MHProNews has routinely asked Arlington, VA based MHI or their Omaha-Knoxville masters to explain or clarify those cases, and they have not yet done so is puzzling isn’t it? Or that not even an attorney working for them has opted to explain such real-world examples – doesn’t that silence speak volumes?
But these vexing internal industry issues are potentially opportunities in disguise too. Every crisis is also an opportunity, once properly understood – but only if someone is committed to doing all that is necessary to navigate the challenges and thus get to the promised land.
Zell could have thrown his arms up over frustrations experienced in MHVille long ago. He hasn’t, he keeps investing. Why? Because, he said in a statement, that Equity LifeStyle Properties (ELS) has long-term confidence in the industry.
Which brings us back to Zell’s mantra. Thanks again to to all who’ve made this the runaway most-read trade media in all of manufactured housing. Yes, we do things differently. But is that part of the reason that has made and kept us #1?
With no further adieu, let’s dive into the real-world scenarios – in the positive as well as the problematic reports – from the week that was: 2-10-2019 to 2-17-2019. Because each report, properly understood, is part of the puzzling promise of manufactured homes as the solution for the affordable housing crisis that is hiding in plain sight.
New Featured Articles and Reports for February on MHProNews
What’s New on MHLivingNews
Democrats, Republicans Agree – “Manufactured Homes Can Play a Vital Role in Easing” the Affordable Housing Shortage – manufacturedhomelivingnews.com
For years here on MHLivingNews and our professional sister site, MHProNews, we’ve worked with a simple premise. Affordable quality living is a non-partisan issue. Rephrased, that means it should be a bipartisan effort to understand and promote the most proven kind of affordable housing that America has ever known.
What’s New from MHARR
What’s New on the Masthead
What’s New on the Daily Business News on MHProNews
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HUD Code Manufactured Home Production Decline Persists – Time For Action Not Excuses | Manufactured Housing Association Regulatory Reform
Washington, D.C., February 4, 2019 – The Manufactured Housing Association for Regulatory Reform (MHARR) reports that according to official statistics compiled on behalf of the U.S. Department of Housing and Urban Development (HUD), HUD Code manufactured home production declined again in December 2018.
“The Illusion of Motion Versus Real-World Challenges” | Manufactured Housing Association Regulatory Reform
Motion – or, more accurately, activity – in and of itself, is not necessarily synonymous with, or equivalent to, realprogress, or, in fact, any progress at all.