Issue link: https://read.dmtmag.com/i/549054
AUGUST 2015 15 THE JOURNAL letters to the editor In Frank Rolfe's words, he's for 'significantly higher lot rents'. That does not make for being a provider of affordable housing! Begin with a definition of affordable housing: "Housing is affordable when individuals or households 'earning less than half the Area Me- dian Income or AMI', can afford to rent a con- ventional apartment and or buy a home in their local housing market." Bruce Savage, The First 20 Years!, 2013. What's that mean? National AMI runs $50,000+/-. If individuals or households earn- ing half that amount, or $25,000/year can af- ford to buy a home, and pay no more than 40% of $25,000 in PITI (or $833/month for home and realty), or lease a conventional apartment, in the local housing market, those housing units are 'affordable'. However, $36,000 AMI is typical of semi- rural areas in the U.S. In this instance, would be homebuyers/site lessees (in the case of land- lease-lifestyle communities), have $600 to in- vest in PITI (loan principal, interest, taxes, insurance) and site rent each month, i.e. $36,000 X .5, divided by 12 months, X .4% = $600.00/month PITI & site rent. Here's matters get dicey, given writer's ar- gument for 'significantly higher rents' = 'the only hope for affordable housing in much of the U.S.' In the $36,000 AMI local housing mar- ket, 3BR2B apartment rents run $900+/- per month, depending on physical and economic occupancy factors. LLLCommunity owners/operators oft use the 3:1 Rule, for pegging rental homesite rates to local 3BR2B apartment units. For example, $900/month rent suggests average LLLCom- munity site rent, all things being equal, of $300+/-month. So, when homeowner/site lessee has $600/month to invest in his home & site rent, and the site rent is $300/month, that leaves $300/month for aforementioned PITI What happens when this writer raises $300 site rent to $350.00? Homeowner has but $250 left for PITI. Choices are to spend more than 40% of income, buy 'less home' with lower PITI, or move to a less expensive LLLCommu- nity. Good-bye affordable housing! George Allen, CPM®Emeritus, MHM® Master We are writing in response to the article "Why Significantly Higher Rents Are The Only Hope For Affordable Housing". In that article the author states the median home price is $200,000 and apartment rents are $1,200. He is trying to make a point that our site rents need to be closer to that. While I understand the purpose behind his article, I'd like to point out his numbers may be accurate in urban areas, but site rent in those areas certainly is not $275 like he alluded to. In the majority of rural areas where that is the average site rent, the median cost of a home is going to be closer to $80,000 - $120,000 and apartment rents $500- $700. He also doesn't take into consideration the monthly cost of the home the residents have to purchase to put on that site. In most areas, when you combine the cost of the site rent and home mortgage the residents end up paying more than the cost of an apartment. The article speaks as though market value equals higher rents when in fact market value equals the right rent. As a landlord, it is our responsibility to ensure our rents are fair and ap- propriate, based on our market and not a national generalization. If our residents cannot af- ford to live on our property then it is not affordable housing. The law of supply and demand dictates what the rents should be. If you raise your rent too high and people move out because they cannot afford it, then there will be no more demand. The vacancy will reduce your overall income. While some of the author's points are factual, a large majority of the general public does not understand the economics of what we do. Therefore this article not only makes community owners look bad, I can almost guarantee that it will be used against us to argue for rent con- trol. Lastly, I'd like to say that while we are all obviously in this business to make money; but for many of us, it is not just about the money. Of the twelve communities we have purchased, all but one of the sellers looked into who we were and what our other properties looked like. They were deeply concerned about who was purchasing their community and wanted to en- sure that it would be someone that would take care of their residents. Many of us would not significantly change the lives of hundreds of people for financial gain. If we lived in a pure cap- italist society this may happen, but thankfully our world has not yet become that extreme. Ken & Katie Hauck, MHMs - Hauck Homes, Inc. Affordable housing is defined by the market (buyers) – as George Allen pointed out. Any- one who thinks such housing will be increased by raising rents is overlooking one of the most fundamental tenets of economics: supply and demand. The author also mistakenly compares lot/site rent to apartment rent. That makes about as much sense as comparing a parking space to an automobile. Finally, it is insensi- tive and arrogant to claim that the residents of land lease communities don't know what's best for themselves. In summary, the views ex- pressed by this author certainly don't represent those of this community owner and, in my opinion, only provide fodder to detractors of our industry. Regards, Spencer Roane, Atlanta, Ga. Letters to the Editor can be submitted to news@journalmfdhousing.com There is a 300 word count limit on letters and request that they be sent in a Word Document format. The views and comments by our monthly columnists are not necessarily the views of THE JOURNAL. Our columnists are given the opportunity to express their opinions each month.