Issue link: https://read.dmtmag.com/i/549054
AUGUST 2015 18 THE JOURNAL Observations From The National Apartment Association Convention BY FRANK ROLFE COMMUNITY CONSULTANT For years we have been going to the MHI show, both in Las Vegas and Chicago. But a few weeks ago we also went to the National Apartment As- sociation show in Las Vegas, to get some fresh ideas from our nearest real estate sector relative. And we got our money's worth. Here are my ob- servations from that show. It's about 10 times bigger than MHI The first thing you notice about the NAA show is the size – it's about ten times larger than the MHI show. Why is that? One thing I noticed is that a huge number of the attendees were apart- ment complex managers, whereas there are vir- tually no manufactured home community managers at the MHI show. Another reason is that there are many more apartment owners in the U.S. then there are manufactured community owners. Operationally, both shows are very sim- ilar, and both charged about the same admission price. Software is the 800 pound gorilla Unlike the MHI show, the biggest participants in the NAA show are software providers. Of course, our industry has Yardi, Rent M anager and Park Sidekick, but there were software companies I had never heard of at NAA and it got me inter- ested to find out more. One such company is En- trata, which is a very popular software platform in the apartment industry. To give you an idea of the dominance of the software vendors, their booths were two stories high, and featured upstairs bal- conies and two-story LED all the way around the booth. Another had curving glass walls two-sto- ries high. Have you ever seen that at MHI? They have a bunch of concerns that we fortunately don't share Some of the booths featured topics that are not of much concern to most community owners – which is a good thing. There were vendors who sell special toilet tank inserts to conserve water, and a number of appliance vendors, and a huge focus on plumbing and landscaping issues. An- other vendor type – that we fortunately don't have to contend with – were companies that specialize in mitigating damage after catastrophic floods and fires. But they al so have a bunch of great ideas that we can use in our industry What made this show worthwhile was that I got some fresh ideas that I'm going to explore for our community portfolio. These concepts include: • Professional phone answering services to han- dle our sales calls. Most community owners have the manager answer the phone. Larger operators often use a call center at their corporate office. But the problem is that those solutions are typi- cally only manned on certain days and times. The professional answering services are open 24/7, and take copious notes on every call, and know the right things to say and what not to say. This is apparently common practice in apartments. • Mystery shopping services. We try to mystery shop our employees constantly, but it's a real drag on manpower and time. There are professional mystery shopping services that do the same thing, keep perfect notes, and then provide computer readouts each month on who's great and who's a flop. • Remodeling purchasing and tracking services. These groups allow you to buy all the parts you need for home renovations from one source, and then tracks what's used on each unit. This focus on cost containment of remodeling is something that apartment owners and community owners have in common, yet they are light years ahead in execution. But just don't tell them you own a manufactured home community I was wearing a suit and got along just fine until people asked me where my apartments are and I told them that I owned manufactured home com- munities instead. The reaction that most people gave me was akin to the revelation that I had lep- rosy. One attendee told me, "oh my gosh, I'd never own one of those things." So I said "what if I gave it to you for free" and she said "I wouldn't take it – those things are disgusting". Most of the vendors were a little kinder, but the minute you revealed that you were a community owner and not an apartment complex owner, they basically just handed you a brochure and went on to a bet- ter prospect. I guess we still get about as much re- spect as the late Rodney Dangerfield. Why can't our industry be more like the apartment industry in some regards? The primary observation from the NAA show is that the apartment industry is miles ahead of us in regards to professional management. The property managers at NAA were more on top of things than most owners at MHI. So how can we afford to hire better talent at our communities? The answer is simple: we need higher rents. Significantly higher. When you consider that the average apartmen t rent in the U.S. was $1,314 in 2014, and the av- erage lot rent in a manufactured home community in the U.S. is around $275 per month, we are charging about $1,000 per month less, yet have a product that most consumers prefer because they have their own yard, privacy, the ability to park by their door, and neighbors that are homeown- ers and care about their community. Instead of trying to patch community management together using lower-paid workers, we will have to ulti- mately raise the rents up a notch and start hiring that apartment talent. Even if our rents doubled, we would still be hugely lower in price than apart- ments, and still maintain 100% occupancy. With the deluge of laws and regulations – from Dodd- Frank to the ADA – a change is bound to happen soon just to remain in compliance. You'll know we raised the rent s enough when you see Entrata's booth at MHI. Conclusion While I would not attend every year, I think that there's valuable information to be learned at the NAA show. After all, we are part of the same multi-family real estate family. Someday, I would like us to be on par with apartment owners re- garding management. And I think we have the engine to drive us to that level readily available in raising rents to reasonable levels. So what are we waiting for? Frank Rolfe has been a manufactured home community owner for almost two decades, and currently ranks as part of the 6th largest community owner in the United States, with more than 17,000 lots in 20 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. To learn more about Frank's v iews on the manufactured home community industry visit www.MobileHomeUniversity.com. T J