Issue link: https://read.dmtmag.com/i/609009
DECEMBER 2015 22 THE JOURNAL Why Every Community Owner Should Give Thanks To Charles Becker BY FRANK ROLFE COMMUNITY CONSULTANT One of the great roadblocks in the manufac- tured home community business has been the complete absence of credible information. The apartment industry has every possible tool, in- cluding the U.S. government's Fair Market Rent report that seemingly allows apartment owners to raise rents with abandon with the ap- parent endorsement of the U.S. government. At the same time, we don't even have any sta- tistics on what our rents are or how they've evolved over time. And we have no scholarly papers by any third party to help solidify the key drivers to profitability or study the industry trends, both past and present. Until now. Charles Becker, a Professor of Economics at Duke University, has started to study the man- ufactured home community industry. And he should receive the full support of every commu- nity owner as he undertakes this important task. The first credentialed academic to tackle our industry Duke will be the first notable source to ever study our sector of real estate. The very fact that Duke University is involved gives the task unparalleled credibility. For an industry that has been dying of thirst for legitimate information, it's as though we've had a swimming pool of Ozarka dumped on our heads. I have no doubt that these reports from Duke will form the nu- cleus of a new era in the study of the manufac- tured home community business. And having scientific research to separate fact from myth will be a huge asset as we strive to be on an equal footing with the apartment industry. I can't even begin to tell you how many times a month I am asked such questions as "what's the average lot rent in the U.S." or "what's been the increase in lot rent in the U.S. over the past fifty years" or even "how many manufac- tured home community lots are there"? And I am always embarrassed to say that nobody has ever bothered to study it. Bravely staring down the stigma Let's face it, our sector of real estate has a less than attractive reputation – even if it does not deserve it. It's amazing to me that Charles Becker has the guts to pioneer the study of an industry that typically is reviewed by COPs, Trailer Park Boys and Myrtle Manor. I was an Economics major at Stanford University, and I can't fathom anyone choosing our arena as their area of focus. Traditionally, economists stick with higher profile, sexier topics, such as oil and gas and the ramifications of immigration re- form. Duke is definitely sticking its neck out, and we should all appreciate that. And if we don't treat them well, I assure you that nobody else will do so in the future. Dealing with the topics that nobody else wants to talk about There are landmines of political incorrectness scattered about all over our industry. You can barely talk about any aspect of this business without ten people accusing you of being unfair to some group. I should know. I raised the lot rents on a small community in Austin by 15% - - while still $1,000 per month less than the av- erage apartment – and appeared in no less than ten newspapers claiming that I was the meanest guy on earth. Manufactured home communi- ties are not a topic that is typically politically correct to discuss, so it shows true bravery for Charles Becker to tread on ground filled with short-tempered detractors. Making the right decisions on what's im- portant These papers by Duke, in our opinion, will do a lot to support the theories that many of us have been operating under for years, based on gut instinct alone. There will finally be factual proof of whether or not amenities are impor- tant, or whether or not our true competition is apartments or stick-built homes, or even what our fair market rents should be. These are all items that can hold giant value in understand- ing what we should be doing, and can once- and-for-all prove out the truth – whether we like it or not. Basing our business on scientific fact and not speculation does much to elevate how we appear to the outside world. Bringing respect to the industry We have felt, for years now, the ultimate destiny of the manufactured home community business is to be on par with the apartment in- dustry. This would yield lower cap rates, greater respect from city hall, and the end of the "stigma wall" that creates a barrier to main- stream real estate investment. In order to make this happen, we have to create confidence in our business model, and having economic re- ports from Duke creates a terrific Exhibit A. Of course, that's not the complete solution. But our current vacuum of data sets a terrible first impression. Can you imagine the stock market operating without statistical analysis? No won- der we are treated so poorly by our real estate asset class peers – we don't appear to have any documented support for anything we say. Conclusion Duke University's Economics Department is embarking on an important journey for the ben- efit of the manufactured home community busi- ness. We should all wish them luck and, if needed, provide any information they should request to prepare their findings. We have per- sonally already called them and offered any and all data from our 170+ communities that they would need for their studies. We suggest that you do the same. The benefits to your business will be huge in the end. Let's show Charles Becker and Duke University that we support what they're doing! 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 views on the manufactured home community industry visit www.MobileHomeUniversity.com. T J