Issue link: https://read.dmtmag.com/i/67690
COMMUNITY CONSULTANT There's A New Revolution Coming In CommunityManagement BY FRANK ROLFE I have worn many hats from my days as an owner of one community to the current portfolio of over 70 communities. I've managed commu- nities from inside the small single-wide of my first one-star community, to later the inside of a club- house in my 260 space 3-star community. I've managed manufactured home communities all by myself, and today with a team of 140 employees. And I've tested every management concept known to man – some which were winners and some gigantic losers. What I'mseeing develop, over time, has been a significant shift from the old-fashioned management structure of an office with set hours and a high-paid man- ager or two, to a lean, no- frills environment focused on cost-cutting and returning every penny to the owner via the bottom line. And, like the American Revolution when the old-fashioned British were annihilated by the shrewder, creative and more aggressive Colonial Army, I can see a rev- olution coming in community management, in which those who don't adopt new strategies to in- crease profitability are trampled. Why do we own and manage communities, anyway? while still providing the same great product or service to the customer – is great. For some rea- son, many community owners have drifted away from proactively trying to find new ways to squeeze pennies out of their property. To get a better handle on this concept, we should look at the restaurant business. Dining titans, such as McDonalds, are endlessly searching for new ways to cut the costs of the products sold, using new ideas and technology to make that happen. The average McDonalds in the U.S. has sales of around $2.3 million per year – about the same as amanufactured home community gets in a rut be- cause it's producing more cash flow than the owner ever imagined, and the desire to create even more cash seems of little interest. And this sense of complacency rubs off on the manager, who figures that if the owner doesn't care, then why should they? The manager makes the same amount regardless of the community's perform- ance, after all.We have to empower themanager to care. With no oversight, comes corruption And, like the American Revolutionwhen the old- fashioned British were annihilated by the shrewder, creative and more aggressive Colonial Army, I can see a revolution coming in community management, inwhich thosewho don't adopt new strategies to increase profitability are trampled. a portfolio of 600manufactured home community lots. Our cap rates are lower, so every penny we make is worth far more than at McDonald's. So why are they trying so much harder than we are? Beware complacency We buy communities all the time in which the The only reason that we ever buy and manage manufactured home communities is to make money. These are income properties, and the focus should be on income. Obviously, we have to provide a good product and service in order to attract and retain tenants. Anything that a com- munity owner – or manager – does that costs money for no reason, is bad for the business. Anything that we can do to increase profits – JUNE 2012 24 THE JOURNAL existing manager displays no interest at all in making money. Water from leaks runs down the streets, community-owned homes sit empty with the doors flapping open and shut, and 30%of the residents have not paid their rent by the end of the month – still, they're getting paid their salary like clockwork, and the manager complains that they do not get enough vacation time or a better health plan.How does this happen?Many times, There is a lot of money that passes through a manufactured home community. Amanager that has lost their way will often start adopting schemes to enrich their payroll evenmore, including embezzlement, vendor kick-back arrangements, fake pet deposits, and the list goes on. A manager that does not have con- tinual real-time supervision is a likely candidate to go down a bad path. A flawed system to begin with I'm endlessly amused at man- ufactured home communities that stick with a rigid 9 to 5 office hour mentality. What can pos- sibly go wrong during business hours? There are normally no residents at home, nor can someone wanting to rent a home visit during those hours. Additionally, howmany communities do you visit that don't have suchmodern inventions as voice- mail, or email, or even a working fax machine. Even a fifth-grade business consultant couldmake a top 10 list of inefficiencies and sloth. So what does work? First of all, unless you have an upscale senior community, or a family community with a ton of 4 and 5 star amenities, you need to re-examine why you have a manager on duty during 9 to 5.