Issue link: https://read.dmtmag.com/i/90145
DEVELOPMENT MARKETING Ask Eddie BY ED HICKS What type of greenfield community do you recommend for a 200+ acre parcel of land in Florida which is fully entitled for m/h com- munity development. Phil T., Ocala, FL There is no substitute for an independent mar- ket and economic feasibility study for a given par- cel of land given the client's investment objectives, financial resources, and level of man- agement involvement to be committed. Don't make the mistake of using a consulting firm which is not familiar withm/h communities. More than one development entity has learned this fact the hard way, since m/h home buyer's wants and needs are often clearly different from those of site built home buyers. Experience in knowledge of home siting, manufacturer's home products, standards, pricing, options, accessory structures, etc. are all important when creating the home product. Review the area demographics: most important is the projected number of new households which are being forecast for the next 5 to 10 years. Using the national average of 5% to 7% of new house- holds in any given area, what is the total number of potential newm/h forecast to be sold, and pre- suming about 50% of these will go into communi- ties, you can estimate the range of potential buyers. Then evaluate the current and anticipated competition, and divide up the market potential between the various competitors. You can make adjustments for various factors such as community type: land lease, sub-division, cooperative, straight rental, seniors, non-age restricted, etc. If it is decided to create a community for all ages, you must evaluate those exterior amenities which are important for that market segment: proximity and quality of schools, access to traffic resources to employment areas, etc. For seniors communities, distance away from schools may be important, and access to major shopping malls, super markets with bakeries and butcher shops, close to colleges and universities, aremore impor- tant. The home product includes the configuration of the home: single or multi-section, perpendicu- NOVEMBER 2012 20 THE JOURNAL lar or parallel to the street, low silhouette instal- lation, 5/12 vs 3/12 roof pitch, house type shin- gle roofs, no auto cover vs carports or garages, etc. Of course these can add greatly to the home price, and can easily take you "over the limit" of home pricing depending on the economics of the financing options. Pricing of the product in the context of avail- able financing is obviously important. For a non- age restricted community, you want the combination of home payments plus the monthly lot rental fee to be equal or better yet, lower than themonthly rent for area comparable 2-3 bedroom apartments. Lot sizes are more important when considering the lot widths. After taking into account the zon- ing setback requirements, to place amulti-section home on a homesite may require a 50' minimum width. As the homesite widths get wider, the cost goes up by a factor of 150% However trying to make 38' wide lots may be very difficult especially when trying to accommodate parallel parking (eliminating the dreaded tandem parking). The current relatively high chattelmortgage fi- nancing rates can somewhat limit the amount of monthly lease payment you can charge. Some clients are willing to use a "zero profit" strategy initially, to offset the higher home financing pay- ments. Seniors communities are not as dependent on home financing, with typically 20% to 40% of the buyers requiring home financing on favorable terms. Still, working with National lenders, plus local banks to provide viable home financing op- tions are important since there are seniors who have the cash, but for various reasons, choose to finance all or a part of their home purchase. In larger seniors projects, it may be possible to create a symbiotic relationship with local banks, with in- community ATMs, premium savings and check- ing account terms, etc. Natural amenities are a plus, especially for non-age restricted communities where communi- ties with off street parking and lots of tree cover adds to the overall positive appearance of the community. In larger communities natural amenities may include waterfront locations, pre- miumhigher locations with wide vistas,mountain views, etc. Community amenities such as playgrounds, community center/office buildings, and RV stor- ages area may be minimal for family communities, if they are large enough to support the capitalized cost, or delayed until a later phase in phased de- velopments. Swimming pools are expensive, add to the cost of liability insurance, and aren't nec- essary inmost non-age restricted communities. In seniors communities community amenitiesmust be there in the earliest sales periods. In most cases, minimum amenities for this community type is a community center, lending library, swimming pool, tennis court, bocci ball, shuffle board, etc. Larger communities may chose to imbed or build adjacent to a golf course, even if it is only a 3-par or executive length. One of the best pieces of advice I can give you is "don't make the mistake of overbuilding the home product". Right now there are more than one beautiful, well built, m/h land lease com- munities which are essentially "dead in the water" because of the downward shift of area site built home prices which they can't match because of built in limitations on the home products being in- stalled. As pretty as they are, multi-section homes, with 5/12 roof pitch, and attached garages on 1/4 acre homesites, for sale at prices from $120,000 and above with 20 yr financing at 7.5% on leased homesites just can't compete with nearby new site built homes for sale at the same prices but with the land and which may be financed at low 4.5% 30 year rates. Need I say more? T J Edward Hicks, Lic. Mortgage Broker, Lic. RE Broker, 913 661-5901, 45 years as Senior M/H Industry Eco- nomic and Market Analyst with Consultants Resource Group, Inc. PO Box 2795, Brandon, FL 33509 www.factorybuilthome.com, www.mobilehomepark.com, www.fha207m.com,