With Opportunity Comes Great Responsibility for Manufactured Housing Operators
Updated: Aug 11, 2019
Over the past five years, the Manufactured Housing industry has been the hottest type of multi-family housing investment. A new influx of Community Investors/Owners has caused a consolidation in the number of operators in the country while increasing their market share. In 2015, the largest 50 operators owned and managed 500,000 sites while, in 2018, the largest 50 operators owned and managed 700,000 sites.
I have been operating in Manufactured Housing Communities since I was 15 years old. That was 15 years ago. My family successfully owned and operated Franklin Homes for 30 years before selling the 2,500 site Michigan portfolio in August of 2018. I was taught and learned a boots on the ground approach to operating, and that it takes industry knowledge, people skills, accountability and follow-up to be profitable in the near and long term. I have operated with 3 of the top 10 largest operators in the country and have consulted, acquired and/or sold from another 50 operators. I have seen the good, the bad and the ugly. If you are considering purchasing a community, there are a few items you should take into consideration.
Manufactured Housing Communities are not like Apartments, Condominiums or Commercial Property Management. In MHC, your land is your asset, not your building. Operating a community is like operating a small town with all the town’s infrastructures as your concern. If you are planning on renting your homes, that brings another layer of commitment into the picture, as then you become a landlord, like you would with an apartment complex, on top of your community ownership role. In every community, the most important job is making sure all residents have a safe and desirable community in which to live and raise their family. Therein lies one of the primary pain points I see again and again in our industry. There are simply not enough good industry professionals to appropriately operate and manage most communities. You have to intentionally decide to be the operator/manager one or find someone to do it for you.
Community Operators have a Responsibility to their Residents. This industry offers opportunities today like perhaps never before. MH is becoming a viable housing option for demographics that have in the past sought alternative methods of housing; put off by the lack of affordable home options the industry previously offered. That MH stigma is disappearing. The new homes manufactured today offer modern designs, amenities and services that consumers are seeking. Now, is the time for Community Operators to step up their service so we do not see another monologue from John Oliver on unsavory practices or more class action lawsuits.
Create a Solid Operational Foundation. Take an examination of who is “manning the fort.” The mistake many, many operators make is, becoming overly reliant on their Community Managers, in particular those who are underqualified or undersupported. This business happens on the ground – at the community level – with the Community Manager the first and sometimes only representative of your company a resident will ever see or come into contact with. A common trend I have seen with newer operators is a lack of industry knowledge, often at the corporate staff level, to lead, guide and support their Community Managers. A strong operation should have set processes, procedures and technologies that ensure efficient operations at every level. Remember, this business is not like running an apartment complex, so having corporate staff with real field experience is a necessity. The tone for success truly is set at the top.
With these keys top of mind, you hold the potential for operating successful operations in this industry.