Rental Demand for the Decade Ahead ? - Posted by Bernd Hanak

Posted by joe–ga on August 14, 2011 at 21:15:45:

it depends on who is looking at something as to the
value of it…I had rather have 1 old mobile home than
10 stick built houses.You can pay for them faster,and
start reaping rewards in 2 to 3 years instead of 15 or
20 years down the road.

Rental Demand for the Decade Ahead ? - Posted by Bernd Hanak

Posted by Bernd Hanak on June 23, 2011 at 20:49:29:

A report from the McKinsey Institute brings home the grim reality employment faces for the next ten years. A sampling of their statistics of jobs in 2011:
20% of the American men are not working today (a revelation).
In 2020, the estimated shortage of college graduates is 1.5million, mainly in the STEM fields (science,technology,engineering, and math). The so- called social sciences, such as sociology, gender and ethnic studies, celeb and moon appreciation are considered with the unskilled labor force. (Does that mean that those college departments are already obsolete? The unions won?t like that.)
40% of the companies that are ready to hire have had the openings for six months or more because of the lack of qualified applicants. (Qualified foreign- born applicants, who graduated from U.S universities, are not mentioned).
The central theme of the report is that American workers lack the education and the skills to satisfy the demand of the job market and that it will take at least a decade for unemployment to return to a pre-recession level. (Will people be forced to reduce their life styles?)
What else is new! The obvious conclusion is that the demand for rentals must steadily increase as the general population increases, income levels decrease, and the number of tenants multiplies. Apartments are not the preferred accommodation for a family. Single family houses are expensive to rent. The trailer parks should do well as more and more people experience poverty. A well- managed mobile home park, in a good school district, will be popular not only for families but is also attractive to the retired population. The crown of the industry, the double- wide on land, is in high demand already. For the decade and beyond, the rental market is one of the very few bright lights on our economic firmament. Let?s offer a good product; good enough to be acceptable as an accommodation for ourselves if we had the need. What could be more desirable than a decade which portends increasing demand for our services?

the elephant in the room - Posted by Steve-WA

Posted by Steve-WA on June 24, 2011 at 12:14:02:

HOWEVER, there are fewer and fewer manufactured homes being made. While many here, myself included, tout the possibility of extending the life of a MH by attentive maintenance and landlord-friendly repair, I fear that it wont be long before there are no more 10-year-old or newer units available in the mainstream.

So we have to consider that the stigma of “living in a trailer park” DOES exist, and may overrule the need for independent, affordable housing, especially when all that is available are “old trailers”.

I mean, right NOW, I do not see a waning demand, but as time goes by, will I be passing along a viable 1969 singlewide on land as a rental to my kids? Maybe, if I can upgrade the look by applying vinyl or wood siding, and prettying up the inside. I can combat the thin walled, barely-insulated 2x3 construction by sistering wider studs when replacing siding (anyone ever done this, or is it a theory in my mind only?), and/or sheetrocking the inside for the insulating quality (aesthetics is an added bonus).

Just thinking; I want to contribute once in awhile.

Re: Rental Demand for the Decade Ahead ? - Posted by Shawn Sisco

Posted by Shawn Sisco on June 24, 2011 at 09:20:41:

Bernd, I think that you have touched on the market altering, game changer topic that has been hidden from view. We in the U.S. now have many more people who really just can not add value to a product or service than at any time in our past.

I have observed a regional HVAC expand into my area, buying the business of my long time provider of HVAC services at a generous premium and most important for the expanding company, hiring this one-time proprietor with a very generous compensation package. This same company first moved into the area by hiring another sharp individual- the upshot of this is that in the teeth of this economic depression, top notch HVAC guys are now compensated at a rate of $60 hr. whereas 5 years ago $40 per hr. would attract this skilled tradesman.

I have observed many other similar situations, but I sure don?t attribute any of this to inflation- I have seen many other goods and services prices plummet. There is a labor shortage. Aging demographics play a part to be sure, but we have never seen so many in our country who simply don?t know how to work.

I think for my MHP business that part of my screening process should be aimed at determining the employability of an applicant. If I can?t see how an employer can profit from the individual, I should take a pass.

Re: the elephant in the room - Posted by shawn sisco

Posted by shawn sisco on June 25, 2011 at 19:45:37:

I have been wondering just what are the “last legs” of
an industry? 8’, 10’, 12’ wides became obsolete and a
park full of them had to upgrade or quit in most
markets. But with the houses of the past 25 years
functional obsolecence doesn’t seem to be the big issue
, but rather the customers don’t get excited about
buying a mh that doesn’t have any flash…they used
MH’s compare favorably with apartments and cheap old
SFH’s. But flash, pizazz and smell of formaldeheide
with trinkets that sparkle are what always seemed to
get people to WANT TO BUY.

A doomed industry! - Posted by Glen (OH)

Posted by Glen (OH) on June 24, 2011 at 18:02:43:

I just read on the web today that manufactured housing is “doomed industry” If I read it online it must be true! http://finance.yahoo.com/career-work/article/112946/doomed-industries-bnet

Glen (OH)

Re: the elephant in the room - Posted by JeffB (MI)

Posted by JeffB (MI) on June 26, 2011 at 21:42:37:

Shawn, I follow what you’re saying about obsolescence. I think it varies by market. I too, have observed the death of the 8, 12, and 14 wide in my market. I have heard potential customers call them “coffins”, “hallways”, “tunnels”, and worse. My customers want doublewides almost exclusively now, even though I try explaining that many of the 16 wides I sell have more square footage.

Many people are choosing to rent, with the uncertainty the future holds for so many of my customers. I can’t blame them. Purchasing a MH from me is not the wise decision it used to be. Sales suffer. I must adapt, to the extent that I can. At some point though, unless the industry changes, the model will be permanently broken. Not necessarily in all markets, but this is what I’m seeing in SE Michigan. As much as LD’s have been a positive game-changer in my own life, I can’t be sentimental – this is a business. I will continue to be paid for my efforts in this regard for many years to come, and for that I am grateful. I choose to reinvest those proceeds in other assets which are more widely accepted and not likely to suffer the same fate, namely, SFH.

Re: the elephant in the room - Posted by Tony Colella

Posted by Tony Colella on June 25, 2011 at 20:43:57:

I too wonder what the replacement will be but as others, and you, have suggested… there may not be one.

In the past we competed with apartements (as you pointed out) but we did not offer the same amenities or size. With the more modern homes (even since the late 1980’s) we have a product that competes and then some.

I don’t know how the manufacturer of new homes will survive but I wouldn’t count Buffet out just yet. My properties are not his target market and for me I will focus on repairs and upgrades that I can make to keep my homes marketable.

There could be many more factors that come in to play. With talk of electric doubling thanks to new regulations we may have other issues to focus on to keep our products marketable.

Tony