Dilemma: Manufactured Home Community Sales Vs. Off-Site Retailer Sales

“Competition is very good…As long as long as it’s healthy. It’s what makes one strive to be better.” …. Christine Lahti

There are about 38,000 manufactured home land-lease communities in the U.S., and about 4.2 million home sites within these communities nationwide, according to the Manufactured Housing Institute (MHI).

New manufactured home community developments have become virtually non-existent due to a myriad of reasons: availability of land in urban areas, local zoning and land use restrictions, preferred commercial and high density residential development, etc.

Traditionally, manufactured homes have been sold and placed within rental communities, aka “mobile home parks,” by manufactured home retailers, aka “dealers,” with non-affiliated display centers located away from those communities. However, that dynamic has changed, and that does not necessarily benefit the retailer, the community, nor the manufactured home purchaser; the goal is to change this back.

Consolidation of existing communities has become a multi-billion dollar industry with the top 50 large institutional investor organizations controlling more than 693,000 home sites across the country. In fact, the money investors are taking in mobile home parks is steady — and growing fast. Between 2004 and 2008, operating income from mobile home park revenues rose 87 percent, according to Green Street Advisors, the global real estate research firm. A significant revenue source results from the sale of manufactured homes sold by park owned retail sales divisions, and  placed upon controlled rental sites within those communities.

Are Retailers And Home Buyers Disadvantaged When Community Controls Purchasing And Placement of Manufactured Homes?

A retailer is reluctant, and rightfully so, to refer an originated customer for home placement to a community that also has a sales division on the premises. Chances are the customer will be encouraged to purchase a home from the community, and often at a higher price. Human nature will dictate the customer’s desire to please those in the place where they will be making their home.

There doesn’t appear to be any easy resolves to this dilemma, at least from the retailer’s perspective. However, it would be wise if  the park operators gave sincere assurances of transaction preservation to retailers for any homebuyers referred to the community for purpose of applying for  tenancy.

Independent retailers are the backbone of the manufactured housing industry. Consolidating retailing of homes into big monopolistic style enterprises does not bode well for this unique, wonderful and entrepreneurial industry.

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