A huge percentage of Americans have virtually no retirement savings and will end up living strictly off of their Social Security payment of around $1,000 per month. And the ranks of these Americans are growing daily as the "Baby Boomer" generation ages. This is the greatest "affordable housing" challenge in history - are we up to the challenge?
How can someone live on $1,000 per month? Even a recent article on MSN.com had the answer - in a manufactured home community. However, that article discussed the concept of several families sharing a single, multi-section manufactured home in a very expensive community. I don't think that most Americans are willing the shack up in their retirement. But can someone live in a manufactured home community on $1,000 per month? Let's see. If your income is $1,000 per month after tax, and you pay $100 for Medicare insurance, $50 for auto insurance, $300 for food, $100 for gas, $200 for electricity, that leaves $250 for lot rent which includes water, sewer and trash. Is this lot rent of $250 per month including water, sewer and trash available on the open market. It sure is. There are many, many manufactured home communities that offer this kind of rate.
So if someone could sell their house, or some other asset, to raise the cash to buy an older manufactured home for, say, $10,000, then the numbers would work for them to live indefinitely on $1,000 per month after tax (remember that social security checks are tax free), assuming that their social security payment is constantly adjusted for inflation (which it is).
And where do you find attractive, clean, safe manufactured home communities with lot rent of $250 per month including all water, sewer and trash? In most cases, out in smaller towns and rural America. Not in the big city, where communities tend to be cramped, unattractive and dangerous - nobody sane is going to be willing to retire there. But what about all those nice communities in smaller towns? The ones with all the vacancies? The ones that have been laboring for decades in areas with low employment and few folks moving in. The ones that you can buy cheap, often with seller financing.
Am I the only one who has noticed this opportunity? Perhaps this is the only chance ever to make a success of these rural and small town parks. The planets appear, to me, to be aligned perfectly to push these little appreciated assets into fully-occupied income properties. Am I the only one excited by these trends?
So how would you harness these trends and make money with them? First you would need to buy some very inexpensive manufactured home communities in areas that are attractive to retirees. They should have city water and sewer, if possible, and solid infrastructure. A beautiful, safe location. A proximity to a bigger town with some big-city amenities that retirees would like, such as bookstores and quaint restaurants. A lot rent of about $250 per month including water, sewer and trash. And enough vacancy to make the seller offer attractive terms and carry the paper. The existing occupancy should, if possible, cover all the expenses and note payment. Now you simply have to wait for all those $1,000 per month retirees to start beating down your door. Right?
Wrong. There is one big missing ingredient. And that is for the industry to promote the fact that anyone can live comfortably on $1,000 per month. It's too large and novel an issue to effectively promote as a small community owner.
It never ceases to amaze me that an industry as large as ours can never effectively promote itself to seize the opportunities presented in the marketplace. All we ever want to do is to look and talk more like stick-built housing - when, in reality, it is the affordable housing side of the business that holds the most promise. All those folks who are going to have to live on $1,000 per month have no alternatives but manufactured housing. The ones who can afford the upper end models can afford many, many other alternatives.
So how can we capture this market? We need to collectively begin advertisements in magazines such as AARP. We need to get articles published in the major newspapers and news web sites. We need to start speaking before large groups of retirees on the concept. We need to meet with governmental agencies to let them know this option exists. We need to get mentioned anywhere and everywhere. Basically, just plain old marketing.
Who will do this? We all need to participate. I really believe that this is our only salvation as an industry - to return to our roots as the affordable housing option, while at the same time, piggyback on a growing trend. Clearly, our attempts to market ourselves as a pricey alternative to stick-built housing have failed. We have been in a recession for the past eight years as an industry.
So will you join me in spreading the gospel that Americans can live on $1,000 per month in a modest manufactured home in a rural market? I hope you will. Because this might be our last shot of turning things around.
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