Latest / The Academy Presents podcast / Manufactured Housing and the Future of Affordable Homeownership with Andrew Cramer

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Manufactured Housing and the Future of Affordable Homeownership with Andrew Cramer · The Academy Presents podcast

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Did you know that 90 % of the world's millionaires
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You're already taking the first step. just by
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joining us here today. Hey guys, it's Angel and
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you are here with the Academy Results Real Estate
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Investing Arts Podcast. And you guessed it, we've
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got another amazing guest. I've got my friend
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here and I'm just going to kind of hand it over
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to him because that's how we do things here.
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So, sir, if you'd like to go ahead and give us
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a little bit about your background and give us
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a small intro into you and then we can get going
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from there. Excellent. Thanks, Angel. My name
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is Andrew Kramer. I work with Bridgeview Asset
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Management. We're a real estate investment and
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management company that works predominantly in
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manufactured housing in the Northwest. We were
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founded about 15 years ago. We've worked about
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35 different transactions in the region. We currently
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manage 22 properties, just under a thousand units.
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And we're kind of actively expanding in the greater
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Pacific Northwest. We're really passionate about
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affordable housing and we're really trying to
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on sort of a larger level, really deliver more
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of an impact and make manufactured housing kind
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of a bigger part of the affordable housing conversation.
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There's been a lot of stigma. There's been a
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lot of kind of complicated history, I guess I'd
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say, about manufactured housing that makes it,
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that's made it kind of making it difficult to
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kind of have it be a part of affordable housing
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in general. I think that there's a lot to it.
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I think that unlike an apartment or like an affordable
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housing project, manufactured housing offers
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homeownership opportunities that are really unique
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and it allows someone who, you know, for example,
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might be on the sort of the lower echelon of
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the economic, you know, economic status or socioeconomic
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status, someone who's making minimum wage a little
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bit more. Manufactured housing offers an option
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for homeownership where it's something that,
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you know, probably the greatest wealth building
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tool for everyone is really not available to
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the folks who are living in that lowest income
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demographic. And, you know, we've done some research
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on this. And if you compare a one bedroom apartment
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to purchasing, then you've got the home home
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part that the savings difference over five years
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can be around seventy thousand dollars in the
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Pacific Northwest. If you think about that, you
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know, that's the equivalent of having seventy
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thousand dollars in a bank account. And. it really
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you know you just can't do that when you think
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about like an apartment you might have a deposit
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that you might get back uh you know really you
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know properly managed manufactured housing can
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actually create that where instead of instead
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of just paying rent each month a portion of that
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payment is going towards paying down your home
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just like any other just like any other mortgage
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um and in in in places like the Pacific Northwest
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where we have rent control that regulated increase
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on rent actually creates quite a bit of protection
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for the homes that are sitting on these lots.
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And, you know, proper management, ethical management
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can also create those opportunities outside of
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like that greater regulation. But, you know,
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that's kind of one of the things that we try
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and promote. And that's one of the things that
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we really try and kind of get the word out about
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not only in the Pacific Northwest, where we have
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a tremendous housing and affordability problem,
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but it's really it's one of these ways where
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to take an everyday living expense and kind of
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convert that into an ability to save money is
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really something that we're trying to kind of
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get greater understanding of that, but also kind
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of hopefully reach people who are considering
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affordability, trying to find a place to live.
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And I guess on that note, I mean, the other thing
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I would say is to people listening, the notion
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of the stigma around manufactured housing it's
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actually really damaging. It's sort of, I think
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we've all heard the like trailer trash stigma
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or those types of comments. The reality is, if
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you're living in a home that you own or if you're,
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you've got, or you're living in a larger property
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and you kind of joke about things like, oh, mobile
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homes are gross or it's trailer tracking. The
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reality is people hear that. And if you're a
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young person starting out and your choices are,
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I'll give you an example here, where it's a,
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you know, in pick a random market in the northwest
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and, you know, apartments are expensive. So one
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bedroom apartment might be like, let's call it
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$1 ,200 a month. And in one of our properties,
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you could buy a home, pay a home payment, a mortgage,
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and also make a lot rent payment. And that would
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be also 1200 bucks a month. And so when you're
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that young person starting out looking to rent
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a property, you say, okay, I've got this apartment
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over here, and I've got this home over here.
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where you know we we try and educate people we
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say you know like everything i've been saying
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right where you've got a mortgage and you can
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pay that down each month you're paying principal
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and that's seventy thousand dollars over five
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years all that's very real uh but the reality
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is if you're a young person and you kind of hear
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your parents or maybe your friends kind of joking
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about trailer trash or saying mobile homes or
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whatever you know that actually that person we
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found this that that's enough that's enough to
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influence them say oh you know this all sounds
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good but I don't want to be traded trash I don't
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want associated with that that's embarrassing
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and so the these stigmas around housing are really
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damaging um and so I I sort of might kind of
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please in a way is to really think about those
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those those types of comments because Well, if
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you're kind of established and like I said, you're
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living in a home and you're comfortable economically,
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it can be kind of funny to joke about those things.
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Someone starting out, you can really stunt that
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person because now that let's fast forward those
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five years, that person, maybe they started a
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family, maybe there's a lot of economic uncertainty,
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but having that 70 grand would be really helpful
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for pretty much everybody. I think the most recent
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statistic, the average savings. of someone over
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55 is less than $40 ,000. And that's the average.
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So that includes all the very wealthy people.
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So again, if you can spend five years paying
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down a home in an affordable circumstances like
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a manufactured home, that 70 grand that's going
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to get you such a leg up. And the other thing
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I would add to that is there's been some really
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interesting changes on the financial side of
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manufactured housing where before there's been
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the financing side is difficult. And it still
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is, but it's really changing. And there's something
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known as FHA Title I, which took place maybe
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four years ago, where now the same type of FHA
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lending that's available for stick -frame homes
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is available for manufactured housing. It's not
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super prevalent or out in the world yet, largely
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because just a demand thing, people don't know
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about it. So that's kind of a, certainly talk
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to your mortgage broker about Title I loans.
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If you're looking to buy a home, it's one of
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those things that's really uh kind of a new program
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that's very exciting and kind of to kind of that
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70 grand i've mentioned it that's great but if
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you can access that wealth uh in a much more
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sort of efficient way through traditional mortgage
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lending that makes that all the more valuable
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um and it also kind of opens up the market and
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if you are you know say you want to sell that
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home and get rid home like the the financing
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available is really a tremendous advantage So
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yeah, those are the things that we think about.
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There's also quite a bit in new manufactured
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housing technology that's really exciting. So
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there's a lot going on. No doubt. We actually
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have a mobile home community development going
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on in central Texas right now. And it's still
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sitting as ag land because now we're in a zone
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battle. Development is a whole new beast, friends.
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It is. It is. It's a whole new beast. It's we're
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seeing the same thing. So my husband, it's it's
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in Waco, Texas. My husband. grew up there not
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really grew up he finished out high school there
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and so he actually graduated from the school
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district that will be servicing this particular
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established or this particular community once
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it's built um and it's literally the best school
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it's the best district in Waco um I grew up 40
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miles away and when we would go there for UIL
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it was like oh of course 38 versus 58 but still
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it was a big difference it was an awesome school
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and so for me what I see is an opportunity for
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students that probably would have never had the
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opportunity to go to that school. Now we're going
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to have 104 pads, hopefully with at least 50
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% families that are going to be able to put those
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kids in that district. And they're going to be
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able to get a really awesome education and own
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their home too. Cause we're doing the resident
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owned model. So much has changed. My grandparents
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had a small mobile home community for trailers
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and they owned them. And I say trailers because
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What has happened in the last 50 years in manufactured
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homes is insane. So like the ones they had, had
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like pocket doors. The walls were literally like
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this thick. Um, they, they were not, I mean,
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it was like OSB flooring. Like it, it was not
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the decking and the quality that you have now.
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They are, the manufactured homes that are being
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built now are literally stick builds on a skid.
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They are, they follow everything. And it's, I
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mean, it's interesting you mentioned 50 years,
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because 50 years ago, exactly, you know, we're
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going back to 1976. And that was sort of that
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was when that was when the HUD standard was created.
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And so that like everything you just mentioned,
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absolutely true. And it's one of the it's actually,
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it's interesting that it's that whole thing,
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right? Pocket doors, first strip walls, all that
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stuff that that is that largely is one of the
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problems that we're still fighting kind of as
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an industry right now, because manufactured homes
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really have existed, kind of like post -World
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War II was when in this country they really started
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showing up, right? And they started showing up
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sort of, you know, GI housing, people coming
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back, ton of it in the West Coast, but there
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was no regulation whatsoever. And that, so those
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first 30 years of the industry, there was just
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this proliferation with absolutely no controls.
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And so you could literally build whatever you
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wanted and call it a manufacturing home. And
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that, that era, even though it's like you said,
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it's more than 50 years old now, those stigmas
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still exist. And you kind of hear people say
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things like you said, right? Where it's like,
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wait a minute, that's a mobile home. That's gross.
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Like there's like, that's not, that's how many,
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I can't tell you what I've heard. That's not
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as good as a stick frame home. Well, the reality
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is since 1976, it absolutely is. It's a different,
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you know, the HUD standard is a different standard
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from the like IRC or the IBC, but they are functionally
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the same in terms of like. structure, safety,
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all of these elements really mirror one another.
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And you're absolutely right, particularly in
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the true modern, which I would say probably the
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last 25 years, the standards are in so many ways
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even better. And a couple examples where I would
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absolutely encourage anyone listening to, if
11:50
you can, go tour a Clayton Holmes factory or
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a Palm Harbor factory, because you'll see, number
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one, it's all indoors. So everything is in this
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climate control environment. And one of the things
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I love seeing on those lines is the efficiency.
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And you'll see like one, two by four that you're
12:09
cutting that down to size, right? But then like
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all of those, like all those sort of waste wood
12:13
materials that on a job site you just see chucked
12:15
into a dumpster, they reuse all those. They use
12:17
them for blocking for cabinets. Everything is
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reused. It's so efficient, but it's also, there's
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very little waste produced in a manufacturing
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home factory, particularly compared to like a
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site built home. And then the other big thing
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is like, I'm sure, well, out of the Pacific Northwest
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here, we have tons of rain. And so you'll look,
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you'll be driving in the middle of February and
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it's pouring rain and there's a new home coming
12:38
up and it's got home wrap around it. But you
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think, man, is all of that, like, you know, all
12:43
that plywood, all that OSB just kind of sitting
12:44
there in the pouring rain, that can't be good.
12:47
So I think the, you know, just the climate, the
12:49
climate difference alone. But yeah, I think the,
12:52
you know, it's a very, as you said, like kind
12:54
of the era of your grandparents. four unit mobile
12:58
home park to today, it couldn't be more different.
13:01
And not only are the standards equivalent, as
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I've said, I think in so many ways, the modern
13:07
manufactured home construction technology is
13:10
just better than what you're seeing kind of in
13:13
the stick frame community. It's a really, you
13:15
know, it's a sad truth, right? Where you look
13:17
at the cost and the time to deliver a home. It's
13:22
one of the, if not the only industry that's gotten
13:24
less efficient. and more expensive to produce
13:28
since 1950. So it's, and I think again, sort
13:31
of main factory housing has such a critical role
13:34
to play in that, but it's just been really hard
13:36
because again, like that stigma, despite HUD
13:40
showing up and saying, hey guys, all these are
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built to the exact same codes. It doesn't really
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matter because like that stigma kind of took
13:45
hold and even now it's really hard to break out
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of it. So it's a challenge. No, it absolutely
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isn't in I mean, even if you go to what's that
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popular taco chains at fuzzies They've got one
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of their tacos is called a trailer trash taco,
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right? Yeah, yeah, it makes it really difficult
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but it's For people to have an opportunity to
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own a home gives it gives a continuity of life
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because so I was a teacher on and off about 18
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years title one schools high poverty schools
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and There's so much instability in those children's
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lives Yeah. And to give them the ability to have
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a home that they can call their own for 10, 15.
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I think that they say it's 17 year life cycle.
14:31
That's their entire childhood. You've just given
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that child a stability that they might not have
14:36
ever had any other way. It's very true. And I
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think it's actually one of the most rewarding
14:42
things for me is seeing we do a lot of turn around
14:45
deals and kind of that time cycle you mentioned.
14:49
you'll see you'll go into a property that's distressed
14:51
that has you know it's got some deferred maintenance
14:53
issues where it's got maybe some criminal loan
14:56
because of just their passive management it's
14:58
not paying any attention and you kind of go in
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you start doing work you know you start you start
15:02
repairing roads you start bringing or taking
15:04
out uh units that are totally dilapidated and
15:07
bringing them in with new units um and you kind
15:10
of start to do this work and maybe you start
15:11
to bring it we love bringing in playgrounds because
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it's just a great community improvement it's
15:15
kind of easy relative it's expensive but no comments
15:18
or anything like that. So it's a great community
15:21
amenity we find. And then you'll see after a
15:23
couple of months, you start to see kids kind
15:25
of playing in the yards and then they're playing
15:26
on the playground. And you realize that you can
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truly transform these communities in a relatively
15:33
quick way. And I think that's kind of, when you
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talk about affordability, I've found that one
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of the frustrating things for me is everybody
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just associates affordability with cost. And
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the reality is affordability is a little more
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complicated than that. When you talk about safety,
15:50
when you talk about community, when you talk
15:52
about amenities and not amenities like, oh, this
15:55
is a hotel with a pool. I'm talking about amenities
15:57
that are sort of necessary for your everyday
16:00
life. Things like laundry, things like storage,
16:02
things like parking. When you can create a community
16:05
that has all those, that individual life gets
16:08
so much better. And invariably, when you can
16:11
get into one of these communities and make a
16:13
ton of improvements, nobody cares if the rents
16:15
go up. They care that the community is better
16:18
and it's a safe place and their kids can go outside
16:20
and play. So exactly to your point, you know,
16:22
that you can have these two things where, you
16:27
know, experience, you know, your tenants quality
16:31
of life, that can go up in a way that whatever
16:35
rental increase, and obviously it has to be ethically
16:38
managed, but like those two things can exist
16:40
simultaneously. And it's really frustrating where
16:43
a lot of times you hear the sort of the fair
16:47
housing arguments always just tied to how much
16:49
are you spending per month and that's just that
16:51
that that has to change because the worst parks
16:55
I've bought have universally had very low rents
16:58
and that doesn't you know by that argument those
17:01
should be great communities right they're cheap
17:03
but in the absence of investment and you can't
17:06
have investment unless you can have a return
17:08
on that investment and you can do things such
17:12
that the return on investment is generated by
17:14
not only your investors and the property owners,
17:17
but also the residents who live there. I think
17:20
a great, to give you a quick example, that one
17:22
of the things we also really like doing is utilities,
17:24
because if you have a utility system that's commercial
17:28
system and everybody's using that system, and
17:30
it's part of your rent, your water and sewer
17:33
bill is part of your rent, what we found is if
17:35
we can install meters in all these homes, that
17:39
same bill is now in the control of those residents.
17:43
And so instead of saying, like, hey, your rent's
17:45
600 bucks a month, and it includes your water,
17:47
if we could say, you know what, your rent's now
17:48
$500 a month, and you're going to pay your own
17:53
water outside of that, we found universally that
17:56
the rates go down, that the usage rates go down
17:58
almost 30%. And that's been studied all over
18:00
the place. But when you see a meter, when you
18:02
have a bill, your usage is going to go down.
18:04
So there's no great, like, winds. for everybody
18:07
because your operating expenses of the property
18:09
have gone down, your tenants are paying less,
18:12
and you're conserving resources. So I think there's
18:15
so many options like that where you can find
18:17
these improvements you can make, these investments
18:20
you can make, that are going to improve tenant
18:22
experience, that are going to generate a great
18:25
return for your investors or for yourselves,
18:27
and that exists at the same time. So I think
18:29
we are always trying to do that because that's
18:31
where... you know, you've got to have there's
18:33
got to have an event across the board. And obviously,
18:36
I don't think, you know, I think there's plenty
18:38
of people who don't do that. And I think that
18:40
things like rent control is sort of a reaction
18:43
to that, that I don't think it's not a great
18:46
affordable housing solution. It's been demonstrated
18:48
to kind of universally reduce supply. People
18:52
don't build in rent control markets. But again,
18:54
it's sort of it's also a reaction. It's a reactionary
18:58
legislative decision to people trying to like
19:00
prevent expenses. And I think the, you know,
19:04
it's just, it's, it's too bad, but it's also
19:06
like, if you can kind of be conscious about how
19:10
you're spending money and how you're increasing
19:11
revenue and property, there's a way for everyone.