1) Who, What and Where: (Your name, formal title at Great Value and where you are based).

Richard J. Rand (Rick) – President of Great Value Homes, Inc. Based in Milwaukee WI

2) Background: (Educational/Professional snapshot before entering the factory-built housing arena.).

I attended Nicolet High School in Milwaukee, WI and The University of Wisconsin Milwaukee. I continued my education with multiple real estate sales and marketing courses along with numerous programs on real estate finance over the last 30 + years.

3) When and How: (When and how you began in manufactured housing. Also mention your professional interests in other fields, such as music.).

I began my real estate career working for Olympic Homes who at that time was the largest home builder in South Eastern WI. The company was a land developer, single family home builder and a condominium developer. My position provided me the opportunity to learn firsthand all facets of land development, single family home construction along with home sales and marketing.

After over 5 years at the firm I left to go to work with my father who owned a Century 21 Real Estate franchise. His company specialized in condominium sales and marketing for both new developments and condo conversions. We represented Developers and Lenders who were the joint venture partners in many of the projects. Our duties included feasibility studies, merchandising, marketing and ultimately the sales of the condominium units.

One day 1981, driving back to my office from a meeting with a developer who was convinced that he had the most feasible apartment complex to convert to condominiums I decided that it was time for me to find the next horizon in housing. About a month later while I was having dinner with my father in law talking about interest rates and housing we started talking about mobile homes. The whole story is too long to describe now briefly, but is very funny.

Needless to say, not long afterward I went out on my own to build my own company while still consulting and assisting my dad’s firm.

As the saying goes; timing is everything.

From that point forward I focused on learning as much as possible about the “mobile home business” while still acting as a real estate broker and consultant. My role as a consultant and working as a real estate broker provided me with tremendous opportunities to learn new areas of real estate that carried over to my interest in manufactured housing.

It took a bit of time for me to be able to financially afford to focus 100% on manufactured housing, but by 1983 the business was my full time career. I have not looked back since then.

4) What are your personal interests or hobbies? How do you like to spend non-work time?

My interests include music, sailing, golf and magic. Music is a passion of mine. I continue to work on my golf game and enjoy sailing on Lake Michigan and inland lakes outside of Milwaukee.

5) One of your many career highlights is an award winning development in Germantown, WI. Please tell us about that project and what are some of the lessons you learned?

When I began focusing on the MH business I was not immediately working on acquiring “mobile home” communities, although I did not put that goal on hold for very long. In my very early days, I was looking at how I could build new housing developments similar to those we had constructed in the 70’s but which would utilize a factory constructed housing product. One of the first communities I constructed is Hilltop Highlands located in Germantown WI, a first ring suburb just outside of the metro Milwaukee market. Over the years our land holdings grew and totaled a 100 acre assemblage. Hilltop was constructed on the first 30 acres.

Immediately south and contiguous with Hilltop is a 40 acre parcel of land with a spring fed pond, an incredibly beautiful wetland area along with 13 wooded acres. My vision for that parcel was to develop a community that was on par or nicer than any other single family land development in the metro Milwaukee area. I saw an opportunity to develop a land lease community that would break the mold for manufactured home communities in WI. Creating a separate identity for each phase of this community was absolutely necessary.

That became the birth of Brookside Meadows and The Reserve at Brookside.

I made a conscientious decision to enhance the community by using all of the natural land amenities as features in the development. That was accomplished by having many of the home sites open to the wetland, leaving as many trees as possible so that homes could be strategically placed, developed hiking trails throughout the property and included an open park area for residents. All home sites are a minimum of 6,000 square feet.

The homes are all low profile with attached garages and subject to design approval by the Architectural Review Committee. I established architectural guidelines in order to ensure that all homes in the community are constructed to approved design standards.

Brookside was the first community in the country to be approved for Freddie Mac conventional financing for home loans. I worked on developing that financing program which also required us to create a long term lease agreement. That agreement was one of the first for manufactured housing in a land lease community.

I learned so many lessons throughout the planning, development and building processes at Brookside. They include issues regarding technical, engineering and construction along with strategies on how to better navigate the approval processes. One lesson of development that cannot go without mention is the expression; “time is money.” Some think that the expression is trite, but believe me, time costs money in many different ways.

Whether lost time is in the planning, design, development or home construction process, it all adds up! Plus you must add in all of the municipal, state and federal approvals required to develop land which also eat up time.

Although I knew the importance of having the right team in place, my view and opinion changed considerably and became far more focused during the development phases than prior to beginning Brookside. To me this is another of those critical lessons learned.

Without the right people and strategic partners – including professionals, suppliers and vendors – you cannot execute your plan and therefore will lose valuable time.

In addition, you have to make certain that every team member understands the business plan and they are committed to the project’s success. Having a wrong team member will cost a fortune in time, team morale and money. If an individual is not committed, they should not be on the team.

6) Besides your years as a smaller MHC portfolio owner, you have played roles in a number of sizable ‘portfolio operators’ in manufactured housing. Walk us through some of those companies and your roles in them.

One of the relationships I developed early in my career was with the senior management team ROC Communities which ultimately became Chateau Communities, a publicly traded REIT. I had met Gary McDaniel, Jim Grange and Reese Davis many years ago and developed a friendship that continues to today.

An opportunity arose in late 1999 for our company to acquire a large MH Portfolio of land lease communities. In 2000, Chateau made a strategic equity investment in Asset Development Group which allowed ADG to achieve our growth objectives. That strategic alliance led to ADG acquiring 23 land lease communities and 3 apartment developments over the next 2 years.

The ADG relationship continued with Hometown America after they acquired all of the assets of Chateau. I had previously worked with Rich Cline when he was our loan officer while at Heller Financial. I had also come to know Barry McCabe over the years from working together at MHI and on the National Communities Council. Our relationships helped make the transition from working with Chateau to Hometown very smooth.

In 2004, after departing ADG, I worked with Randy Rowe and the team at Green Courte Partners. I was involved in both land lease community management and homes sales at GCP. I also assisted with acquisitions and various special projects during my tenure with Green Courte.

Both Randy and I were active at MHI and worked closely on many national issues including the long term lease in conjunction with GSE financing. Unfortunately, when both Freddie and FNMA lending activities came to a screeching halt, the long term lease and financing efforts were tabled.

My time with Green Courte provided me with a great opportunity to continue to grow professionally and work with a great team of individuals, including current NCC Chairman David Lentz.

7) Besides having one of your projects named the MH Community of the Year, you’ve received a number of industry awards and recognitions. Please share some of those highlights.

I was fortunate to be honored as the Industry Person of the Year for Land Lease Communities in April of 2010 by the Manufactured Housing Institute. This honor means a great deal to me since I was selected by my national industry peers.

In November of 2010, I received the Elmer Fry Award for innovation and leadership in the Manufactured Home Industry from the Wisconsin Housing Alliance. Elmer was the “father” of the modern manufactured housing industry who challenged conventional wisdom and delivered a home design customers wanted.

The Wisconsin Housing Alliance Board of Directors honored me with this prestigious award for my innovation and leadership in the industry.

8) You have had unique ties and substantial roles in connection with manufactured housing associations, including MHI, as well as a task force for your state’s governor. Can you outline those for us?

I have been a member of the Wisconsin Housing Alliance (WHA) since sometime in the early 1980’s. I was elected to the Board of Directors of WHA in 1987 and continue to serve today. I also am a past Chairman of the WHA Board.

My involvement on the national front began with the National Manufactured Housing Federation which ultimately merged with the Manufactured Housing Institute. My activities at MHI began after the merger and include being the past Chairman of the Federated States Division and a past member of the MHI Board of Directors. In addition, I am a member of the Board of Directors and a past Chairman of the National Communities Council. I continue to serve as Chairman of the Manufactured Housing Institute Political Action Committee Board of Directors.

I was appointed by Wisconsin Governor Tommy Thompson as the Chairman of the Governor’s Blue Ribbon Task Force on Manufactured Housing in Wisconsin.

The Task Force held over 80 hours of face to face meeting time and adopted 49 motions which were used as the basis for the Final Report that was submitted to the Governor. Today, all but 5 of the recommendations of the Task Force have been enacted or passed into law!

I am a founding member and previously served as a Director on the Board of the Urban Land Institute Manufactured Housing Communities Council.

9)You earned the ACM accreditation. Tell us about that, as well as your ties to other associations with and groups in the housing industry that you have connections to, please.

I became involved with the Manufactured Housing Educational Institute (MHEI) at the time of its formation and was a member of the first group of instructors for the Accredited Community Management Course. I also contributed to writing one of the course manuals and have earned the Accredited Community Manager (ACM) accreditation.

I have been a member of the National Association of Realtors since 1976. I have also been member of the National Association of Home Builders since the 1970’s. Both organizations have State and Local Chapters, to which I belong.

10)The industry as a whole has suffered from challenges that drew down occupancy. Many MH land lease community operators have also had issues with collections. Your operation has fared far better than others! Without revealing trade secrets or confidential info, please give us a snapshot of your operations. Then, tell us some of the kinds of insights or “lessons learned” that caused you to be selected for the community operator panel discussion at the upcoming Louisville Show.

A lesson I learned long ago is that change is constant. Either you learn to embrace change or you fall behind. So, I have continued to learn and have changed.

I started my first real estate company off very small; just me. As I increased in size, I incorporated Asset Development Group and grew that company over many years. We developed many operating procedures and programs that worked very well during that period of time. At ADG, we established centralization for many facets of operations. That made for more efficiency in accounting, communication and standardization of tasks which allowed us to operate with a smaller staff.

I still believe in and utilize centralization of various tasks along with standardized procedures. But today, I feel it is critical that we have a much closer relationship with our residents. There are multiple reasons for my change in philosophy. Being closer to the residents requires hiring and training qualified personnel at the properties who better communicate the company’s philosophy. Managers must also be more involved on a daily basis, even in smaller communities.

By having active communication along with collection of rent at the property level we have substantially reduced receivables which is a huge change from my past experiences.

If we stay away from “bottom feeding” and continue to qualify incoming resident on a uniform basis we can temper our risk of future delinquency issues. Yet, we must accept that we all will have residents who run into financial issues during their tenancy. That is a way of life! Who has never run into some sort of issue that caused hardship and pain in their lives? We all have at one point or another.

The big question is what are we going to do to assist those individuals? Either we find ways to work with them while they climb out of their hardship or we invite them to find a new housing opportunity. I understand that we are not a bank or welfare agency. But the economic times we are in requires us as property owners to think far more creatively than just being hard-nosed and demanding payment today.

If we want to continue to attract new residents then we need to use our best asset which is our current residents. Those are the individuals who will assist us in maintaining a higher level of occupancy. This is reality! Our residents are our best resource.

I believe that just as the question implies, times have changed. As community owners we need to change accordingly. One key element is having solid leadership at the helm.

11)Communities and Retailers have been put in a tough spot by regulations surrounding Dodd-Frank, the SAFE Act and other rules at the federal and state levels. As an active board member of your state association and the PAC Chairman at MHI, what kind of advice would you share with those who have not yet picked up the phone, faxed or emailed their Congressman in support of HR 1779?

If you have not already been part of the effort in supporting our industry, you must be asleep!

It is time to get out of bed and pick up the telephone, send an email or write a letter. Stop sitting idly by waiting for someone else to do all the heavy lifting.

We are all in this together, no matter what your role is in the industry. From a worker on the assembly line, Chairman of the Board of a MH Company, an owner of one community, an employee of a portfolio owner or whatever your role may be, we all make our living from the manufactured housing industry.

This business has been very good to most all involved over the years. I believe that we must all give back to our industry. Whether that is by purchasing a raffle ticket, assisting in a letter writing campaign or hosting an event for an elected official we must be active and out on the front line.

If not you, then who?

12)The Wisconsin Housing Alliance is widely respected for its educational and political efforts. For those who are not actively engaged in a state or national association, why do you think business owners and managers ought to get involved? What are the practical benefits from association membership?

I will answer this question by quoting from my remarks upon receiving the Elmer Fry award.

“This morning, a small committee of us met to talk about ideas on how we can reach out to more individual WHA members to become involved in WHA activities. How coincidental, here we were, a group of volunteers, working on a plan on how to attract more people to volunteer and assist in the activities of WHA.

This is where you fit in!

It is easy to be involved!

There are many levels of how you can become involved. A full time commitment is not required.

Here are few examples:

• Work on a WHA committee.

• Help out at a WHA event.

• Contact Potential Members.

• Serve on the Board.

• Donate to our WHA Conduit and MHI PAC.

You already have taken the first step of involvement by virtue of your attendance today at the WHA Annual Meeting. Thank you for your participation! Your attendance is greatly appreciated by both your Board of Directors and staff.

There has never been a better time to become more involved in your industry and Trade Association. As you heard this afternoon, we are faced with many serious issues in the industry today. These issues are not going to just disappear. Over the last number of years, our industry has been always on the defensive. Today, we now have the opportunity to take the offensive.

So tonight, my message to you is; become involved, participate and don’t wait for someone else to fix the problem. Please, don’t be a taker, be a giver!

Now is the time for our industry to unite and work for the betterment of all involved. That includes our residents, home buyers, communities, retailers and service suppliers.

When you give back to your own industry you will reap the rewards 10 fold.

I stand here tonight as an example of these rewards.

Thank you.

Please don’t forget to contribute to the WHA Conduit and MHI PAC.”

13)We mentioned manufactured home communities earlier. There are risks with not being licensed, but also risks with trying to do compliance and not staying up to date on ever changing regulations. You came up with a unique, straight forward solution for communities that want to lend that keeps them compliant and allows them to focus more on their core business. Tell us about that program and how you could also play a role in creating such programs for others.

I believe that your question relates to consumer financing for home sales in MH communities. My prior consumer financing was offered so that we would sell more homes and fill sites in my communities. The underwriting was more flexible, required a minimum of a 10% down payment, with a short amortization at a below market interest rate. The key to the success of the financing was affordable payments that built equity quickly. I feel strongly that the goal of being involved in consumer lending should not be focused on an interest rate but rather be focused on filling non-productive home sites and allowing a consumer to build equity.

What I have been able to accomplish with consumer lending for home purchases in the past will no longer be acceptable going forward.

With all of the new regulations and lending requirements that are in effect and come online in January my best advice for a community owner is to develop a strategic relationship with a lender who is properly licensed in your state.

If you have the capital to fund home purchases, then let that lender manage the entire loan originating process and loan servicing for you. Instruct the lender to keep the interest rates below market and have fast amortization periods.

If you have existing loans in place make arrangements to have the licensed lender take over the servicing of those loans for you. What you do not want to do is be involved in areas that you are not properly licensed to conduct business in.

Focus on your core business, property management, resident relations and home sales. Let the lenders who are properly licensed work with you to manage the financing side of the business.

14) Let’s tee up this question by naming some names on a hot topic. Leigh Abrams and Randy Rowe are among the many voices that MHProNews has interviewed that called for a national image campaign to advance manufactured housing. Sam Landy at UMH and CU Factory Built Lending have not only supported that call, but have taken the extra step of supporting the ManufacturedHomeLivingNews.com online image and educational effort. You know also know that Sam Landy, who in an interview with MHProNews said that given the need for affordable housing in the U.S., he can see manufactured housing return to shipment levels of 300,000 to 400,000 a year.

Against that backdrop, you have a unique perspective because you were part of the MHI task force that explored creating a national image campaign for the industry. Tell us why you think image building is important, why some image building must take place online ala ManufacturedHomeLivingNews.com and what sort of bottom line impact do you think that a combination of image building and enhanced sales skills would bring to new home shipment levels in our industry? Do you think investing in marketing and sales would improve a company’s or the industry’s image and bottom line results?

I have been involved in home sales for most of my life and have seen many positive changes in sales and marketing for all housing products over the years. One of the reasons I became involved in the MH industry was because the homes were constructed as well as many of the entry level site built homes in our marketplace. There were and continue to be multiple other advantages to utilizing manufactured housing. I felt then and now that we should market our homes the same as site builders market their homes to consumers. Why not? We are on par with many of the site built homes, we have as many if not more amenities in our homes and we will save time which we know is money for the consumer.

What we are dealing with are consumer perceptions that have not changed due to lack of knowledge. So therefore we are faced with these very old perceptions that are referred to as image. The purpose of marketing, whether on a company level or at various industry levels is to attract consumers to our model home, display or sales center located in a community. Once the consumer visits our location we can work on the education necessary to change their perceptions. To accomplish this we must actually show the product we have marketed and provide the merchandising materials that will help them gain a greater knowledge of the home. That is where we can make an impact and begin the process of changing perceptions.

There used to be an old rule in home sales about bringing one person to a sales center who in turn would tell at least three others. Just think of the impact we can have on perceptions if we market, merchandise and display our homes professionally and on par with any other housing product.

15) Your company is engaged in resales of owner-occupied homes. You try to help home owners exit their home with a good return, right? This is interesting, because Warren Buffett famously told Kevin Clayton the following. “Kevin, it seems to me that the problem of your industry is resale.” Randy Rowe has also called for enhanced re-marketing as part of the 5 point plan he put forward for industry recovery. Your thoughts on the value and importance of remarketing?

Since I began owning land lease communities I have always provided brokerage services for the resale of a resident’s home. My background in this area comes from my days in single family and condominium sales. There are multiple reasons to provide this service which will benefit all parties.

First, offering existing residents a professional service to sell their home for a reasonable fee is another piece of resident relations. Who could possibly be a better resource than the management or sales team that knows all of the data on home sales in the community?

Secondly, I feel that an owner should want to know as much as possible on the sales activity taking place in their own community. This provides them with the best source of sales data and demographics of new residents.

Lastly, done well, there is potential of a new income source for both the staff and community.

Becoming involved in the brokerage of resident’s homes will most likely require a new license. It will also take training and new resources. Owners must make a real commitment to be involved in this sales service or in the alternative partner with a company that will focus on that program in their community.

For me, the goal of offering a brokerage service is to aide in maintaining occupancy in our communities while providing us the opportunity to have a closer relationship with our residents.

16) You heard Sam Zell in Chicago speak of the risks of FED policy and potential loss of our reserve currency status and what that could mean to our nation. You posted on LinkedIn that you felt this was a compelling statement; explain why you think federal policy – and the FED’s policy – are issues that ought to be on the Industry’s radar, besides topics like financing and HR 1779.

We do not live “under the dome.” We, like every other industry in this country are affected by the federal policies and the economy. However, I know that Mr. Zell is far more qualified to comment on Fed Policy than me. Mr. Zell commented that “Our way of life is very much threatened.”  My question is whether others think our industry and future are threatened. I encourage others to share their thoughts on this topic.

I do feel that as an industry we must keep abreast of legislation and regulation that may have an effect on our daily business. Regulation continues to grow at an alarming rate. Whether there is a new proposal from an Agency or a Fed Policy that effect’s our business, we should be as current as possible on what may move forward.

We cannot afford to be blindsided by some new idea or concept which is not beneficial to our residents or industry. We have seen legislation and regulation appear in the past that if we would have not interceded as an industry would have added additional layers of work and greater cost to both residents and owners.

This is one of the important reasons we have Trade Associations such as MHI and our State Associations. As members we should give direction to the Board of Directors who in turn directs the Staff to take the lead on keeping track of the discussions on new regulation.

17) As someone who does consulting and contract work yourself, you have also used consultants. Is it fair to say that you believe in the potential value of consulting? Why should someone consider hiring a consultant? How did you personally go about hiring consultants?

I do believe in the value of using a consultant! No one individual has all of the knowledge and answers to every question on the multitude of issues we face today. Just keeping up with new regulations has become a daunting task. Here are two examples of why I hired a consultant for assistance.

When I was working on the plans for new homes at Brookside I hired a professional who had years of experience in working with home designs and manufactures to assist me with the process. I had met this individual at various industry events and knew his professional background. He guided me through the entire process from start to finish. Hiring this individual saved me from making costly errors, opened new doors with vendors and saved a great deal of time. All of these lessons were invaluable and the education paid off on other projects that I developed and worked on after Brookside.

In another community I wanted to relocate a playground area and felt that professional assistance with the project would save valuable time. Hiring a landscape architect was the obvious answer. In this case I had worked with this individual in the past and knew his abilities. We spent a day on the site, walked the area and looked not only at alternatives for the playground area but for other enhancements we could bring to the community. This was an excellent investment that allowed me to place a model home on the site of the old playground which was sold to a consumer shortly thereafter. The new playground was moved to a location that is a far more desirable area of the community. I might have been able to accomplish all of this without the consultant, but by hiring him we saved a great deal of time and received the City approvals without any objection.

Before calling or writing an individual requesting their assistance, I suggest that you first make an outline of what you feel you need help on accomplishing. The better you can describe to a potential consultant what your needs are, the easier it will be for them to determine if they have the knowledge base to assist.

I also suggest that you obtain references from the individual or firm and contact those past clients to see if the consultant accomplished the client’s goals. You may also want to discuss in advance what parameters should be established in order for both of you to better work together. People all work differently so asking questions is healthy.

18) What closing thoughts or advice would you have for industry professionals who want to be progressive, improve their bottom lines and ought to be solution oriented?

First, let me thank you for the allowing me to share my thoughts in this “Cup of Coffee.” I hope the subjects I have spoken about inspire others to try new ideas and concepts.

There is one additional topic I would like to comment on regarding homes in land lease communities.

Today, there is a greater trend to rent homes in manufactured home communities. Many think that this is a new trend. But that is not the case; the community business has been in the home rental business before. It may not have occurred in as much volume as it appears some owners are doing today, but we have done this in the past. The reason communities have turned to rental of homes varies dependent upon the circumstances. Some reasons are due to the large loss of homes in communities due to repossessions. Others are due to the economics of owning a home in a community. The reasons vary between markets.

The primary reason owners have turned to rentals is to fill vacant homes sites and produce rental income. I did this very same model in the early 1990’s. We had a massive exodus of homes due strong competition in the market from a new community who undercut all others rental rates. Also, a local transporter would do all of the work necessary to take down a home; move and reset it in the new community and only charge around $500. Go figure, who would think that we could be faced with a large vacancy issue in a market which had maintained very high occupancy rates for many years.

So we did what we had to do, brought in quality new homes, set them up including a deck and rear stairs and included a shed. We qualified prospective residents under the same criteria that we used company wide. We structured the rent so that we covered our site rent and personal property tax on the manufactured home. The remainder of the rent went to pay the debt service on the homes which we amortized from 7 to 12 years dependent upon cost. The program was a great success, we filed sites, created an income stream that could be separated from lot rents and tracked home expenses separately. Eventually, we sold all of the homes including some to the residents who were living them.

There are many community owners who are renting under very similar programs today. I will also do so on a more limited basis in 2014. Since my overall occupancy are at high levels, I am not forced to add as many rentals as other owners have. My goal is to fill a handful of non-productive home sites. I will either sell or rent the home to accomplish my goal, while still marketing the community for new residents and additional infill.

My advice to other owners is to be careful. Do not take on more than you can handle either operationally or financially. The carrying costs add up quickly and will defiantly affect a community’s bottom line if not properly managed.

In conclusion let me remind you that Manufactured Housing fills a tremendous need in the overall housing market. We should not forget from where we came. We are the answer to the entry level affordable housing market. We are also the solution for many other housing needs throughout the United States. To accomplish both of these goals, we must work together and change people’s perceptions of the housing product we can provide for their families.

Thank you. ##