Selling the Land Lease Concept to Potential Residents

                                                                                     SELLING THE LAND LEASE CONCEPT TO POTENTIAL RESIDENTS
                                                                                                 (What happens in Vegas doesn't stay in Vegas)
                                                                                                                        Joanne M. Stevens 

For the third time in as many years, in conjunction with the annual Manufactured Housing Institute Congress in Las Vegas, the National Communities Council of MHI held a one-day forum for community management and operations. This year's theme was "Maximizing Profitability in Parks and Communities". Many tools to succeed, grow and prosper were presented. (For information and dates regarding next year's Congress as well as other items of interest, see www.manufacturedhousing.org.)  

Community owners tend to believe that residents or prospective residents of parks and communities think about and understand the benefits of leasing rather than owning land. Many owners haven't thought through the process of "Why does someone lease versus own land?", and even fewer home sales people are equipped to competently explain the advantages and can make the case for leasing versus owning. Fact is, many sales people will end up agreeing with the prospective residents that it is better to own rather than lease land. Most sales people have never received any explanation or training as to why the land lease is an excellent concept.  

Joe Adams, PHC owner of the Housing Marketplace, Inc. gave an impressive and enlightening presentation on how to market, communicate and reinforce the advantages and benefits of leasing land versus owning.  

A little bit about Joe. During his career, Joe has been a manufacturer and retailer. As a retailer, he directed sales and marketing at 15 communities in Florida where sales of homes exceeded 180 per month. That is a lot of home sales by anyone's standards! To learn more about Joe Adams and his sales training business go to:  www.TheHousingMarketPlace.com  or phone: 828-891-3911.

To order the complete "Selling the Benefits of Leased Land" training program with slides and synchronized audio go to the website or call Joe.  

BASIC PREMISE

Consumers today are worried about a great many things. For you in the community business, this means:

• Fear causes many people to avoid making decisions.
• Adults tend to listen only to information that reinforces their learned value systems.
• People rarely change their opinion about anything without an overabundance of information.

Understanding these premises is key to effectively making the case to the consumer for leasing land in a park or community. Community owners and managers are in the position of needing to be very proactive in addressing the consumers' fears, especially their unspoken fears. In making the "sale" of the land lease or the home and land lease, the successful community operator will anticipate and prepare for what is on consumers' minds. It is time for us to stop telling prospects what we want to talk about and anticipate and engage the prospect in a way that helps them make a good decision about housing. 

SHOPPERS FEARS

What are consumers worried about today? Sadly, the list is long and includes everything from the economy with job layoffs, the weak American dollar, the sub-prime fallout and rising gas and food prices to the war, global warming and natural disasters. The Baby Boomers who are starting to retire worry that Social Security won't be available to them and that their health care costs will spin out of control. Knowing that your customer

is carrying a heavy load and preparing them with solid information regarding their home-buying decision is an important service.  As they relate to the park or community, the consumers' fears are that: 

• Rent Increases. Be prepared to explain how rent increases are set.
• Change of Land Use to a higher and better use, causing the community to close and forcing them to move. The prospect needs to understand whether or not this is likely to happen.
• Resale of manufactured homes and depreciation. If you sell homes, explain current trends.
• Natural disasters such as hurricanes, tornadoes, floods. Talk about the history of the property and safeguards.

Maybe it's time for us to think more about what the consumer is worried about and how our communities and homes will help make their life better. 

BELIEF THAT OWNING LAND IS RIGHT

In this country we are acculturated from birth that it is better to own than to rent. As with many beliefs, we don't always question or analyze them to see if they are right for us and our situation. That is why we in the community business need to present compelling information and logic if we expect the prospect to understand the benefits of leasing land. 

THE BENEFITS OF LEASED LAND

So, how do you explain the benefits of leased land to the consumer? Joe offered the following insights: 

1. Market leased land as a good investment. Financially you can make a sound case that by leasing rather than owning, the consumer is dollars ahead. There is no cash outlay for the land.

2. Sell the sense of security and control with leased land.

3. Favorably compare the costs of leasing the land versus owning.

4. Build value in the monthly rent. 

As you can see, it will take time and research to prepare the facts for a customer. And while Joe didn't say it, you get the sense that we in the community business have been winging it for a long time.  

One of the highlights of Joe's presentation was his use of customer/resident testimonials. Joe uses a wider range of advertising and marketing than the average business and most community owners don't have unlimited ad dollars. But

these testimonials work very effectively on community websites, direct mail, brochures, newsletters, etc.  Resident quotes for sales and marketing: 

• Provide Cash Return:

"Why tie up my money in land when other investments could supplement my monthly income?"

"I use the monthly cash from my investments to offset my living expenses."

"By having the cash, we have the freedom to invest where we want."

• On Ability to Obtain a Higher Rate of Return:

"I cannot control the rate of return on land."

"Owning the land offers no financial security unless we sell it or borrow against it." 

Joe had some good ideas for obtaining testimonials, but he believes the best way is to have a third party tape a 10 to 15 minute conversation with a resident about the community, owning vs. leasing, etc. Maybe only one or two sentences will be used, but that is all that is needed for a testimonial. Be sure to have the customer's prior permission for you to use anything said in the conversation for your marketing. 

USE CHARTS AND ILLUSTRATIONS

As a park/community owner, you need to develop charts and illustrations demonstrating the customers' savings by not investing in land but rather investing those same dollars into a CD or similar vehicle with compounding interest. Find the actual lot costs in your market and use average rates of return on investments like CDs. Design a Microsoft Excel (or similar) spreadsheet to enter various lot costs, interest rates and number of years to show the return on their money. Your customer needs to be well-armed with this information when he gets negative feedback from well-meaning friends, family and co-workers about moving into a park or community.  

Develop charts and illustrations to compare monthly living expenses and savings on leasing the land vs. owning. Include savings on making interest payments on the land, real estate taxes vs. personal property taxes, assessments to improve the land, utilities included in the site rent , lower utility bills of energy efficient manufactured homes. 

BE PREPARED WITH THE RIGHT QUESTIONS TO ENGAGE THE CONSUMER

Examples:

Why do so many people live on leased land?

Are homes in leased land communities a good investment?

What are some of the differences in leased land versus deeded land?

Do homes hold their value in leased land communities?

What services are included in the lease fee? 

Finally Joe reminds us that stating the services included in the monthly site rent is not the same as RELAYING THE BENEFITS. It has to be communicated in a way that the customer can clearly see what is in it for him. Remember - people rarely change their opinion about anything without an overabundance of information. 

                                                                                         Joanne M. Stevens Park & Community Specialist

                                                               A specialist in consulting and brokering for mobile home parks and land lease communities throughout the U.S., Joanne's experience in the Manufactured Housing Industry includes:

• Real Estate Agent since 1981
• Real Estate Broker since 1983
• Member of the National Association of Realtors
• Member of CIREI (Commercial Investment Real Estate Institute)
• CCIM (Certified Commercial Investment Member) designee since 1994
• Urban Land Institute member