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:
“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
116 Third Street SE
Cedar Rapids, IA 52401
Phone
319-378-6818
Direct 319-378-6786
Fax 319-365-9833
www.JoanneMStevens.com
www.iowacommercial.com
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
