Behind the Scenes: Manufactured Housing Communities
On October 3, Freddie Mac Multifamily purchased our first Manufactured Housing Community (MHC) loan: a $10.5 million loan to finance Longhaven Estates in Phoenix, Ariz. This inaugural deal brought to fruition a new initiative we have been working on for a while, and announced last spring. You can read about the Longhaven deal
here and our initiative announcement here.
But the question I’m often asked is, “How did we do it?” To me, it was about dedication, expertise and tenacity. And almost all of it focused on relationships.
It’s not easy being the last one to the table. Relationships are already established. Track records are already proven. Trust is already built. Our conventional multifamily business had already achieved this status. We needed to prove to the MHC industry that we could be a reliable capital source in this particular market segment. We needed to prove that lenders and borrowers would experience the same high quality level of service and certainty of execution that they currently receive from us on conventional multifamily loans.
In short, we needed to prove that we’re dedicated to serving manufactured housing communities. So what did we do?
I started with myself. I had to prove my own dedication. I knew we wanted to make a big splash at the Manufactured Housing Institute (MHI) conference in Las Vegas last spring. And I didn’t want anything to stop that from happening. So – I kid you not – I actually planned my wedding around the conference! Rather than doing a destination wedding and missing the conference, my fiancée and I agreed to get married in Vegas. And that’s exactly what we did the day after the conference ended. I hope you agree, that’s dedication.
Next, we needed to build expertise. So we hand-picked a core team for MHCs, with the time and desire to develop relationships and with a deep knowledge of the intricacies of this business. Then, we were tenacious in pursuing business. We reached out to community owners. This was the key to our success in purchasing our first MHC loan.
For example, we first met Erik Hagen of Cobblestone Real Estate at the MHI conference. A month later, we met again in his hometown of Chicago. And more recently, we invited him to Freddie Mac headquarters, where he spoke to 200 employees and shared his insight on this business. A relationship was developed.
However, it’s not just the borrowers with whom we need to develop relationships. It is also our lenders. We are working with Seller/Servicers that have done business with us for years, understand MHCs, and know how to do business with us. Because of these relationships, Will Baker of Walker & Dunlop was able to originate our first MHC loan, experience the same high quality level of service as our conventional business, and close the loan within 45 days. A relationship continued to grow.
The first deal of any new initiative is always significant. It is like a first-born child; it sets the standard very high. And early indications suggest that our efforts are making a positive impact. With our announcement to enter this space, lenders and borrowers have told us that they have seen the availability of funding go up and the cost of capital go down. And, while it’s still early, we are bringing mortgage funds to locations we have not been active in before, bringing much needed capital to rural areas where traditional multifamily apartments are scarce. We are committed to an industry that provides affordable housing and a community.
But this is only the beginning.
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