Andrew Luter thinks that buyers of mobile homes deserve a break.

Luter is chief operating officer with BaseCamp Capital, a Denver-based private equity firm that in January acquired 65 mobile-home communities from Clayton Homes, the industry’s largest producer of manufactured homes. (BUILDER Online reported on this transaction last Friday.)  Those assets are now being managed by Yes Communities, which BaseCamp formed specifically for that purpose, and whose name signifies the positive approach Luter wants his company to convey and bring to this sector.

Last year, an estimated 95,600 manufactured homes were shipped by producers, off 19 percent from the previous year, and a continuation of a downward slide that dates back to the late 1990s. Given the negative publicity surrounding the use of FEMA trailers as temporary shelter after the devastation caused by Hurricanes Katrina and Rita, it’s easy to forget that more than 22.5 million people live full-time in manufactured housing across the country, according to Manufactured Housing Institute (MHI) data. Luter thinks the time is particularly ripe now for this kind of affordable housing, given the “huge percentage of the population” that’s been “left in the dust” by current market conditions where home prices, while falling, are still out of reach for many buyers who are also facing much tighter credit terms for mortgages.

However, Luter also believes that affordability of manufactured housing — which can be priced anywhere from $20,000 to $100,000 — is undermined by the way these homes are financed. “Chattel lending,” as it is called, often requires buyers who may have checkered credit histories to begin with to pay considerably higher interest rates for their loans, which limits these buyers’ ability to ever build up any equity in their houses.  Yes Communities, he says, is taking a different approach by offering its own financing that not only gets the mortgage rate down to between 7 and 9 percent, but also significantly reduces the amortization period. (Luter says the goal would be seven years.)

BaseCamp brings considerable expertise to this arena. Several of its principals, says Luter, are veterans of the manufactured housing industry, having worked for Chateau Communities, a real-estate investment trust that at one time was the largest owner-operator of mobile-home communities in the U.S. (Chateau, with 261 communities and more than 88,000 home sites, was acquired by HomeTown America, a similar business, for $2.2 billion in October 2003.)

When asked whether Yes intends to expand its business beyond the communities it acquired from Clayton Homes, Luter is a bit coy, but says that growth would depend on his company proving to buyers that it has their well-being at heart, and is there to “respect and help them.”

Learn more about markets featured in this article: Denver, CO.