Modular housing financing - Posted by Builder

Real Estate Investing Real Estate Financing
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Posted by Jimmy on May 05, 2005 at 10:28:02:

the cost of the structures, before they left the factory, was $26.25 per foot. by the time I got my Certificates of Occupancy issued, I had an average of $52.60 psf in total, total costs. In this total, probably $3.50 a foot is wrapped up in acquiring the lots, tree clearing, lot leveling, and building a retaining wall necessitated by the lot leveling.

So $49 a foot is a pretty solid number. I am not including appliances I installed later.

and bear in mind, these were built between December, 2001 and June, 2002. and East Texas labor rates are lower than most other parts of the country.

I could have built the same duplexes for $50 a foot with a local builder, and had more attractive looking buildings. Even though my duplexes are structurally sound and completely up to code, they are still somewhat “mobile-homey” in appearance. That is no problem with renters. it could be a problem down the road if and when I want to sell these guys. Remember, the modulars are constrained by the fact that the segments have to fit on the back of a big rig. No such constraints for a site built structure.

I did the modular route in order to save money. I didn’t. Once you have been through the process, from start to finish, and see all the costs, you will arrive at the same conclusion. The modular rep was a nice guy, but he did not give me a complete picture of the construction budget.

One more thing: your property is only as good as the crew who seals up the modular segments, and slides the bad boy onto your foundation. I encountered a number of problems in this process. The site crew blamed the factory. and the factory blamed the site crew. and I got caught in the middle of their bullsh** and paid the freight.

as a matter of principle, I would refuse to do business with any modular mfgr unless THEY also install the structure, build the foundation, and seal up the segments. This way, THEY are responsible for EVERYTHING. and if there is a problem, there will be no debate about who is responsible. Don’t hold your breath looking for a mfgr who does the wntire job. They don;t want the whole job, precisely bacause they DO NOT TO BE RESPONSIBLE.

I am still steamed about the way I was treated during the problem stage.

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Modular housing financing - Posted by Builder

Posted by Builder on May 05, 2005 at 06:55:56:

I am exploring options for a building project and I heard that it is difficult to get financing for modular or pre-built homes.

Question 1: If I were to plan to build a subdivision of modular or pre-built homes would I have difficulty getting construction financing, assume my credit is great and I have a good project plan…

Question 2: If not then would the potential home buyer have an issue getting financing for one of these homes? Would they have to go to a specific lender to get their financing or would this not even be an issue?

Thanks,
Tim

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Re: Modular housing financing - Posted by Don Dion

Posted by Don Dion on May 06, 2005 at 08:50:30:

Here are the specs I use from my lenders when doing these types of deals for my local builders. Check with me via email to see if we are licensed in your area.
A manufactured home is defined as “any dwelling uunit on a permanent chassis and attached to a permanent foundation system” and must meet the following cond:

  1. must have been built to FMHC saftey standards est in june 1976 with evidence of a HUD Data Plate/Cert lable.
  2. Be on a sep lot owned by the purchaser or included in the transaction. Home must be classified as real property and taxed as such with land held as fee simple.
    3.Towing hitch, wheels, axles muce be removed and home attached to a perm foundation in accordance with MFG requirements for anchoring.
  3. Can not be single wide must exceed 600 sq ft and 12’ min width.
    5.Any home on a private road must have a private road maint agreement.
  4. Home must be connected to perm to septic or public sewer system.
  5. All site work on the unit must be completed prior to closing.
  6. No additions added outside the original structure are permitted.
  7. Must be zoned for residential use.
    I have given the short version of this in an attempt to answer your question. Hope this helps.
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Re: Modular housing financing - Posted by Jimmy

Posted by Jimmy on May 05, 2005 at 08:55:34:

I assume you are not talking abour mobile homes.

Modular homes are built to the same specifications and codes as are site built homes, and should be underwritten the same as site built stuff. All of the local building codes will apply, and must be complied with.

I erected two modular duplexes in 2002, and had little problem. Texas law is very protective of the modular industry, and prohibits discrimination by localities, lenders, etc. against these structures.

For the record, I would not erect another modular structure. There is NO savings of money compared to site-built, despite the bulls*** spewed forth by the industry. There can be a time savings, if you really know what you are doing.

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Re: Modular housing financing - Posted by Max

Posted by Max on May 05, 2005 at 08:17:40:

If you are talking double wide mobiles there are some drawbacks. Not many lenders will touch these.

If you are talking a manufactored home that is shop built and moved to site and sits on a permanent foundation and is completed on site. They are treated the same as stick built.
If this does not answer the question, e-mail me for further info. I may be able to help with financing also

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Re: Modular housing financing - Posted by Builder

Posted by Builder on May 05, 2005 at 09:38:14:

Thanks for the feed back.

Do you mind me asking what you ultimatly paid per Sqr Ft for the entire build process, minus the land if possible?

Thanks a lot,
Tim