Resale Value of Manufactured Homes

Manufactured homes can appreciate and be a good investment. If the site is chosen carefully and the landscaping is attractive, the home can go up in value similar to a neighborhood of stick-built homes. But, like other neighborhoods, the condition of your neighbors’ homes will play an important role in how well your home maintains its value. As you may have guessed, the two biggest home-buying groups buying manufactured homes are entry-level homebuyers and retirees. Each group presents a slightly different approach to shopping.

Typical Fees and building fee schedule

The list of fees you’ll pay is usually called the building fee schedule. These fees vary from city to city and range from almost nothing to thousands of dollars. Some of the most common fees you’ll find are building fee, plan check fee, water connection, utilities connections, water development, sewer fees, and environmental impact fees. The list sometimes gets long and grim, with all sorts of fees before you reach the total line.
Depending on the area, lot, and site, fees can run from 50 percent to nearly equal the cost of the home. For instance, if the cost of the home is $70,000, the site work can run about $30,000 plus the cost of a lot. If the lot is $32,000, the total cost of the home will be $132,000. A similar size stick-built home in many areas would cost about $160,000, depending on land and permit fees.

Building Permit and Site Fees

If you’ve hired a general contractor, getting the permits, estimates, and lining up the subcontractors will be part of the bid. But, if you’re doing your own paperwork and lining up everything for the factory site crew when the home arrives, you’ll have to get the building permits yourself. Typically, you’ll go down to your city’s building department and get a Building Permit Application packet to fill out and submit, along with a set of plans from the home manufacturer. You’ll also have to pay a nonrefundable deposit or application fee. Within a week or two (hopefully) you’ll get the paperwork back with a list of fees. In most cases, these fees will have to be paid before you’re issued a Certificate of Occupancy and can move in.

Sources of Building Lots

The best and easiest way to find a building lot is to contact a realtor who works in your area of interest. Many times they will know of developers who are selling lots to builders or can check the multiple listing for what’s available. Another good source is newspaper classifieds under ‘‘building lots.’’ If you’ve exhausted these sources, you’ll need to get a little more aggressive and drive around your area of interest to look for possible lots.
Sometimes, homeowners will buy a double lot when they build and keep one for an investment or for a family member to build on in the future. But in the ebb and flow of human events, plans and circumstances can change quickly. A vacant lot that’s not for sale today may suddenly be for sale tomorrow or when a serious buyer calls offering money at an opportune time.
Randall and Sharon discovered this when they couldn’t find a lot for sale in the area they lived in. What few lots were available were tied up by builders for spec or custom home jobs, and they weren’t interested in selling.
As a last resort, Sharon started driving through neighborhoods and areas they liked, looking for vacant lots. She made a list of those that looked interesting and got the names and addresses of the owners from the county recorder’s office. It wasn’t long before she had a list of eight possibilities.
Three of the lot owners lived out of state, and from their addresses on the tax records, Sharon was able to get their phone numbers. Her next step was to contact the owners on the list and see if any were interested in selling.
Five local lot owners were not interested, but one of the out-ofstate owners expressed interest. The couple had bought the lot a few years ago, but a job transfer had changed their plans, so they kept the lot as an investment. But now that their son was going to a local university, they had been thinking of selling.
Ron and Sharon offered the lot owners the appraised value for their lot and agreed to split the cost of a certified appraisal. The sellers accepted the offer and the deal closed three weeks later. This proactive approach often works because many owners don’t think of selling until someone contacts them and starts the wheels spinning.

Tips on Buying a Building Lot

The real estate truism that location is everything should guide you when you’re shopping for a building lot. You control your housing destiny more because you pick the location. And that means you’ll need to do more homework to make sure you get the best location possible.
It’s important to remember that a great house on a bad lot will not be as good an investment as a smaller house with a great location. The extra time and effort you spend finding the best location you can afford will pay bigger dividends later on.
The first step in lot shopping is to make a list of all the possible sites you’re interested in. The more lots you have to choose from, the better. Once you’ve completed the list, the next step is to start the process of elimination. The following tips will help you do that. Check with the city or county planning authority and see what’s planned for the area. If there’s a master plan, study it carefully. The secluded lot you love now may be next to an industrial park in 10 years, according to a zoning master plan. Look at the growth patterns for your area of interest. If all indications are that the area will increase in value, that’s a plus. Also, check and see if any highways, off-ramps, or access roads are planed for the area. And, of course, find out if the area is currently on the upswing or is declining in value. Get a copy of any zoning and restrictive covenants (CC&R) for the development or area. The better the area, the more restrictions on what you can build. However, that can often be a plus because restrictions tend to keep home values up.
For example, Brent and Susan found a great deal on a lot next to a newly completed golf course that the local municipality was selling as surplus property. A look at the CC & Rs revealed that homes had to be 1,200 square feet or more on the main floor along with an attached two- or three-car garage. The restrictions also limited their landscaping options and required an underground sprinkling system to keep the lawn and shrubs in good condition.
Brent and Susan were planning on putting a modular home on the property and had picked out the plan they liked. Unfortunately, it was only 1,150 square feet on the main floor and had a carport instead of a garage.
Getting in touch with the design people at the factory, the homebuyers were able to increase the square footage and enclose the carport to create a garage. This stretched the loan they could qualify for to the limit, but they felt it was worth it. Area values should increase in the years ahead and justify the additional expense. Check out the cost of utilities. A cheaper lot that costs more to run utilities into may not be as good a deal as one that has them stubbed at the property line. For instance, it’s usually more expensive to run electrical lines underground than overhead. And running water, waste, and gas lines at $10 to $20 a foot each, depending on the area, can run up site costs fast.
Make sure you have all your building site ducks in a row. Get all the necessary building permits, utilities, and hookup fees nailed down. Next get the site-work subcontractors lined up and bid prices locked in and in writing if the home dealer doesn’t handle that.

Ten Shopping Tips to Help You Make the Best Manufactured Home Choice

1. Like most other things, higher quality costs more in the beginning but not in the long run. So go for the best built home you can qualify for. A top-of-the-line model will hold its value better when the time comes to sell and move up.
2. Shop around for a model that doesn’t have the mobile home silhouette, in other words, a rectangle with a flat roof. Many manufacturers have models with steeper pitched roofs, porches, and even slide-outs that get away from a boring rectangle.
3. Look closely at the furnishings that often come with the home. Many times they’re low end, and you would be better off buying them elsewhere.
4. To get a good idea of what’s available, go to regional trade shows where you can see the latest innovations from many mobile home manufacturers at one time. Any manufactured home dealer can tell you when and where they are for your area.
5. Visit several dealers and price similar homes. Look out for the model loaded with options that you may not want or need that are included in the price. Get a breakdown of all the costs. That way you can tell what items you don’t want and may be able to eliminate or trade for something you do.
6. Check on the dealer as you would a builder. Call the Better Business Bureau and see if there are any complaints. The bank that does the financing is another good source of information. Also, talk to several past customers and see if they’ve had any problems and if they would use their dealer again.
7. Modular home builders will usually quote you the base model price with the cheapest appliances, finishes, and fixtures. The molding, windows, floor coverings, and fixtures will often need to be upgraded a notch or two. To be realistic, plan on adding $5,000 to $10,000 to the base price to get what you really want.
8. Consider adding more windows or going with bigger windows that will make your home more livable and add to its value if you resell.
9. Upgrading the tub and shower stalls are a good investment and helps the home keep its value. Also consider upgrading fixtures. Bottom-of-the-line faucets and other fixtures lose their shine fast and will need replacing in a couple of years.
10. Curb appeal not only gives you pride of ownership but is important to maintaining your home’s value. Adding trim in a second color or upgrading the exterior is worth considering. It’s important to remember that sooner or later all homes sport a ‘‘for sale’’ sign. If you keep that in mind when you buy, selling will be easier and more profitable when you outgrow the house or get a job transfer.

How to Shop for a Manufactured Home

After you’ve talked to two or three lenders and gotten their best deals written out on Good Faith Estimates, the next step is shopping time. Keep in mind that a good lender who is knowledgeable about manufactured homes can also help you narrow down your dealer list. She probably knows which dealers have the best reputations. Many dealers have model homes set up on site you can go through and get ideas. Others have subdivisions with both model homes and lots for sale.
Since you’ll have about the same options as a stick-built home, it’s a good idea to work up a list of wants and needs so that you can determine what style and floor plan will work for you.

Manufactured Home Money Matters

Standard costs for a modular home will run $50 to $60 a square foot, with the most popular size homes in the 1,700 to 2,000 square foot range. Some builders also have high-end or luxury series that can run $80 to $100 a square foot with homes up to 5,000 square feet or more. However, a typical 3-bedroom, 2-bath, 1,800 square foot home will cost around $100,000, plus site work.
The financing options for modular and manufactured homes are the same as financing a stick-built one. FHA/VA and conventional loan programs are available from the same lenders as you would use for a typical subdivision home. Most home dealers or manufacturers have lenders they work with that can finance the total package of home, site work, and land.
But, like shopping for a single-family home or condo, it’s important to shop around and compare loans. Dealer loan packages that finance the lot, site work, and home are convenient but not always the most economical. You may save money by getting a construction loan through your bank or credit union and the 30-year loan through a mortgage company.
One financial plus of a modular or manufactured home is the shorter length of a construction loan if you take one out for the lot and site work. You pay interest for weeks instead of months. For example, if you bought a building lot for $50,000 and financed it for 6 percent interest, your monthly interest bill would be $250. Assume you spend a month or two fine tuning your house plans, getting the permits, and lining up your contractor or subcontractors. If all goes well, the construction can be completed and the home ready to move into in about six months. You’ve spent $1,500 in interest on the lot alone. If you had ordered a modular home, it’s likely you would have been moving into the home in four to six weeks. Your lot loan interest bill would be around $375, saving you more than $1,100. If you were to add in the construction interest of stick-building the home, the bill would be several thousand dollars more. The bottom line on financing is to shop around and compare at least three lenders’ rates. Don’t assume that the dealer’s deal is the best, even if he throws in inducements or extras. In fact, you should be wary whenever a dealer or builder offers extras to go with the financing. Somebody is paying for those extras, and that person is usually you.

A Manufactured Home Can Make a Great Starter Home

Manufactured homes can be a good starter home for the following reasons:

• The average cost of a manufactured home is roughly half that of a stick-built home.
• A manufactured home can often be ordered, delivered, set up, and ready to move into in four to six weeks, and sometimes faster, if you go for a model the dealer has on hand. All manufactured homes must be built to HUD/FHA construction standards, making financing with low down and market rates possible.
• You can get manufactured homes with more than 2,000 square feet of living space in two and three sections with slide-outs, garages, and other options.
• Manufactured homes mounted on permanent foundations in good areas tend to hold their value and will most likely appreciate.

Owning vs. Renting Manufactured Homes

Throughout the country there are attractive manufactured home developments
where you own the lot. Sometimes a homeowners association similar to those of a condo or town house project takes care of
the grounds and amenities. In the Southeast and in Sunbelt areas, some developments approach those of expensive gated communities with high-end amenities such as golf courses, clubhouses, and equestrian trails.
Buying a manufactured home can be a good investment if you buy the lot with it. If you choose an area or subdivision carefully, your home will tend to hold its value.
However, if the home is on a rented pad, you’re subject to all the reasons why you don’t want to be a tenant. Why pay a monthly pad fee when you could be building equity in your own lot? Also, if the landlord doesn’t keep up the park or the area deteriorates, you may not be able to sell. If you’ve financed most of the purchase price and values drop, you may end up owing more than the house is worth. Realtors like to call this negative or upside down equity.

Mobile Homes

Forget everything you’ve heard about mobile homes, especially the Hollywood image of cheap trailers and seedy mobile home parks. New technology and improved materials are making mobile homes an attractive housing option.
In fact, the name mobile home may no longer be an accurate term. These homes are built in factory conditions using quality materials to meet federal and state codes. Unlike a modular home, mobile homes are built on a steel undercarriage. The wheels are used to transport the sections to the site where the home is slid off the carriage onto a foundation and permanently anchored.
The terms mobile and manufactured home are almost interchangeable, since both are transported in sections and joined at the site. The fine line difference is how much finish work is done on site. If you want to split hairs, you could say a mobile is completely finished at the factory and the sections joined at the site. A manufactured home may have siding or other finish work done on site to make it look more stick built.

Precut or Kit Homes

As the name suggests, a kit home is just that. All the components of the home are precut at the factory and shipped to the site ready to build. It’s kind of like a model airplane or car. All you have to do is put it together, and it’ll look like the picture on the box. Many log, timber frame, and specialty homes come in kit form because of the specialized materials and hardware needed. And you can build the house or hire the dealer’s crew to put it all together. You can buy a precut or kit home in just about any size or style, from your plans or theirs. You can choose the quality and upgrades you want and can afford. You can also choose how complete you want the kit, from the structure only to a complete house with nails included and ready to build. For the do-it-yourselfer with some spare time, this can be a ticket to the most house for the least money. The biggest advantages of kit homes are that you get everything you need precut and ready to go on site. There’s no waste unless you make a mistake. Depending on the area, you should be able to get the lumber and components cheaper than if you went to the nearest Home Depot.

To see how much you would save, get a lumber list from the dealer on a home plan you’re interested in and price it at your favorite lumberyard. Also, while you’re at it, compare the hardware and appliances offered with the kit to what you can get locally. Building a kit is going to be like constructing a stick-built home with you as the general contractor. You’ll need to schedule local build-ing inspections for each phase and hire subcontractors for the installs you don’t want to tackle, like plumbing, electrical, or sheet rocking. The bottom line is that you can save quite a lot of money if you’re handy and want to do most of the work yourself. In addition, having everything on site and ready to go can save you considerable time running around as well as eliminate mistakes and waste. Financing a kit home is similar to financing a stick-built home. Most lenders will go along with the financing when there’s a contractor involved. If, for example, your brother-law isn’t a contractor and you plan on going it alone, you’ll need to convince a lender you have the background and skills to do the job. Even then, you may have to jump through a few extra hoops the lender may require to limit its liability. If you’re building a log, timber frame, geodesic, or other unusual style home you may have to shop around for a lender who specializes in these types of homes. The dealer should be able to give you a list of references.