Factory-Built Housing

Video - Beginners Guide to Modular Homes

2007-06-14T13:53:00.000-07:00

This is a great video from the Modular Council showing the basics of the building a modular home.

Faster, Better,Cheaper - Awesome!

Champion Enterprises

2007-06-13T14:53:00.001-07:00

Phyllis Knight, the CFO for Champion Enterprises, gave a speech today about the company at the Morgan Stanley Small Cap Executives Conference in New York. Here is the link to her presentation and slides. If you have any interest in the direction that Champion and the industry are taking, it is worth listening to her presentation.

Here are some of the highlights:

2007 HUD code Deliveries - 115,000 est. (All-time High in 1999 - 379K units)
By 2011, Their sales will be split evenly between HUD code homes, modular and international modular
There will be no growth in HUD code homes. 115,000/yr for a long time.
Production capacity is in the 40-50% range today (1 week backlog) - Hopes to see it in the 80s soon
They have strong cash flow and low CAPEX - They have the free cash flow and can do more "bolt on" acquisitions of modular home builders

Champion really has its model figured out. The future to factory-built housing is not in the HUD business - It's in the modular business. "The man with the gold makes the rules" is so true today. The financing is biggest hinderance to the HUD business and with modular you know longer have a financing problem.

When should a Manufactured Home Dealer Sell a Client a Modular Home?

2007-06-12T13:18:00.000-07:00

10 Reasons to Consider

By Chris Tawney

As construction lenders that specialize in factory-built housing, we often are contacted by dealers who are struggling to complete a difficult manufactured home transaction. They have spent countless hours contacting lenders trying to find a loan program that just does not exist. They could be saving themselves time and possibly saving a transaction if they just discussed with their client building a modular home instead.

When we pose the idea of a modular home to a dealer, we often hear, “a modular home cost so much more than manufactured home.” True, a modular home could cost $10,000 to $20,000 more than the same size manufactured home because of the costs for the specific state and code upgrades, the added cost of the permanent foundation and additional set up costs. But, what the dealer fails to realize is that the upfront costs are usually outweighed by the other advantages of a modular home.

First, the mortgage interest rate that the borrower can get on manufactured home is always higher than a modular. Lenders perceive an added risk to a manufactured home and adjust their rates higher for that risk. This higher rate equates to a higher monthly mortgage payment for the client. Conversely, the buyer of a modular home will get a rate that is consistent with current market rates. The client has to look at all of the costs of homeownership and not necessarily just the additional upfront cost of the modular home.

Secondly, the modular home will appraise for more than a similar manufactured home home. It has been our experience that the costs of the project are typically 10% to 30% less than the appraised value of the home. It goes without saying, this equity created is something that is extremely beneficial to the client. We recently had a client come to us wanting to purchase a piece of land and build a manufactured home on it. When we did our appraisal the value was equal only to the total costs of the project (land, home & improvements). We suggested doing the appraisal as if the same was a modular. When we did that the home didn’t appraise only for the costs – it appraised for $180,000 more than the costs!

Here are 10 reasons when it makes sense to sell a client a modular home –

- The land value is too great and the highest and best use of the property is to build a modular home on the property.

- The borrower needs a stated income loan program.

- Once the manufactured home is installed on the property it will not have sufficient value

– There are no comparable sales in the area.

- The borrower does not fit into any of the available loan programs available for manufactured housing (Conventional, VA, FHA or specialty loan programs).

- The borrower would like in the future to have a home equity line of credit (HELOC). National lenders do not offer a HELOC for manufactured homes.

- The borrower would like to do a Zero Down loan program and he can’t qualify for an FHA program. If the client built a modular home, any immediate equity would be considered in his loan approval.

- The borrower has a FICO below 620 and does not qualify for an FHA loan. There are modular home construction loan programs for credit scores as low as 550.

- An investor client wants to develop a piece of land. There are few alternatives for construction financing for manufactured home investment properties. There is ample investor financing options when using modular.

- The borrower needs a sub prime loan.

- The client will create a non-conforming property – This happens when a manufactured home is placed in a neighborhood of site-built homes. This home will be nearly impossible to finance, and ultimately sell in the future. This is a big disservice to the client.

The reasons to sell a client a modular home are many. There are countless other reasons for when it makes sense to sell a client a modular home. Sometimes it is the dealer’s responsibility to talk the client out of one these solutions especially if the client is paying cash for the home. So, the next time a client is about to walk out of your office because they can’t get financing ask the question – What about a modular?

About the Author

Since 2005, Chris Tawney of Eagle Nationwide Mortgage (formerly Sunset Mortgage Co., LP, now a division of Eagle National Bank, NA.), has completed more than 80 modular home construction financing transactions for clients throughout the western U.S. He specializes in construction financing for factory-built housing. His offices are in Phoenix, Arizona and can be reached at (877) 898-1465 or on the web at www.FactoryBuiltLending.com

Marmol Radziner Prefab Video

2007-05-02T16:57:00.001-07:00

LXTV.com did a video story last week on Marmol Radziner and their prefab homes. The video is here. They interview Leo Marmol and he explains their ideas for prefabs and walks the interviewer through the process of building one of their homes in their factory.

Champion Homes reported $7.2M Quarter Loss

2007-04-19T11:03:00.001-07:00

Champion Entereprises (CHB) reported a first quarter loss of $7.2 million. Here is the link to Yahoo Finance on Champion and an article from Fool.com that came out prior to their conference call.

Fool.com thinks that we will see an even lower net as the year progress. They say that the net income is taken into an account a $108 M tax benefit.

Exploring strategies to solve housing crunch in Seattle

2007-04-19T08:57:00.001-07:00

Creative use of modular housing can cut as much as 15 percent off construction costs. On the money side, many communities are using tax increment financing ...(Read On)

City of St. Petersburg Builds With Modular

2007-03-15T08:41:00.001-07:00

The city of St. Petersburg, FL has just completed a 1,540 SF modular home in area called Bartlett Park. For many years this area has been crime-ridden and an area not considered for new development or rehab. By using modular housing the city is able to reduce the overall cost of the home and make it more affordable to potential buyers.

Here are the links to the story and the video from WTSP News.

Concrete Modular Homes in Florida

2007-03-08T19:46:00.001-07:00

Here is a company building modular homes using concrete. Very cool.Royal Concrete Conceptss is focusing on the Florida market and building a better safer home against hurricanes.

This could also be beneficial for California and the threat of earthquakes. Here is the press release from the company today.

Mod is Not So Odd

2007-02-20T15:33:00.001-07:00

Nationwide Homes

Palm Harbor Homes

Several modular projects were on display at the International Homebuilders Show in Orlando Florida last week. Both Nationwide Homes and Palm Harbor Homes had homes on display. Here is a link to the story at the Orlando Sentinel.

Web Show - Google Current Takes a look at Prefab

2007-01-22T14:23:00.000-07:00


Google Current is an up to the minute look at what the world is searching for. This show is talking about prefab housing and the companies in the industry. Google says that the search activity goes up after the newest issue of Dwell Maganzine comes out. Interesting... Aired: 03/10/06 Host: Kinga Philipps

Another Palm Spring Modern Prefab

2007-01-18T16:38:00.000-07:00

In December, we completed the construction financing for another modern prefab home that will be going into the Bisnaga Canyon area of Palm Springs, CA. The client was able to acquire the land and finance 100% of the costs of the home and the site improvements.

Here are some renderings of the house.

If you want to know more about this or other projects visit our website www.factorybuiltlending.com or contact me by email here or by phone at (866) 898-1465.

2007 Will Be the Year of the Modular Home

2007-01-10T12:11:00.000-07:00

2007 is already starting off as the year of the Democrats, the iPhone (wow, at 500 bucks) and the Iraq War. I think that 2007 will be the year where the real estate industry will finally wake and fully-embrace the idea of modular homes. Up to this point, so many players (lenders, appraisers, Realtors, builders, buyers) have knocked the product. They have all been claiming that this type of housing is not comparable to on-site construction. They are WRONG!

South Carolina is waking up to the changes. South Carolina has always been a state with a lot of manufactured homes but modular homes is a newer phenomenon. Builders and buyers in that state are seeing the benefits of modular homes. (I posted earlier about $1.4M+ modular homes in CA).

In a recent article here, buyers of these modular homes are not seeing a *mobile home* in a trailer park but a well-crafted home that was built in controlled environment that is 10-20% less expensive than a similar on-site constructed home. The naysayers are the site-built builders that just don't get it. Even the local Realtors who are the most skeptical (and the least educated on the product) are starting to see the benefits.

If you can sell a customer a home for 10-20% less than its competitors, aren't you creating instant equity for your client? aren't you creating a benefit to your customer? Isn't that your job as a Realtor? I would think in a slowing housing market, Realtors and builders would be looking for anyway possible to differentiate themselves from their competitors.

Newly Financed Modern Prefab in Palm Springs

2006-10-03T15:24:00.000-07:00

We just closed the construction financing for this new prefab modular in Palm Springs, CA. The home will be approximately 2,400 SF with three bedrooms and three baths with an additional one bedroom guest house. Patrick Seabol of Modernist Modular Homes is the designer and builder of this house. The home is located in the Bisnaga Canyon area and has great views of downtown Palm Springs and the entire Coachella Valley.

We are working on a second project with Patrick in the same area that will close at the end of October. I will post renderings on the other house when they are available.

The total project cost of this home is right at $1 million. If you want more details about this project email or call me at (866) 898-1465.

Hive Modular

2006-10-03T08:46:00.000-07:00

Seth Godin's blog pointed me to this video about the Hive House in Minneapolis. The video highlights the Hive House, built by Hive Modular and the home's landscape design firm, rosenlof/lucas.

The house itself is pretty cool. What is interesting is how they used the inexpensive video as an invitation to an open house party for the new home. They sent out the link to the video to show off the home and at the end gave you the information for the party.

Doing it differently - very cool!

Genesis Homes for Mississippi to Rebuild After Katrina

2006-08-29T16:57:00.000-07:00

Genesis Homes, a division of Champion Enterprises and a local contractor, Panella Custom Builders in Bay Saint Louis and Pass Christian, Mississippi are using modular homes to rebuild after the devastation left by Hurricane Katrina one year ago. Here is a link to the press release announcing the companies' plan. Panella plans to sell 300 modular homes in the next two years at four of their subdivisions.

The home in the picture appears to be the Genesis' cottage model on a pier foundation. The builder added the porch dormer on site and the smaller "doll house" dormers are an option from Genesis. The builder claims that the homes can be completed within 30 days of the home arriving on the site from the factory.

Using modular homes will be a common site in the months to come as the rebuilding process continues in the gulf states.

Prefab seen as affordable solution in Palm Beach Co.

2006-08-23T11:24:00.000-07:00

The County of Palm Beach, Florida is exploring the idea of using modular homes to help bring affordable housing to the area. Read the article here.

The county wants to purchase available lots and then install modular home on to the sites. The home would then be sold to qualified buyers and the land would be "gifted" to them. The land would have deed restrictions to keep the property affordable for future buyers.

Prefab Homes Are All The Rage on CBS TV

2006-08-14T16:57:00.000-07:00

Here is a great video story about modular homes on CBS' The Early Show. Check it out here

Financing Your Manufactured Home

2006-07-12T18:25:00.000-07:00

Not as easy as they make it out to be. Here is the press release from the Michigan Manufactured Housing Association. If it was so easy everyone could/would get a loan.

FL Developer Is Building With Modular Homes

2006-07-12T12:23:00.000-07:00

A local Florida developer is building a new subdivision in Ft. Pierce using modular homes instead of site built. The article is here at tcpalm.com. From the feedback on the article, the developer is getting a lot of crticism for not using block construction and for not being "affordable" enough. The homes meets the state's requirement for wind load.

Less than $190,000 seems affordable to me. I just need to remember the critics are not his target market. People who want an affordable well-built home for around $1,500 per month are the developer's market. Good luck to Strong and Quality LLC on their project.

House Moved to Island in Long Island Sound

2006-07-09T14:06:00.000-07:00

This is a great example of using modular housing technology. Cheaper, Faster, Better. The article is here.

First Cars Now Housing - Toyota's World Domination

2006-06-17T05:28:00.000-07:00

It makes sense. They know manufacturing.

Toyota's next step towards world domination - home construction

Modern modular: Ticky-tacky no more

2006-02-03T08:36:00.000-07:00

OK, this should be the "tipping point" for modular homes in America. Read another great article from today's Philadelphia Inquirer,

Modern modular: Ticky-tacky no more: "Modern modular: Ticky-tacky no more"

New Modular Going In Florida

2006-01-04T11:34:00.000-07:00

Palm Harbor's Discovery Homes' modular home series is being craned onto its site Aurburndale, Florida. The owner makes the claim that when this home is finished it will be worth more than $500,000. I know these numbers are right. We have two modular home clients that have recent appraisals over $1,000,000! This is definitely not a manufactured home.

Here is the link to the article from The Ledger newspaper in Lakeland, FL. Palm Harbor has this same home set up on its sales lot in Chandler, AZ and it looks great.

This story and others like it continue to reiterate why modular homes make so much sense. Speed, cost saving and building efficiency are the name of the game.

Another Reason not to buy a HUD home

2005-11-08T15:37:00.000-07:00

Another Reason not to buy a HUD-coded Home

Read here.

Palm Harbor Homes Arizona Introduces New Modular Home

2005-11-03T09:27:00.000-07:00

Palm Harbor has announced a new model to their modular home division, Discovery Custom Homes. (Here is a link to their press release) A photo of the home is here.

Features of this new home are:

Standard overhangs – many builders do not include eaves on their homes.

6/12 or higher roof pitches (Standard pitch for a manufactured home is 3/12)

Flexible Floor plans - Square footage of 1,809 to 2,445

Innovative designs

I have been out to the sales center in Chandler, AZ on a couple of occasions and I like their models. You can check out all of the Discovery homes here. Discovery competes directly with the Genesis series of modular homes from Champion and with UBC-coded homes from Cavco. Most of our dealers have told us that the Genesis and Cavco homes are less expensive than the Discovery. I have noticed that there are more standard upgrades in the Discovery product.

The new offering from Palm Harbor/Discovery is still a better option than most site-built homes of today.

2005-11-02T09:14:00.000-07:00

Prefab Homes Get Fabulous

BusinessWeek Online has a new article about new trends in Factory-built housing here. Also, check out the slide show here.

I think we are about to see the tipping point for modular housing. As these innovative architects and builders continue to experiment with modular construction, the big boys (Champion, Palm Harbor, Fleetwood and Clayton) are going to have to begin to offer these modern alternatives.

The MH industry is offering an affordable product with its HUD-coded homes. It now needs to expands its offering for more modern products.

Great Modern Modular in California

2005-11-01T19:21:00.000-07:00

Fabprefab.com recently sent out an email highlighting a new modular modern home in Desert Hot Springs, California. I have been a big fan of Marmol Radziner + Associates since I first saw articles of Ron Radziner’s own home in Architectural Digest and Sunset Magazine a few years ago.

They are now designing and building modern modular homes. Check out their new website here. They have built an unbelievable home. They have incorporated concrete floors, high ceilings and many other very modern features.

I am a little concerned with their price point above $200 PSF. Price is also the big issues with many buyers of the GlideHouse. Part of the draw to modular construction is the cost savings over site-built. They would argue that their clients are not as concerned about the price. I would agree that to duplicate this home in the field would probably be in the $300+ PSF range.

Another great job by Marmol Radziner.

2005-11-01T11:18:00.000-07:00

Not tin cans on wheels
Marilyn Bowden at Bankrate.com has a great article here about today’s manufactured housing. Here are the hHighlights of her article:

- One in 10 new homes in 2004 was a manufactured home.

- These homes are “built tough.” I always tell people, your home has to travel down the highway at 55 MPH. It better be built strong to handle that.

- The Ford Foundation is spending millions of dollars to help the image of factory built housing.

- No longer a bad investment

2006 should be a very strong year for all forms of factory-built housing (manufactured, modular and panelized). I think we will see new ideas coming from the industry as we rebuild the in the Gulf States after this terrible hurricane season.

MODULAR MANSIONS

2005-09-13T09:23:00.000-07:00

Big modular homes are making there way into Chicago. Read (here) about them in the Chicago Tribune.

New Palm Harbor Modular Home for California

2005-08-23T10:44:00.000-07:00

New Modular home by Palm Harbor is ready for California

Palm Harbor Homes’ modular division, Discovery Custom Homes is showing its new UBC-coded modular home, the Buckeye, at the Southern California Home & Garden Show in Anaheim this week. The Buckeye is the first modular home that Palm Harbor is shipping to California.

Palm Harbor has told me that they will only be signing up established modular home builders and not likely any manufactured home street dealers. I am told that their Lantana and the Wilmington models will soon be able to ship to California buyers.

I have posted a few pictures below.

It is a pretty nice little house. It will be interesting to see what the buyers' interest is in it after the show. I have a concern that its price may be a little too high compared to their competitors.

Big Modular Home in California

2005-06-24T15:35:00.000-07:00

Our client has completed a Bainbridge model from Genesis Homes (part of Champion Homes Inc) in Tehachapi, CA (outside of LA). All of these pictures are the rear view of the property (The pictures were taken last winter). This client chose to build the home on a walk-out basement foundation because of the slope of the site.

The basement added more than 2,000 s.f to the already 3,100 s.f. that is on the main floor.

From this view you can see that owner chose to build a large deck off the main level.

Here is a copy of the home's floor plan

Manufactured home shipments up slightly in May

2005-06-21T17:45:00.000-07:00

ARLINGTON, Va. -- The Manufactured Housing Institute's Flash Report indicates 10,984 HUD-Code manufactured homes were shipped in May 2005, compared with 10,587 in May 2004. Shipments of single-section homes led in May, up 11.0 percent year-over-year; multi-section shipments were up 1.6 percent over the same period. The overall shipment increase was 3.7 percent.

The shipments estimate is based on reports from 153 plants out of an estimated 200 operating plants, representing 77 percent of anticipated production.

1.6% for multi-sections doesn't seem like a lot. I wonder what the modular shipments looked like in May?

UCLA's Anderson Real Estate Report Is Out Today

2005-06-21T13:09:00.000-07:00

The much anticipated UCLA Anderson Forecast is out this morning. The article at RISMedia here says the CA market is "overheated and due for a correction." The article goes on to say that there is no way that the state's housing economy can continue at its previous pace.

Slowing is Starting

"San Diego County, for example, the median price of a home reached $488,000 in May, up 7.5 percent from May of last year. That's the smallest year-over-year gain, in percentages, in five years." I think this cooling trend will continue.

I was having lunch with a local stockbroker who said something interesting, "if you are constantly talking about a housing bubble than the bubble will never happen." He is right. What he is saying is that the market is anticipating this cooling period and so the bubble will never happen. Interesting thought on his part.

Factory Fresh

2005-06-20T18:19:00.000-07:00

An article in today's Odessa, TX American newspaper here had another great article about manufactured housing. Most of the article was related to California and California Senate Bill 2827 which would allow a manufactured home in any R-1 zoned lot in the state.

The problem I have with this is not the fact that they would allow manufactured homes in neighborhoods that traditionally don't have them. The problems I have are, one, how are you ever going to finance it? And two, if you pay cash and place it on the lot anyway, how in the world are you going to ever sell it?

Forget what the dealers are telling you. Lenders are not in love with manufactured homes. The easiest way to kill a MH loan is: Where are the comparables? Better have at least 3 sales of MH within 1-3 miles! And if you decide to put that nice big triple wide on the lot, make sure all of your comps are triples also. Good luck!

MH dealers would do their clients a huge favor and steer them towards a modular home. It's a little more expensive but there are no financing problems.

FHA Loan Limits Nearly $313,000 in California

2005-06-15T06:13:00.000-07:00

FHA has raised the maximum loan limits to $312,895 for many California counties. FHA is becoming the only financing option for many manufactured home buyers. FHA has always been the financing option for affordable housing and I think they will be the major financing option for the industry.

Many dealers do not like FHA financing because of the additional requirements FHA places on them. The biggest one is the foundation system. In most cases a dealer would prefer to use a simple post and pier foundation. FHA requires a permanent foundation that is designed by an engineer and inspected by an approved FHA foundation inspector before they will approve the borrower's loan. This foundation can add more than $4,000 to the cost of the home.

Financing for manufactured homes is contininuing to be more difficult. Conventional (Fannie Mae and Freddie Mac) as well as sub prime lenders all look at manufactured housing in a very poor light. Fannie and Freddie want to finance safe (low LTV, high FICOs) loans. They don't want to be the affordable housing source. Recently, Ameriquest Mortgage (and its wholesale lender, Argent) decided to pull out of lending on MH properites. They did this with no warning and they left a lot of customers clamoring for alternatives that don't exist.

When it comes to financing manufactured homes for the affordable housing market, FHA is the only way to go.

Assembly Required

2005-06-13T08:51:00.000-07:00

A great article in the LA times here (reg. req'd) about the state's modular home industry. In 2004, 42,000 modular homes were constructed. California only had a small percentage of those homes.

Modular homes are coming to California and they are a great solutions to the state's housing crisis.

Why won't more manufacturers convert their HUD factories to modular?

2005-06-09T09:44:00.000-07:00

With the MH industry still in its 4+ years doldrums it makes sense to convert those factories building HUD-coded homes and have them start making modulars. This recent article (read here) on builderonline.com is telling a great story about the problems facing the factory-built housing space. I know for a fact the modular home factories in the west cannot meet their current demand. Clients are waiting more than 6 months for the delivery of their home. With construction time now pushing 9 months, modular is losing its time-saving feature. Fleetwood should seriously consider "flipping" 1-2 west coast plants to modulars. That would sure help the company

A great modular home success story in Maryland

2005-04-26T17:59:00.000-07:00

The new buyers of a modular home claim more than $100,000+ in instant equity and saved more than 10% in costs over site built construction. The time it took to construct the home was extremely short – Less than 2 months! Link to the article at Hometownanapolis.com. Definitely read this great article.

Another Modular Going Up In PS

2005-04-26T16:02:00.000-07:00

SolTerra's home going on to its foundation in Palm Springs. April 25, 2005 (Picture courtesy of The Desert Sun Newspaper)

SolTerra Development of Palm Springs is great example of another new "modular home entrepreneur." Thomas and Micahel understand the benefits and process of buying and building a modular home.