Issue link: https://read.dmtmag.com/i/133786
DEVELOPMENT MARKETING Ask Eddie BY ED HICKS Personally I don't really like the appearance of most of the manufactured homes in my community. Is it worthwhile to update the standards as new homes move in? Gary W., Pensacola, FL That's a loaded question. No doubt creating a better appearing home externally generally helps with acceptance on the part of many, but is it worth the additional cost? Does it lose it's afford ability? In general, if you are trying to provide "affordable housing", I say no, depending on your target home buyer in the context of available home financing options. Why? Because in many cases, you are only adding cost, but not necessarily adding functionality, safety, or livability. It may look nicer, but does it really provide more housing value? For example, lets take a basic 3/2 1,200 sq.ft. vinyl sided, composition single roof, single section home with an 84" interior ceiling height which would retail in a Zone 1 location to local m/h installation standards, which would sell at retail for $44,900 including setup, tiedowns, external a/c system, hookup to utilities, vinyl skirting, and a set of front and rear steps. Like it or not, it's one of America's best housing values. In this example, lets presume as home options and features are added, the same basic home standards and options remain: eg, carpet, cabinets, windows, ceiling height, appliances, etc. Add a Carport This accessory is much preferred in warmer climates. May be attached to the side of the home, or stand alone. Est Cost: $3,500 to $5,500 or more depending on size, configuration, and materials used. Change to a double section home: additional transportation costs (depending on the distance from the point of origin to the homesite), costs of additional blocking below the marriage line, installation of end caps, ridge caps, with blocking, racking and leveling. Est: $4,000 to $6,000 or more. JUNE 2013 24 THE JOURNAL Increase roof pitch to 5/12: Additional factory costs, on-site costs of installing a knee wall, extra work on end caps. Looks more like a site built home. Est: $4,000 to 5,000 Install "hard board siding" Adds weight to the home, but makes the siding stronger and provides the owner with lower maintenance costs, and a longer home life. Est: $3,500 to $4,500 Low Silhouette Installation Makes the home look more like a site built with a lower profile, and reduces 4 steps at the entry/exit points to only 1 or two steps. Est: $4,500 to $5,500 Parallel vs perpendicular. The presentation of the home to the roadway also may make the home look more like site built, but the developer's hard development costs per homesite will increase by 30% or more. Est: $7,500 to $12,500 or more depending on the area. Underground electrical service: Generally available in many areas, but when not, can add from $500 to $900 per homesite or more if done by the utility company. If a private contractor does the work, it may be more. Mounted Meter Panel: If the home is unlikely to ever be moved (and in higher quality communities, they are not), this feature eliminates the need for an electrical pedestal and allows the electric utility provider to wire directly to the home, just as they do with site built. May save from $900 to $1,200 per home. More if the utility company requires an electrician to hook up to the meter. Adding it all up, we have just gone from a $44,900 3/2 single section home to a $89,900 home, not including the homesite. A $44,900 single section home which is 90% financed as a chattel for 20 years at 7.5%, the monthly payment would be: $623.52 (including a $300 monthly lot rent). A $128,900 multi section home (including a homesite for $39,000) as real property using a 96.5% 30 year, FHA loan at 4.5%, the payment would be: $627.90 Is it worth it? Could be depending on the market, available financing, and the target resident demographic profile. Other Considerations: Attached Garages These provide storage space not available with carports, eliminates the need for storage sheds, and offer better protection for automobiles. Estimated additional cost: $9,000 to $12,000 depending on features. Permanent foundations Necessary for 30 year, low interest, financing e.g. FHA loans if sold in land-home combination as real property. May add as much as $4,000 to $6,000 depending on the jurisdiction. However, at today's lower interest rates and longer term loans may lower the overall monthly payment to the home buyer. HUD Code vs Modular. Building the home to Modular codes (which are not uniform) but to the same size and options standards as a HUD code home may add from $9,000 to $11,000 to the cost of the home at the factory, and as much as $4,000 to $6,000 to the cost of the foundation and installation depending on the jurisdiction's standards. Admittedly these additional changes to the retail price of a home will vary greatly with the area in which the home is sited, and the qualify/price level of change to which each is built. Nevertheless, it is apparent that holding down home pricing, which is what we are all about, may require sacrificing some of the "niceties" of various options in home and installation standards. Think about it! T J Edward "Ask Eddie" Hicks. Proud factory built home resident of Hidden Harbor on Lake Harris, Leesburg, FL. 34748 (352) 2054975 or (813 300-6150 Easteddie@aol.com www.mobilehomepark.com, www.factorybuilthome.com, www.fha207m.com. Mr Hicks lic. RE Broker, and Lic Mortgage Broker, is a national consultant providing marketing and economic services, community brokerage, and financing for m/h communities with over 45 years m/h industry experience, as a retailer, manufacturer, and community developer.