If you are in the right areas, there are big profits to be made with modular homes. The downside? You may need a lot of cash for these deals.
Modular homes are not just a step up from mobile homes. The new ones are normally built to higher standards than many quarterly stick-built houses. They have six-inch walls and lots of insulation. Once they are on a foundation, they often qualify for quarterly home financing, as opposed to mobiles, which you'll always pay a higher interest rate on.
However, they are cheaper than a quarterly wood-framed home. This makes them a good selection for many home buyers, but what about investors? It depends how you use them. If they are already attached to a lot, you can just treat them like any residential property - as long as they are truly modular homes, and not classified as double-wide mobile homes. The latter are harder to finance, and you'll pay higher interest.
Perhaps the most profitable strategy, though, is to start with land and put a modular on it. In many areas, a modular home on an acre of land might sell for 0,000, and yet the cost of the land and the critical improvements plus the modular may be under 0,000. There is a great chance in those areas where this is true.
Modular Home Investing - An Example
Suppose you have been watching sales of homes colse to the edge of the city where you live. Every now and then you see a modular sell, normally on an acre or two of land, because many subdivisions won't allow them. They seem to be consistently selling for colse to 5,000 or so if they have at least three bedrooms and two baths.
There are any favorable pieces of property in the area selling for ,000 to ,000. You can buy a 3-bedroom, 2-bath modular new for ,000. The modular salesman tells you what you need to do to prepare a lot. Now you need to study the other costs.
The well drilling firm that has been most active in the area says the wells are shallow in the area where two of the properties are. They can put in a well and pump for ,800. The soils is sandy, so you can get a septic ideas installed for just ,700. A power pole will cost ,500, an asphalt driveway ,800, and the foundation ,200. Setting up the home and manufacture the hook-ups is included in the buy price. Closing costs and two months of holding costs will run about ,000.
You determine that you are interested in the most high-priced lot, the one that is ,000. It has the nicest location, and it is in the area where it is cheaper to have a well put it.
Adding up all the costs, you arrive at a shape of 8,000. You think you can get more for the property, but you make a safe angle of 2,000. You comprehend that after ,000 in commission and other Closing costs, you would be left with a behalf of only ,000. That is not very motivating.
However, you have other plans. You have enough cash to start the project, and a home equity line of prestige to end it without getting a a new mortgage. You make an offer on the property of ,000 which is accepted. Then you arrange for the well, septic system, and power pole to be installed. While this is going on, you start shopping for a repossessed modular.
You've seen them advertised in the paper for as petite as ,000. You let some dealers know you are interested in a "repo," and a month later you get a call. A dealer has an almost new 3-bedroom, 2-bath modular that he will sell for ,000. You agree.
You are spending ,000 less on the home as originally projected, and you bought the lot for ,000 less as well. You do ,000 in landscaping that you didn't contain in your customary figures. You have an extra ,000 in holding costs because it took longer than originally projected to perfect the project, and the other costs are ,000 higher than anticipated.
The good news is that because you did the landscaping and paid for the best lot, the home sells for 8,000. Your total costs were just 3,000. Your total behalf is ,000. That is enough to make investing in modular homes interesting.
Repossessed Mobile Homes:Investing In Modular Homes
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