Home Sweet Manufactured Home 03/17/2015 11:29 AM

Manufactured housing doesn’t have a glamorous reputation, but since 1992, when Hurricane Andrew shredded thousands of mobile homes in Florida, regulations nationwide have been strengthened. Structurally, new manufactured housing can stand up to all but the strongest storms, says Bob Stroh, who directs the University of Florida’s Shimberg Center for Affordable Housing. “And beyond that, some of them are really nice.”

They are also really affordable.

In 1996, Jason Feinsmith was earning his master’s degree in business administration at Stanford University and his wife, Elana, was employed as a certified financial planner for Charles Schwab.

While the rest of their friends were contemplating how to pay for million-dollar homes, the Feinsmiths took out a $39,000 loan on a 1974 double-wide mobile home in Silicon Valley for which they paid a total of $47,000.

Today, they still live there with their 7-year-old son and 4-year-old daughter. Elana Feinsmith is a stay-at-home mom and Jason Feinsmith is an entrepreneur who has used some of their considerable savings to start his own software venture. They have a healthy retirement account and are socking away more money to send the kids to college.

On the other side of the country, in upstate New York, when Ron Hagelberger retired, he and his wife, Linda, sold their four-bedroom colonial and spent part of what they made on the sale to pay cash for a brand-new, 1,700-square-foot manufactured house in a development reserved for people older than 55.

“We moved here because you get a lot of value for the dollar — three bedrooms, two baths, a formal dining room, a large kitchen and a pretty good-sized yard. Because the management takes care of the maintenance, we can simply close the door and leave. We just got back from a cruise, and while we were on it, we didn’t have to worry whether the basement was flooding or if somebody was maintaining the pool,” Ron Hagelberger says.

In California, the Feinsmiths paid off the loan on the mobile home, so their housing expenses each month include $826 in rent for their lot, $22 for trash collection, $15 for sewer, and $78 for gas and electric, which adds up to $941. The Feinsmiths don’t own the property, so they don’t pay property taxes, and none of their expenses are tax-deductible. Still, less than $1,000 per month is pretty good for a home that has hardwood floors; a large, screened-in porch; a deck; and a small, private yard for the children to play in.

Elana Feinsmith says at one point they considered moving, but when they looked at the $800,000, 50-year-old tract homes that they could afford only if she went back to work, the idea lost its appeal.

The homes in the development where the Hagelbergers live are currently selling for $115,000. Land rent is $420 per month, which includes basic cable. Owners pay gas and electric, which on a year-round monthly billing cycle is about $85 per month, according to Noel Dill, vice president of Rock Oak, the company that developed the community. The residents also pay a quarterly water bill of about $25 and insurance on the contents of their homes, which could run $50 per month.

These expenses add up to about $563 monthly. If the Hagelbergers had put 20% down and borrowed the rest, they would be paying an additional mortgage of about $740 per month, assuming a 7.5% rate and 20-year term. Manufactured housing may not be prestigious, but the savings are impressive.

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An Old Mobile Home Or Money In Disguise? 07/31/2013 9:30 AM

Fred was like most investors and entrepreneurs and had no idea that mobile homes could be a good investment and a great moneymaker. And what little he had heard about mobile homes wasn't very flattering. But Fred read a book called Deals On Wheels about how you could make money with them and called me to get some more information. He wanted to know if he could visit with me sometime, buy lunch and see first hand just what I was doing. At 9 o'clock one morning, Fred shows up at my door and we went on a park tour. The first park we drove through, I pointed to a mobile home and said, "Fred, take a look at that mobile home and tell me what you see." This was a 15 year old single wide home. The paint was ugly, one section of the skirting was missing, a window pane was broken, a dog was tied to the steps and the yard would never win a "Yard of the month award." I could sense that Fred wasn't real impressed at what he was seeing. He looked a little puzzled and said, " I see an old mobile home." And to the untrained eye, that's just what it looked like. There was nothing wrong with Fred's eyesight, he saw exactly what I just described. But what he didn't realize was that he was looking at money disguised to look like an old, ugly mobile home. Then I gave Fred the history on this home. 

About two years before, I had bought this home for $2,700. I spent another $341 for advertising and minor repairs. My total cost in that home was $3,041. In less than two weeks, I had it sold for $6,950 to a young couple that needed an affordable place to live. This couple, like many couples, would never save enough to buy what they wanted, but they could make a payment every month for life. They paid $750 down and I took back a note at 12.75% interest (the industry standard) payable $191.07 monthly for 40 months. Now, let's run the numbers and see how I made out. 

We had $3,041 invested, received $750 down, leaving $2,291 in the deal. We now have a note for $6,200 and will receive $191.07 for 40 months. If I punched the right buttons, that's a 95% yield. After 40 months, we will have collected $7,642. And also, it will only take 12 payments to recover the $2,291 we have left in the note. As you can see, this little deal provides very high yield, with minimum risk and was done in a very short time. 
Note. If you don't know how to use a financial calculator, or understand how to punch the numbers to get these figures, then I recommend my book Taking The Mystery Out Of Money. It has a chapter explaining in complete detail on using a financial calculator for most any financial transaction. 

Now, let me explain what I've really done with just a few hours of work. Some people will think I simply put a little deal together and made a good profit…which I have. But I've done much more than that. What some people fail to realize is that I've spent a few hours of work to create a note that now obligates somebody to send me a check every month for the next 40 months. Once the deal is done, what more do I have to do to get paid? Nothing but wait for the mail carrier to bring the checks. I don't even have to leave the house to get paid, but that nice couple living in that mobile home have to go to work every day so they can send me a check. And they get to do it 40 times. And it was done on an old, ugly mobile home that most investors wouldn't consider of any value or collateral. 

After explaining all this to Fred, I asked him to take another look at that mobile home and tell me what he saw. What he saw the first time was something that looked ugly, but now, he realized he had been suffering from an optical illusion. You might say that Fred's vision had shown a remarkable improvement in a very short time. Now he could clearly see money. I then asked Fred to figure out how many little mobile home payments like this he would need each month to equal the checks he got from his job. I explained that if he did just one little deal a month, it wouldn't take that many months before somebody else would be sending him more money than his full time job was paying. And if he still enjoyed working a "job" when he reached that point, he could just keep the job as a hobby. 

Now, I'd like to elaborate some more on this little deal to show how a little education and knowledge can make such a big difference in a person's life. Before I learned how to put my money to work, I was doing all the work. I was so uneducated back then that I thought the answer to financial freedom was working two jobs. And that's what I did for many years. Finally, I realized there wasn't enough hours in a day, and I couldn't work enough hours in a month, to reach financial security. There had to be a better way, and I started looking for that way. When I realized that education and knowledge was the answer, I made up my mind to get an education. You see, until then all I had was some "schooling". Now I realized I needed some education. 
So I started learning who the people were that was successful and was doing what I wanted to do. I started attending seminars taught by those people. I paid money that I couldn't afford to pay to go to those seminars. I took time off from work that I couldn't afford to take. I bought books, tapes and courses that I couldn't afford. I spent many hours listening to those tapes and reading the books, when I could have been watching ball games on TV, or fishing, like a lot of folks were doing. I was doing all the things I couldn't afford to do, so that someday I would be able to afford to do all the things I wanted to do. And I soon learned that it wasn't a question of whether I could afford to attend seminars, I realized that I couldn't afford not to go. 

Now I can look back and see that I didn't do all the easy things, and all the fun things like many people were doing, but I did all the right things. And today, we enjoy financial security and financial freedom and can do what we want to do, and we can do it when we want to do it. While some of our friends are still working "jobs" searching for financial security that they will never know. They had the same chance to make choices that I had, they just made the wrong choices. They all had "schooling" but they didn't have the necessary education that provides financial freedom. Now they tell me how lucky I am.

The best investment you can make is in yourself. So be willing to pay for your education now, or be prepared to pay a much bigger price for your lack of education later. The choices you make today will determine your financial future. Be sure you make the right choice, because you will have to live with the results of that choice. 

Fred paid for lunch that day, which was a burger and fries. (I think I'm working too cheap.) Next time Fred it's going to be prime rib and good wine. 

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Upwardly Mobile Homes 07/31/2013 9:24 AM

When it comes to real estate, the trailer park gets a bad rap. But some designers think that this forsaken corner of the market is worthy of reevaluation-and even resuscitation. 

For decades, trailer parks have been increasingly marginalized to a strict set of stereotypes. They might gleam as well-manicured retirement communities to some, but in their most iconic state they are perceived as the province of the unfortunate. The question of whether design can save or even improve trailer parks is preempted almost immediately by “Why bother?”

The latter question is easier to answer. Allan Wallis, author of Wheel Estate: The Rise and Decline of Mobile Homes and an authority on regional housing, calls trailer parks an undervalued, endangered resource. “Hundreds of thousands of living spaces” have been zoned out of existence, Wallis says, warning that “we are losing a certain niche in the housing market that the market left on its own would not really replace.” Trailer parks, he explains, put workforce housing where communities desperately need it. Drive these inhabitants to suburbia’s outer rings, and freeways get clogged while households become severely strained by car and gas payments. Wallis welcomes innovative design: Trailer parks could use a face-lift. “You need to create a visually attractive package,” he says. “I would ask the designers of the iPod, ‘Could you do that for a mobile home?’”

Michael Hughes is an architect ready to provide that attention. TrailerWrap—–a stylish rethinking of a traditional double-wide—–began as a University of Colorado project exploring “alternative urbanism” in a standard-issue trailer park that survived Boulder’s million-dollar housing market. Trailer parks emerged, says Hughes, as “a way that more people could afford to live in urban settings, in the heart of expensive cities, and retain an interpretation of the American dream.” He argues that “you can redirect the effort and money from the 24 roof pitches you see in suburban houses and put it into bigger windows, taller ceilings, bigger volumes, better finishes, a more open and expansive connection to the outdoors.”

Hughes is not the only architect prying the trailer free of its dubious pedigree. San Francisco architect Christopher C. Deam’s design for a 400-square-foot unit called the Glassic Flat is small by any standard. Built by an established trailer manufacturer, his “shoebox with one side in glass” rolls out of the factory at around $65,000. The design holds to current modular styles, but requires no foundation, no contractor, and a fraction of the cost of a high-design modular home. “You just drive the thing in, set it up, and you’re done,” Deam says. “It’s a total solution to make prefab truly prefab.”

The design-inclined might wonder why all trailers don’t celebrate the box in this way. Mobile homes boast the briefest history in housing, literally towed into existence by the automobile. For a time, they held an atomic-age chic—–Bing Crosby counted Lucille Ball and Desi Arnaz as tenants in his Blue Skies Village outside Palm Springs—–but somewhere along the line trailers became “manufactured housing.” Design gave way to economy, and trailers wheeled into a rut of small windows, fake shutters, and bleak ribbed siding. The inherent beauty of the box was supplanted by icons borrowed from suburbia.

That design lapse persists. Tim Howard, president of Breckenridge Finer Living, says he builds “cottages.” Deam’s Glassic Flat joins a Brecken-ridge line that includes a peak-roofed trailer with “the natural beauty of a stone exterior” made from “a high-density synthetic stone product.” When Deam first came into his office, Howard politely showed the architect the door. “I absolutely did not get it,” Howard says. But when Target ordered a half-dozen trailers for New York Fashion Week, Breckenridge reconsidered.

Even people who value the niche question what design could do for these communities. Wallis and sociologist Kate MacTavish at Oregon State University say designs like TrailerWrap might ease the eyesore factor, but both acknowledge that economics 
and a pervasive stigma stack the deck. Wallis notes that cities have long discouraged housing that generates little in property taxes. MacTavish, who spends much of her career in the parks, calls mobile homes America’s largest source of unsubsidized affordable housing, but explains that the economics work against the individual owners. They might pay usurious interest rates and face inevitable depreciation, divesting them of the single most important investment payoff most Americans will see: their homes.

MacTavish also asks, “Where are the dollars going to come from to upgrade these aging parks?” Many trailers are nearing the end of their useful lives and owners cannot sell their homes or even afford demolition. The new designs are nice but gentrification looms. She wonders if “you would end up with two kinds of parks”: the standard lot of rusted siding, and that of elitist enclaves of design devotees keeping sleek pied-à-terres on wheels.

That wheeled oasis is Canadian designer Andy Thomson’s vision. His miniHome packs off-the-grid ecofeatures into a segmented box, but at $119,000, it’s not an affordable housing model. He shies from the “trailer park” term. “We have a contest to come up with a name, and we haven’t thought of it yet.” An investor exploring the concept of urbanites shopping for second homes, Thomson believes that “blue-collar and downtown” don’t necessarily mix. 
The line between alternative style and down-market desperation may lie in demographics. While Sean Penn lived in a 27-foot Airstream and El Cosmico brings an instant arts community to rural Texas with a village of vintage trailers, the mobile cachet of cool lurches to a stop with the word “double-wide.”

For Hughes, the positive attributes of the trailer park don’t extend to the trailers themselves. While “the trailer park is built on good bones,” he says, “the downfall is in the unit.” Saving the trailer park means getting rid of the trailers. His alternative urbanism ideal would let owners buy the lots they rented and build efficient, permanent homes with traditional mortgages and the benefits of appreciation.  A requirement that homes in the park remain “mobile” adds expensive  retrofits to TrailerWrap—–this despite most mobile homes making only one trip, from factory to park.

Like MacTavish, Hughes holds an affection for the classic New Orleans shotgun house. He brings that restraint to a development planned for Fayetteville, where he teaches at the University of Arkansas. The idea, he says, is to “take the design ideas of TrailerWrap and ignore that it has a chassis,” creating a community of courtyard houses affordable to police officers, his fellow faculty, and employees at nonprofits.

Taking lessons learned in the trailer park beyond the park gates may be the single greatest benefit of thinking inside the box. Small, efficient homes could define a new kind of neighborhood and fulfill a promise that mobile homes missed so conspicuously. Trailers could distribute the benefits of modernism beyond its moneyed devotees to serve a greater public. The question may be not what modern design can do for the trailer park but what the trailer park can do for modern design.

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