Elephant in the room


#1

Ok guys please enlighten me.

I see Steve Case has begun to buy wholesale from Clayton. I admit I have no idea what it actually costs a manufacturer to build one of these. I do know I can buy one from a factory in Indiana for 17K- U-pick up. From what I can tell, there are probably at least 20 enlightened park owners on this board who would like to infill their parks. Lets say each owner needs an average of 20 homes = 400 homes.

Why couldn’t a coalition of park owners approach a manufacturer and ask them to build a basic, no-frills 14 X 70 3/2 for a “reasonable” price (e.g.$12-14K)? With a sales guarantee of 400+ units over 1-3yrs., couldn’t the manufacturer find it in their business plan to make simpler affordable housing like was originally intended in the 60’s through early 80’s instead of “Lifestyle” housing?

I honestly believe the demand would be much higher from enlightened MHP owners than what I’ve outlined here.

Steve


#2

An excellent idea. I have a friends who own several stores across our area that compete against the big boys (in this example it is places like walgreens and staples ). They are part of large buying co-ops made up of independent store owners. That is how they can go to a manufacturer and get wholesale pricing as good as the large chain stores. I am sure any mobile home manufacturer would love a large order we would be capable of giving them. Count me and my partner in.


#3

The buyers groups would need to be buying from same plant - not manufacturer. Negotiation skills aren’t lacking on this forum - I doubt a group could be much more effective.


#4

Steve,

Great idea. I actually talked to a single-plant manufacturer in Alabama about this concept. Shawn hit the nail on the head…the group would have to buy from the same plant and pay cash before delivery.

However, most of the manufacturers now don’t have the no frills 14x70 floor plan. The main reason is because there has been virtually no demand for this type of home from the independent retail sales lots.

Also, the plant owner went over his actual costs of production and they have risen drastically in the past two years. He simply can’t build anything for less than $14-15K due to labor, material and overhead costs. Truth-of-the-matter is nobody can build the cheapo home any more and keep it within HUD standards.

As you know, I purchased 12 new 14x70 homes a couple of years ago for one of my parks and discovered a strange phenomena. They were hard to sell and it took us almost a year to fill the last unit. People were willing to pay as much or more for a 5-10 year old 16 wide. Now, we don’t even buy 14 wides anymore unless they are repos inside the park.

The homes I recently purchased from Clayton were mid-level DWs. They are going into a large, upper scale park and we will have close to $40K in each by the time they are “sale-ready”. We bought these homes to make the park more attractive and feel like we can move them at a sales price close to $48K since they are being placed on a lake and have the back porch option where the owner has a lakeview. As you can see, we are not making much money on these homes, but the additional lot rent ($283) they will produce is what we are after.

On a different note, I think it would be a great idea to see a “focus group” come together in the near future consisting of park owners and manufacturers. Maybe this group could develop some ideas on how the manufacturers and park owners could work together to help each other out. I mentioned this to Jim Clayton a few months ago when he visited one of my parks. If something does start to happen, I’ll definitely let everyone know.

Steve


#5

I’m in. I need roughly 28 more homes. I’m in the Oklahoma City area. I could also buy from a plant in northern or panhandle area of Texas, or Kansas, or Arkansas, or maybe Missouri.

-Jefferson-


#6

I just toured the Sholte Homes factory yesterday in Rockwell NC. They will sell me 16X72 (16X76 overall) homes for $20600. delivered to my park. The homes are beautiful and we are considering this option. I would have about $28K in each home and would need to sell them for $34K. We are running out of options with the repo market. There are fewer and fewer repo homes available and they need more and more work. I have been putting up to $18K in a fixed up 14X80 10 year old home. We are analyzing our market again to see if we could qualify enough people whom could afford a $400 per month house payment ( plus $215 lot rent). I look at it this way. I buy 10 year old 14X80s and finance for 12 years and have a 22 year old home in the park at the end of the contract or I buy new 16X72 and finance for 12 years and have a 12 year old home in the park at the end of the contract. The whole picture looks better if the new homes will work out. Even the resales after evictions would be better with a newer asset. More due diligence will tell.


#7

Jefferson, I would recommend you attend the Texas MH Show - sorry I don’t know when and where. Of the states you listed, currently only Texas has operational plants. Texas MH builders have historically built more expensive homes than Southeast builders. You might try MS builders, the Tunica Show in spring is the best place to view them all in one place. I sell some built by Lexington Homes - they are the cheapest I could find, and I imagine we are similar in freight costs. 662-834-0292 I think David Ward is OK rep. Good Luck.