Builder planning 10,000 manufactured homes in next 5 years in new communities across the U.S

A home builder with projects as high as ONE BILLION dollars is now dipping their toes in the Manufactured Home Community pool.

What does a developer who builds projects with white sandy beach lagoons, Flow-rider surfing simulator machines, splash parks, swim up bars and “in community” farmers’ markets have to do with manufactured homes???

Seems they have gotten bitten by the affordable housing bug.

Magatel Group, founded in 2006 is one of the largest private homebuilders in the nation (having built more than 100 developments with thousands of homes). They even have a ONE BILLION dollar project west of Dallas but the news today is their announcement that they are opening the floodgates for prefabricated homes with plans for a very large subdivision in Texas using manufactured homes. This is coupled with a five year vision of 10,000 such homes in newly built communities throughout the U.S.

The nearly 700 homes will be in Weston, a Dallas suburb in the “A” rated Celina Independent School District. Square footage will be 550 to 2,400. This is the launch of their prefabricated product line named: Golden Gate Communities.

So what does a developer who also builds $600,000 homes put into their brand new manufactured home community?

How about an amenity center with café, fitness center, resort-style swimming pool and other outdoor recreation activities such as Pickle ball, bocce ball, volleyball and a playground. Also, five acres at each community will be dedicated to a farmer’s market providing residents access to local produce (and will ultimately support small business owners and agricultural workers). These amenities will be exclusive to residents and not available to the public.

I will be digging deeper into this projects along with their future MHC projects (to find out answers to questions like; from where will all these homes come and what will the price point be?)

To be kept up to date just drop me a note in the comments or DM me and I’ll make sure you are copied on all future news.

Samuel Hartzog
floridahome21@gmail.com

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Will these just be prefab homes or actual HUD mobile homes? On their own land or land lease community? I feel like the news release is a little unclear. Two initial thoughts:

  1. it is always said by us investors “they aren’t building any more communities” - well, I guess no one with deep enough pockets has tried yet
  2. thankfully even with one big player stepping in there is still not nearly enough housing to make a dent in the needed supply
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Thanks for replying.

To the first sentence, I’m not sure what you are asking as I’m not aware of any “official” designation of the word “prefab,” although HUD Manufactured Homes are “prefabricated,” and modular, while prefabricated, are an entirely different ballgame. I believe these homes will be sold as real property, (home and land together) as opposed to a land lease community.

Clayton used the word “Prefabulous” in its huge ad campaign ( Commercial Ads 2019 - Clayton Homes - Prefabulous® - YouTube ) for their homes (the ads show a home that meets the criteria for special financing from Fannie and Freddie which allows buyers to get 30 year loans with the same interest rate as stick built homes. These homes are called MH Advantage and Freddie’s program is Choice Home. Here is a video on Freddie’s loan program: https://youtu.be/h0SMW2tSvzo ).

I think “HUD mobile homes” is a misnomer at best and a pejorative at worst as they are typically called manufactured homes (although I realize many people still use the “mobile home” when speaking of them). If you mean will they meet the HUD guidelines I’m not sure how they couldn’t (unless they were “modular” homes which would be an entirely different set of guidelines). But it does raise a good questions: where will these homes be produced? At a Clayton or Legacy factory or a factory Megatel is ramping up?

To your comment labelled “1” They actually are now, and have been building new communities. But records will show you that they are few and far between and the older communities being sold for “highest and best use” and turned into something other than a manufactured home community outnumber the new ones being built. One excellent example of a new community being built is happening in Washington State being built by Ryan Gibson and Spartan Investment Group. Some have been built by others in Texas (Roberts Communities) and Louisiana (Southern Choice Properties) just to name a few. But yes, they are few and far between.

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Thanks captsam for the thoughtful reply and additional details. That was the crux of what I was wondering— are these being sold as real property with land or is this being developed as a traditional MHC. Sounds like it’s a traditional development, only with prefab vs site built homes. IMO a great way to bring more affordable housing to market but not something that’s a threat to the MHC ownership model (not that you suggested it was, just saying)

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You are welcome. I did reach out to the author of one of the myriad articles I found on this and asked from where would the homes be coming and he said he “I tried to get more details but they weren’t forthcoming.” It is not entirely out of the question that they could open a plant and produce them which would obviously help margins.
One of the interesting things I did see in some of their marketing material is that, in some communities, if you rent an apartment in an “affiliated” apartment complex they will apply ONE YEAR of the rent you paid as a down payment on buying one of their homes. Since down payments are one of the obstacles many first time buyers have to overcome, this would certainly help with that, to say nothing of the genius stroke of marketing it is. Note: if you do “sell” units watch also for any new (they were done once before) down payment assistance grants coming out of Washington as they wind their way through the legislative machine). :wink:

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Interesting. Definitely a novel concept to go from custom homebuilder to prefab homemaker and MHP developer.

Big question I have is: how are they getting town and local governments to permit them to develop these new MHPs? As we all know, MHPs carry a negative stigma and most municipalities aren’t jumping to award new zoning and permitting for such. (though one guess I have is, “money talks” and they are paying their way to approval

Thanks for writing Dave. Couple of thoughts.

First, you have to remember where this first community is being planned…Texas. A quick look at the number of manufactured homes in this state will lend credibility to the fact that they are probably more accepted there than other places. A nice presentation with virtual flyovers of a new community, artists renderings of all the amenities listed, inside shots of the homes (it can be hard, if not impossible to discern that you are looking at a manufactured home from some of the new product out there), will go a long way toward changing that long held stereotype. Call me optimistic but between the new product (homes and developments) out there and the increased pressure for affordable homes I believe that the NIMBY stance is being eroded, as it should be.

Next is tax base. While I am still trying to get the price point for these homes (they are not going to be sold for $80,000, that much I will predict :wink: I have to think that, faced with a beautiful presentation from an established builder showing how nice these communities are going to be, the big question for the government official would be, “Do we want to turn down this development and the resulting large increase in real estate taxes it will bring it?” From what I understand, Texas real estate taxes are nothing to laugh at (7th highest in the U.S. at an effective rate of 1.69%, well above the national average of 1.07%) and a denial of a development approval would probably mean turning down a substantial deposit into the official coffers.

Just my thoughts.

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This is great news. Won’t be cheap, but far more affordable than stick-built. Just makes our product price point better. Plus mainstreams it more, may improve our financing options.

Keep me up to date please…

thanks
Vince@spearheadhomes.com

I will keep you posted as I learn more Vince.