car repossession and taking it to an auction lot is a much easier proposition but when you think of the high interest rates that MH lenders had it had to be very profitable for them
deals went from 7 year loan terms to 15 or 20 and at the time I closed my dealership we were seeing 30 year loans
30 years! after about 7 or so years I see many of my clients get what I refer to as “buyer’s fatigue” they still have a long time to go on their loan, things are starting to wear out and require replacement or refurbishment and they just couldn’t see the light at the end of the tunnel
many of my clients won’t blink at paying $450 a month for a car payment, but they want a MH loan in the $250-350 range in order to accommodate rent
ever increasing costs are what is putting pressure on the MH industry…the homes got much more expensive, rent got much more expensive because on our side, the costs of operation increased and frankly, many of the large businesses who operate parks demand a higher profit than a mom and pop operation
common sense says that it’s now better to buy a house and see increasing values on your investment than sign on for a thirty year loan on a mobile home.
not long ago I would have said the 55 and over park is the future of the industry and maybe it will be again, but I’m seeing people who missed the boat as far as selling their homes at peak value and investing in MH’s and having a stash of money left over…without that peak value its less enticing to downsize that way
and of course we still have the trailer trash stigma and tornado death trap stigma to counter.
It’s been a challenging business for a while and will continue to be so for a while I fear.
When you talk to park owners about their experiences with customers “sticking” in mobile home deals and not “trashing” them, you tend to quickly realize that geography is a key driver to the happiness of their experience. We own parks in 17 states, and there’s no way that you can compare a customer in Oklahoma to a customer in Wisconsin. Different areas can result in entirely different mobile home park scenarios. You can talk to two owners with similar parks but different states, and one will say that mobile home park customers are awful and the other that mobile home park customers are fantastic – and they can both be 100% correct at the same time.
Regardless of what part of America your park is in, there is one group that has really failed our industry, and that’s the U.S. government. Mobile home failures are not nearly as bad or costly as the current single-family disaster, but the government continues to make lending possible for stick-built homes while completely turning its back on the affordable housing industry. They will regret this decision eventually. The lower income portion of our population is soaring – nearly 50% when you add in the 47% on some form of social program and the 10,000 per day baby boomers who are retiring into a social security income of $14,000 per year – and mobile home parks are the only form of detached housing that works for this group. The reason that the industry has no reasonable credit programs for mobile home buyers is that the U.S. government has done nothing to proactively make this happen. If the government pulled the plug on bailing out and supporting single-family lending, the stick-built industry would collapse overnight.
Oops! I didn’t mean to be insulting – I just meant that the analogy was (in my view) not a suitable one (not apt). There are definitely similarities but I think the differences are important when it comes to measuring the risk of default and therefore the appropriate interest rate.