Over the past 30 months, really from the beginning of July 2008 in my case I noticed a clear change in the demographic while I am reselling my used manufactured homes. A big part of my real estate strategy while selling homes is selling them with a required down payment and set monthly payments thereafter for a predetermined length until the home is paid off to me.
In mid 2008, when I first met a buyer named Roberta, I began to notice a clear shift upward in the economic classes my real estate adverting ads were finding for me. Prior to meeting Roberta, my down payment for a clean 3 bedroom 2 bathroom manufactured home hovered around at an averaged $5,200 (without regards to length or width). Between July 2008 and today, my average down payments and monthly payments have steadily risen to 75% more than those early 2008 prices.
Contrary to the roughness in today’s real estate market and joblessness setting new record highs, my monthly payments and the down payments I’ve collected have noticeably been on a sharp rise. Even now I am constantly experimenting with higher and higher down and monthly payments.
Below is a list of my beliefs about why this willingness and ability to pay higher and higher prices is contrary to today’s real estate market and economy.
Cost Per Square Foot: Roberta along with a dozen other potential buyers all approached me to sell them a clean and clear 3/2 manufactured home on private land. Roberta had recently foreclosed on her longtime townhome of 12 years due to a poor decision to refinance and pull out almost all their equity a year prior. Roberta and her family had never lived in a manufactured home prior to meeting with me, and they were all apprehensively excited about learning the ins and outs of their newly used manufactured home.
Roberta and her family had just moved from a 1,450 square foot town home less than 3 miles away where they were paying just over $1,700 per month. The manufactured home which to this day Roberta and her family still pay towards is your average 1600 square foot double-wide home with appliances, Jacuzzi tub, and skylights; yet the amount I required down from her was $7,000 and her per month payment to own this home was $700. Roberta told me to my face that prior to her contacting me, she and her friends were discussing the substantial lower cost per-square-foot benefit to living in a factory built home versus the block homes they were use to.
Jaded Buyers: Many buyers I sell to now have gone through foreclosure and had their home taken from them within the past five years. Their number one reason for their inability to pay has been their fixed wages, and annual interest rates raising monthly payments – some months by $300 at a time. Many buyers in the past two years have leveled with me that they do not feel comfortable with a bank held mortgage like before, not realizing a fixed rate mortgage may have prevented their whole nightmare.
Either way, a majority of owners I sell to today are a new breed of factory built home dwellers; many buyers are now coming from traditional homes and suburbia wonderlands. This has made for a much easier time collecting payments, fielding fewer objections, and answering less questions.
John’s Mental Shift: If you have been investing in real estate for long, you know how easy it can be to get comfortable and complacent. Whether it is not always attending a real estate meeting or not making offers in a timely manner, it may be my alone default setting that caused me to rarely test the maximum totals my investment homes can be producing for me.
While advertising what was to become Roberta’s home on a whim, I decided to increase the asking price down by a drastic $2,000 over what I thought the down payment should be, and increased the monthly payment by $200. To my surprise I received more qualified buyers responding to my ads than before. If it was not for this gutsy move to advertise for more than I was comfortable with, I would not have discovered my new breed of buyers.
Summary: Whether traditional home buyers turned manufactured home dwellers have always been in the market, I don’t know. However if it was not for me testing the limits of what people will pay for my properties I would have missed out on tens of thousands of dollars over the past 2 ½ years. Worse than losing out on the money would have been the lesson that I learned from this experience: if you advertise for low income housing that’s who you will attract. The only thing that changed with my homes and ads from before July 2008 and after was the amount of money I requested.
I make it a point now to routinely advertise for greater and greater profits. By doing this I weed out renters and flaky buyers and only concern myself with buyers with money, bank accounts, jobs, and a pride of ownership in their new home.
“The only way to discover the limits of the possible is to go beyond them into the impossible.” – Arthur C. Clarke