Is a mobile home practical for my family?

[garypely]

I had a few question for you guys and gals! I used to live in two mobile homes. In the first one it was a older 2 bedroom, then on to a 3 bedroom. Since then we moved and bought a traditional home.

My savings account would be much bigger if we didn't purchase this home. We paid 80K for it and after 4 years owe 70K. We have put in around 10K in repairs and I am getting sick of it. I went and met with an attorney and since I bought it on land contract I can just turn it back over and walk away (that is the good news!).

I called the couple of local parks that we have here and one of them stated that they just sold a 3 bedroom for a couple grand. He stated that it was in good shape, nothing is available at the moment but he will keep me posted.

I currently pay $500 house payment, $150 month property tax, $85 home owners, $25 for water bill. For a total of $760 month, plus any repairs. I figure if we paid cash for a mobile then lot rent would be only $295 in one park or $310 in the other. Home owners would be approx $40 (rough quote).

I am wondering about space issues because it would be me, my wife, son 10, daughter 6, son 4 and son 2. How practical would it be for 6 of us to live in a 3 bedroom mobile? Our current home is a duplex that we use as a single family. It is about 1700 sq. For a few years we rented the upstairs and lived in the bottom of about 1100 sq.

Sorry for the long post, the reasons for the possible move is that I am sick of throwing money into a home that I owe 70K on and might be able to sell for 50K. I figure what I am saving on interest would make this a good deal. I would be saving over $400 per month doing this? Any thoughts or ideas?

Thanks,
Gary

[Jim from Canada]

It all depends on your tolerance level. 2 people can feel crowded in a 4000 sq. ft. home and yet 12 can be comfortable in a 600 sq. ft. apt. For a family of 6, I can't see a 3 bedroom double wide being a problem. Master bed room, girls room, boys room. Get used to not being a packrat! lol! I grew up with 7 brothers and sisters in a 3 bedroom house.

[Greg S]

I can just turn it back over and walk away (that is the good news!).

Thanks,
Gary

What you consider to be good news is part of what contributed to the recent economic crash. People must take ownership of there responsibilities. You would be wiser to stay where you are and wait for the economy to rebound.

Remember a stick built home is an appreciating investment and a mobile home is a depreciating liability.

A mobile home requires the same amount of repair and upkeep as a stick built and often those costs are higher due to the availability of specific materials. I would think a three bedroom for a couple of thousand will require work (money).

When you were told a mobile was in "good condition" do you know what standard was used to determine that evaluation. Would it be "good" by your families standards?

What costs are associated with a mobile home in those parks, water, sewer, taxes, above the lot rents.

As far as 6 people (4 kids, 3 son's!!) in a three bedroom the picture that comes to mind is sardines and the lot size for them to play in is also considerably reduced over a regular lot.

For the savings of possibly $200 per month you will be giving up an appreciating asset ,(in the future) considerable space, (inside as well as out) and possibly end up with a unhappy family.

You need to take the family to look at some mobiles for sale before you put any more thought into buying one in my opinion.

[Rod]

Gary,

Just turning it over to the bank will wreck your credit. Its just a voluntary foreclosure.

The $400 you think your saving will cost you, here's how.
If you have no mortgage you will loose your interest deduction
and your property tax deduction.
If you let the house go it will stop you from getting loans for years to come. And when you do, you will pay an inflated interset rate for poor credit. Some of your current credit cards may have stips that if your FICO drops your rate increases. This is because of increased risk. Some insurance companies also tie credit score to insurance premiums.

When the housing market stabilizes and starts to grow again so will the value of your home.

just my 2 cents

Rod

[garypely]

It is a land contract NOT bank financed. So there is nothing being reported on the credit report. What I did that was stupid was to buy the home not inspected.

I do not itemize to get the mortgage deduction. Our income is below just taking the regular deductions.

The lot size around here are about 30 feet on each side of the mobile home.

We have been thinking about this a lot lately. What is changing my mind about staying here is the fact of all of the work left on the home. I know that it is my fault that I purchased this with no inspection but I did not anticipate putting over 10k into this and my best guess is about 10K more.

The good thing though is that it is a duplex and we can refinish our attic into a bedroom. Then the downstairs will have 4 bedrooms (3 bedrooms plus room in attic). Then I think we are going to try and rent the upstairs again. The more I think about this and talk to different people it seems that this is the best option for us.

Thanks people for your honest answers including the ones I probably didn't want to hear.

[Harry]

Hi garypely

Here's my 2 cents.

Stickbilt homes are certainly not an appreciating investment in my state. Recently values have dropped some 30+%. Lots of people are upside down...they owe more that the home is worth. When the economy is going to improve is a real crap shoot.

I've been "house poor" myself and I don't like it.

I grew up in 3 br homes and there were 6 of us.

A MH on your own land would be neat if you can swing it.

Good luck to you.

Harry

[Yanita]

Hi,

I am with Harry on this one.

Annnd, if a mobile home is set on a permanent foundation and considered real property you do not lose value....you gain, I know my tax bill reflects the increase yearly.

As for everyone fitting, get the largest home affordable. I have friends raising 5 kids in a 4 bedroom MH!

IF you decide to per sue this please go to the "Stickies" on the main page of the site, and look for an article titled, Purchasing A USED Manufactured Home.

And folks...please do not chastise anyone on this site for financial errors!

Yanita

[garypely]

That is what I am finding out. In Feb I will be able to get financing again. In the town where I live singlewides on property are banned because of zoning issues. However, doubles are allowed. The housing market in Michigan really stinks. We had a real estate agent come through and give us a value if we were to sell it. I feel bad giving it back to the owner but I also feel that we got screwed. Yes, it was my fault for not getting it appraised or inspected.

She stated that we should have only paid $65K back when we bought it. We might just look for a double on property. A friend of mine picked up a foreclosure on an acre of land for $33K.

[Rod]

Gary,

That's good that its not with a bank and wont be reported to the credit bureau. My question is this, does the land contract have a stipulation that you can just walk away at any time? If so great. If not will the seller give you a release?... and let you out of the contract. I'm not sure about Michigan's contract laws but here in NY the seller would have the option to sue for failure to execute the contract. If you didn't settle than a judgement would be issued in his favor. With this judgement he would be able to garnish wages etc. And judgements show on credits reports for 10yrs+

Hopefully the contract has "outs" for you, just make sure first.

I agree the housing market is not what it was and values around the country have dropped. We are short to forget that the property values had increased significantly in the previous five years to the down turn. Some markets have taken it worse than others Michigan is certainly one of them.

In the long run owning property has always pr oven to be a good investment.

AVG Price of homes sold in the US

1920 $3500
1930 $7145 Notice the big drop then the rebound after the war.
1940 $3920 Percentage wise these #'s are as bad if not worse 1950 $8450
1960 $19000
1970 $27000
1980 $77500
1990 $150000
2000 $204000
2008 $290,000 (first 3 qtrs)

My point is if you can weather the storm try to hold on to the
property.

MH's on land in some markets do appreciate, but not at the same rate as conventional homes. Typically the inrcease in value of the land is higher than the depreciation on the MH therefore an overall increase in value. Just not as significant.

Rod

[garypely]

Rod, I met with an attorney before we even looked at moving. My attorney stated that their is no recourse for the seller. That basically he was taking a chance selling on a land contract. However, he stated not to feel bad for the seller. If he gets it back he has had around $10K in repairs done.

I would feel bad turning it back over but we are just looking at options at this point. The home is in Michigan and you know the economy here.

[Greg S]

You appear to have paid the owner $10,000 of the $80,000 owed.

Assuming the home is presently worth $50,000 and the original owner could resell in this market at that price he would lose $20,000 ($80,000 - ($50,000 + $10,000)).

Regardless of what your lawyer says I would suspect the sellers lawyer may come after you for any loss or the whole amount if it does not resell. Legal fees could be costly regardless of the outcome.

I think you should hold on until the market improves in a few years.

[oldfart]

Gary I read and re-read this post many times before I felt I had to respond. I'm still not sure I have all my thoughts in line but thought I'd just ramble on here a bit. Have you ever read any of the stories in Mother Earth News Magazine? It's available at most any news-stand or grocery store. Now, mind ye, I don't always agree with the greenies an bunnie-huggers. But they's a lot to be learned from reading this magazine. One of the first things I've come to realize is we need a lot less room than we think we do. Back before I lost my wife (2005) we raised myself, my wife and my daughter in a home with 600sq.ft. of living space. We lived right smart comfortable. A 3 bedroom trailer...(sorry.. mobile home..) and we did o.k. Mind ye..it wasn't The Ritz...but we did o.k.! I still live in that 12X60 home. Sometime along the way we raised my grandson Bryce Logan as well. Now mind ye..this is in the space most folks park their cars in! We found ways to make space. Bunk-beds take up only as much room as a single bed..but sleep 2! (or more...) Eh!! A standard chest-a-drawers takes up as much space as a floor-to ceiling wall of shelving/drawers and yet only holds half as much. That space under the bed? Roll-out plastic storage bins! WalMarts got 'em! Big space savings there! In the summer... winter clothes goes in there...reverse it in the spring! Son...I have a dear friend, Ed Bullock, that lives up in Slana, Alaska in a 16X28ft. cabin...I've posted his picture hereabouts. He, his wife, 2 horses and 20 sled-dogs live in a home that's under 500sq.ft.total living space. Yes my friend..a mobile home can be practical for your family. Audie..the Oldfart...

[WildIrish]

I figure if we paid cash for a mobile then lot rent would be only $295 in one park or $310 in the other. Home owners would be approx $40 (rough quote).

We saw this whole housing crisis coming, which is why we decided to pay cash for a MH on a foundation in a real lot, rather than in a park. It's in a small town, about 25 miles from the nearest city, and so we save a lot in monthly lot rent.

Something you need to think about, compared to stick-built homes...sure, those are considered good investments, but what happens if you lose your job and you're $70k in debt? You'd lose that home. Whereas, if you buy a MH outright--on your own land--you don't have to worry about being homeless. We got booted out of our last home b/c our landlord decided to let it go into foreclosure...we had some life insurance money, and decided to invest in a MH. Now, no matter what happens, we at least have a home. It's a real nice model from the mid-1970's, which we got for $30k because the sellers were in a hurry to move. Be sure to get a realtor on your side; our realtor was invaluable to us.

I am wondering about space issues because it would be me, my wife, son 10, daughter 6, son 4 and son 2. How practical would it be for 6 of us to live in a 3 bedroom mobile? Our current home is a duplex that we use as a single family. It is about 1700 sq. For a few years we rented the upstairs and lived in the bottom of about 1100 sq.

Our double wide is about 1600 sq ft, so that's about the same as in your duplex. If you folks were able to live in 1100 sq ft, a double-wide would be a piece of cake.

[DigitalDreams]

Well I don't know about the rest of you but I won't ever give up on something I start buying because it's insane in my opinion to throw away money. I have a uncle who was in real estate and investment banking till he retired and is still sitting pretty good and his advise about three weeks ago was hold real estate it will come back soon and sit on the mutual funds cause the long term will come back and you will not loss as long as the fund exists.
I can attest that while my mutual fund values have dropped in the last six months the shares have jumped drastically due to lower share prices.
And real estate values are just equalizing out the market was hot
and overpriced and if he paid only 80 grand for the property and it was not high for the area before it will come back.
I paid 21 grand for my property 15 years ago now worth 90 grand but
mortgage value is about 86 but I expect it to not drop lower cause the guys
with money in the area will suck up the foreclosures and market will
stabilize.

One bad thing about buying in a park is your still renting,just not the home and to me thats kinda like paying for a parking ramp space cause its close when theres a free parking lot across the block.

I grew up in a town in Iowa that a major employer left watched
houses selling for 40 grand in the 80's drop to values of 16 grand
for about 12 years but the guys that weathered it out and stayed
now have 120 grand homes it just takes time.Besides if you find you need something larger after it comes back you usually end up paying more, might explain why if I think I will
need it someday I buy it now cause I know it will be more when I really do.

And to the fellow or gal that started this thread work with your people you are buying from and you'll probably find they will work with you I got in a bind right after I started buying my place and
needed the payment level dropped lower on my contract for deed which is what I assume you have and most of the time you will find
that the seller is just building a nets egg for retirement or unloaded it cause he needed to lower his expenditures and will work with you, I got mine when I was still buying it to lower the payment by 300 dollars a month and extend the contract out another 1 1/2 years now I realize that yours may extend out a little further than that due to higher loan value and I was only originally contracted for 3 years but stretched it out to 4 1/2.