All Forum Posts by: Account Closed

I'd like to hear about your experience regarding this because in my experience this is completely incorrect. Modular buildings are built to the same building code as any stick built product and generally built under better conditions with better quality control processes than most stick built product. I've worked on many modular projects and have never had the appraisal of one be of concern. There's a strong demographic of folks who are into publications like Dwell, Archdaily, Treehugger, etc. that are very interested in modular/prefab construction and in some cases that fact alone can lead to quite a bit of buzz especially around new development. 

On the lending side I have run into hiccups with lenders unfamiliar and scared of the process. Never with the appraisal.  

Yes, I have. If you can't realize instant equity after construction don't build. Modular or not...

@David Lowe

Not much experience doing business in Mexico really but we've worked on many container projects nationwide including San Diego's first container house and the Quartyard project, which was successfully moved after years of operation to another site.

https://rstavares.com

 You're correct. I forgot about that

The 203k isn't an option but FHA does have a ground up construction loan called the One Time Close loan that he could look into.

https://www.fha.com/fha_one-time-close

@Nathaniel, check out my prefab new construction story of 3 units:

https://www.biggerpockets.com/forums/223/topics/473320-san-diego-prefab-housing-development-and-airbnb-success-story

Auto Shop? Do your due diligence. There's a high likelihood of contaminated soils

I only got a year on the warranty, so anything longer than that sounds good to me.

Without knowing what you're building it's hard to say what to pay special attention to. Turns out I needed to pay special attention to everything. One easy example being my drawings showing where the oven hood exhaust vent would come in the soffit at the roof and instead they just ran it straight out of the wall. This beautiful wall they painted black and they put this stupid plastic white exhaust hood outlet in the center of it...

I ripped it off as soon as the trucks arrived on site so it wouldn't show up in any photos and put it up later after I spray painted it black.

I had a number of banks drop out of my 3-unit build because I was going modular. I don't know if you're doing custom modular or not but I was. If you're doing some off-the-shelf product from a manufacturer you might have an easier time. The lender I wound up using was a smaller community bank so I'd suggest starting there first. One of the more difficult aspects of a modular home build for lenders to swallow is that the manufacturers will typically require 100% payment before the mods leave their lot, which leaves you with little leverage for shortages in workmanship or other issues. The manufacturer should warrant the product for a period of time, though. Your mileage may vary. I was looking for a pretty large loan at $1.8M

If you're going to be an owner-occupant of one of these 4 units you'll probably have an easier time. As far as I know FHA loans and most Freddie and Fannie products are pretty familiar with modular builds by now.

Investment Info:

Small multi-family (2-4 units) other investment.

Purchase price: $888,000

Cash invested: $222,000

Purchased an existing duplex on a 17,000 sf. hillside lot with the potential for a larger development project in November of 2017. Spent two months repairing some damage, painting and staging the unit and split the master bedroom off from the rest of the upstairs unit to create three separate listings. We listed all three on AirBnB. The location is central to San Diego, right next to downtown with amazing views of the city skyline from each unit. Only 2 miles from the convention ctr & d/t

What made you interested in investing in this type of deal?

I got into Real Estate Development after completing a Masters of Real Estate Development for Architects degree in 2013. Two weeks after graduating I was in escrow on a 5,000 sf. piece of dirt a block from the beach where I designed and built three prefabricated homes. I posted a project success story shortly after completing it here:
https://www.biggerpockets.com/forums/223/topics/473320-san-diego-prefab-housing-development-and-airbnb-success-story

How did you find this deal and how did you negotiate it?

Property was on the MLS sitting for a bit. After purchasing my first development deal my wife got her Realtors license so we could save on developing more in the future. We offered asking price as the numbers all penciled out just fine and the offer was accepted right away. The property cash flowed after a little TLC so it was an easy deal to get into.

How did you finance this deal?

Traditional non-owner occupied 25% down financing for this one

How did you add value to the deal?

Exterior paint was crumbling and an ugly mustard yellow. A google streetview snapshot from several years ago showed the house as a mild sky blue so I decided to try and paint back to that color. I went a little too "sky" but it gives this WWII era home a bit of charm. I'll capture some of this blue in the new development as well.

What was the outcome?

The development potential of this property is enormous. We're currently entitling an 18 unit 4-story prefabricated apartment building that will take the duplex' place and have sweeping views of downtown, the bay, Coronado bridge and Balboa Park. Hoping to break ground this year and move in next year with a mix of long-term and short-term occupants. Two of the 18 units will be designated affordable housing.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My amazing wife is a realtor with Canter Brokerage
My go to loan officer is Carl Spiteri at Benchmark Mortgage

@Mitchell Litam

That's not a good definition. The biggest discernable difference between Modular and manufactured is that Modular buildings are built to International Building Code standards or whatever building code governs in the local jurisdiction having responsibility (often state building codes that are modeled from the IBC) and manufactured homes are built to federal HUD (Housing and Urban Development) code. Whether or not the building can be moved is almost irrelevant