Good Value US Real Estate


Looking for good value US real estate can help make us secure.

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See a good value US real estate trend below.

Recent messages have reviewed  how value should always be sought in all investments. During these times of change and likely inflation, there are five good places to invest… equities, multi currency investments, commodities, real estate and your own micro business.

Our most recent value messages have looked at equities and micro businesses.

The message shares some views on good value US real estate.

Last year I was delighted to see our good friend, Jackie Flynn, take the helm of International Living.  IL started many decades ago by Bill and Elizabeth Bonner has been the flagship of the Agora group for decades. Bill, Elizabeth, Merri and I all started at almost exactly the same time and I was on Agora’s original board.

Though long ago Merri and I decided to just focus on our own business and not be on any boards, we have remained good friends with the people at Agora and we have worked with Jackie Flynn for years.

We hold Jackie in high regard so I was not surprised when she wrote in the latest edition of International Living:  We spend most of the year considering questions of value.  Where can you live better for less and enjoy life more. Where in the world does it make the best sense to retire, launch a business, invest?

The  2011 winner? The good ol’ U.S. of A.  It wins because its economy is huge, its infrastructure is massive, and it scores well across the rest of the categories.

No question: Those stats are reflected on the ground in a culture of convenience. No place on Earth is it easier to to get what you want, when you want it. And it can be affordable too. After all, you could rent a place in Dodge City Kansas for the same price you’d pay in Grenada Nicaragua.

Several recent articles at our site have outlined the benefits of investing in good value US real estate.

One message looked at the idea of  expanding single family dwellings into multiple units like high end boarding houses.  Oters have viewed the importance of enhancing value by adding value via fixing up.

Here is another good value US real estate idea in… modular homes.

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Modular homes have come…

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a long way up and could be featured in the next boom… in fact I like them in bad times as well.

A recent USA Today article entitled “Not Your Father’s Double Wide” by Wendy Koch says:  more U.S. consumers and developers are turning to factory-built housing for speed, quality and energy efficiency. The prefab market, once derided as the lowly world of double-wides, is positioning itself for major growth when the housing industry rebounds.

“We’re light years away from where we were five years ago,” says Tedd Benson of New Hampshire-based Bensonwood Homes. His company is refining computer software that can do a 3-D home model, then cut, shape and detail each part in the factory.

That’s not all. Other advances include a folding technology that allows Blu Homes to truck across the country modules as narrow as 8 feet that unfold – origami-like – to create homes more than twice that width when placed on a foundation.

Near Boulder, Colo., prefabs by Solar Village have thermal solar windows that collect the sun’s rays during the day and release the energy for the home’s use at night. “They heat homes for free,” says Mark Kostovny, the company’s founder.

Going deeper green.

Green prefabs are also becoming more energy efficient. Many, such as Blu Homes, meet the U.S. government’s Energy Star standard, which typically means they use at least 20 percent less energy than regular new homes.

Others go much further. Some earn the top rating from the private U.S. Green Building Council or qualify as “net zero,” which means they produce as much power annually – often via solar panels – as they consume.

Green prefabs have multiple advantages, aside from speed and lower utility costs, says Sheri Koones, author of the 2010 book Prefabulous and Sustainable. She says they’re often higher quality, because they’re built in climate-controlled conditions, so building materials aren’t exposed to bad weather. Also, she says, they waste fewer materials.

Several prefab newcomers, including ZETA, Minnesota-based Hive Modular and Florida-based Cabin Fever, report healthy annual increases in the number of homes they’re building.

“It’s trending positive, but it’s still a small niche market,” says Brian Abramson, co-founder of Seattle-based Method Homes, which expects to build at least 16 prefabs this year.

Prefabs will gain market share “when the housing market comes back” and U.S. building codes demand greater energy efficiency, predicts Lloyd Alter, an architect who once developed these homes and is now an architectural critic for TreeHugger, an environmental website.

During the housing bubble, quality mattered less than a low price, but times have changed, says Benson. Buyers are now looking for improved quality, he says, because they plan to live in their homes – not flip them as investments two years later.

“This is the time for off-site fabrication,” he adds.

Future remains unclear

Will prefabs really take off, as advocates say?

In 20 years, everyone will be doing what Benson is doing now, but most off-site builders are not yet as sophisticated, says architect Susan Susanka, author of the Not So Big House series of books.

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Rethink the image of the modular home.

Custom Modular Homes of Long Island put together this house with six bedrooms, seven bathrooms, an 8,000 square foot modular mansion in South Hampton, N.Y. It has an eat-in kitchen as well as formal and outdoor dining areas, an outdoor fireplace, and an outdoor grill. This modular mansion was installed on its plot along with a tennis court and pool.

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There are always glitches and risks in any industry so we always must take care. I have two good friends who have been involved in this industry for decades so I asked for their views.

One friend said:  Your discussion of the modulars is very sound. Modulars have developed into beautiful dwellings. Most modulars are sold on to privately owned land or subdivision lots.  Our park is an older, well established development (1972) and is filled with older single and doublewide mobile homes.

It is a “mixed” park, meaning that we rent lots to both families and retired adults. Most residents own their own homes. We own and rent a few homes.

Because most of the income is derived from land (we do not own the homes… we just rent the lots to the owners of the mobile homes) , the primary chores are maintenance of the water and sewer systems. Because very little maintenance is needed, the income is nearly “management free.”

We like the challenge of working it as a project to make it more attractive.

The other friend contacted his son in law who wrote this:

Hi Gary,  I’m a consultant in the manufactured (factory built) home business and  am responding to your modular home comments.

Your comments exclusively talked about modular homes.  A modular home is a home built in a factory to local building codes and inspected by inspectors (plumbing, electrical etc.) from the local jurisdiction where the home will be permanently placed.  Manufactured homes (yes, your father’s double wide) is the term now used to describe what were commonly known as mobile homes in the 1960’s and 70’s.  They are built to the HUD federal building code which is basically exempt from all local codes. If you build a manufactured home to the HUD code it can be placed almost anywhere, theoretically, without pre-emption from the local zoning and planning officials, although they often find a way to stop a manufactured home from being delivered to a place they may find unsuitable – its’ the old “not in my backyard” mentality.

While I don’t disagree with your assessment of modular homes as a great value, sales results have never come close to meeting anyone’s expectations.  As far as I know modular home sales have declined steadily for years, even when mortgage money was easy to get, but I would want to confirm that with MHI – The Manufactured Housing Institute in Washington DC.  Henry Ford proved you can make something of high quality at a low price if you build it in mass quantity in a climate controlled environment.  You can take advantage of the economies of scale you get when buying raw materials in bulk with very little construction waste.   But planning and zoning officials and home lenders have not embraced a home built in a factory, manufactured or modular.  They view them as an inferior form of housing.  A professor from UCLA who visited an Urban Land Institute forum in Las Vegas on factory built homes told a group of us “you guys are the only industry I know of where consumers have come to expect your factory built product to be inferior to the same thing being built out in the rain, one at a time”.  He posed the question: “would you buy a car or a DVD player from someone who built one in his basement, or would you buy a car or a DVD player from a company that mass produces them on an assembly line?  Which has a perceived higher quality?  The one built on an assembly line always wins – unless it’s a house.”  Don’t get me wrong — consumers come to home shows and see these cool, sleek, environmentally friendly, highly energy efficient modular homes and just love them.  I’ve worked many a home show for Ideabox (www.ideabox.us) and the consumer response is nothing short of spectacular.  They just don’t buy them.

I would like nothing more than to be proven wrong.  It makes sense to build a home in modules and deliver them to a site for quick assembly.  I would personally profit greatly from an increase in modular home sales and production, but until planning and zoning officials, and mortgage lenders see them as having the same or similar value to a site-built home I don’t see anything that would indicate modular home sales will increase.  Take care,

These comments are really interesting to me because one way to create added value is by changing utility… as Merri and I did buying a subsistence farm in the Blue Ridge and changing it into a boomer residence and seminar center. Often the change comes simply from a change in perception.   Ashe County, North Carolina was viewed as a downtrodden area.  Merri and I saw that the land was better in many ways for residential purposes… yet the perceptions had kept prices low.   Then we saw a sixfold increase in prices over the next ten years as perceptions shifted.

We always like to invest in ideas, things and places that are out of fashion!    Fashion destroys value . Take our home in Naples, Florida. When we bought it was a sleepy fishing village… winter residence valued far below Florida’s East coast real estate.   Then Naples became fashionable.  We sold and moved to unfashionable Ashe County, NC… and Ecuador.

Another way to create added value in real estate is by fixing up.  Buy a fixer upper in an unfashionable place… that is nearly and as good as a fashionable place.
A third way to gain value in real estate is to find innovative ways to improve its utility.  Building fabrication at a factory has always made sense versus on site construction.   Now changes in consumer value and image and the need for more efficiency and less waste is lending power to the concept of modular homes.

There are two ways I am looking at investing in modular homes. First… we’ll be researching modular home makers and their shares.  Second, we’ll be looking for modular homes already on site that are for sale. Many modular homes were foreclosed during the real estate bubble’s bursting. Because they cost so much to move, they can at times be purchased as real bargains that should offer appreciating value as rental units.

High inflation is probably ahead.  There are five good places to profit from it… equities, multi currency investments, commodities, your own micro business and in good value real estate. The US offers good value real estate and modular homes may be one leader in this sector.

Gary

Join Merri and me in Mt. Dora, Florida at our February 11-12-13 International Investing AND Business seminars where we have chosen to buy good value real estate.  Save $499.



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