Is it risky to build a modular home that meets California Building Code in Cupertino, CA? Would I have problem selling it in the future?

Asked by Luke Cheung, California Sat Sep 22, 2012

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22
Tinoresident, Other Pro, Cupertino, CA
Mon Sep 24, 2012
I cannot comment about selling a modular home in Cupertino. My family built a modular home in Cupertino three years ago. The experience was positive.

To my knowledge, we are the second family in our neighborhood that built a modular home.

In 2008, on the way home, I saw a section of a house being lifted by crane and placed on the foundation. The whole house came in three sections. Previously, I had seen a HGTV episode about modular homes. Seeing a modular home installed in my neighborhood piqued my interest. I watched the building process, researched information online and finally, knocked on my neighbor’s door and asked questions. My neighbor shared some tips with me and I started talking to different modular home dealers.

We went to city’s planning department, the staff showed our lot's set back requirements and drew the building envelope for our future house.

After multiple negotiations, my wife and I selected a dealer and a factory to build our house. My wife designed a house that met our needs. The factory updated the design to be factory buildable. My wife and I made three trips to the factory to select our house options. Once the selections were made, we negotiated and agreed on the final factory price with the dealer. The factory did not raise the price after the sales contract was signed through the dealer.

Our house is well built. It has 2x6 exterior studs. 2x10 floor joists. The entire house is well insulated and it shows on the PG&E bills.

The building permit process was smooth. Anything built in the factory had to be approved by State of California. The factory gave us the building plan and Title 24 report already approved by the State government. Our architect/engineer did the blending package for the building permit submission that included the factory plan, foundation plan and the stick built portion of the house that was mainly the garage. City of Cupertino did a cursory review of the factory plan and paid more attention to the stick build portion of the submission. The first submission was returned for corrections. The return was mainly related to the stick build portion of the house. We got the building permit after the second submission.

Our house came with many items already completed in the factory, such as:

• Recessed lights
• Windows , cornice boxes, wood blinds
• Ceiling and interior walls painted, doors installed
• Tankless waterheater
• Furnace and air duct
• Plumbing and electrical inside the walls were already done

The bathrooms were completed at the factory. The bathrooms’ tiles were installed at the factory and withstood the transport. The kitchen cabinets were partially installed and the rest of the kitchen accessories, including cabinets, faucet, garbage disposal, countertop, refrigerator, range and hood, were loose shipped. Our house has 9 feet tall ceiling throughout, tray ceiling in living room and 8 feet tall interior doors.

The city inspectors did not re-inspect any work that had already passed the State inspection in the factory. This made the building process much faster. We moved into our house four months after it was placed on the foundation.

We have refinanced our house three times to take advantage of the lower interest rates. We have no problem getting conventional interest rates. In our very first refinancing, our loan agent told the lenders that the house was built in the factory. This caused a few lenders thinking it was a HUD standard manufactured home. Fortunately, Bank of America had good knowledge of modular homes. We submitted the paperwork to show the house was built based on the uniform building code (UBC) and California Building Code (CBC). The appraiser treated our house no different than a stick built house. The underwriter later told our loan agent that in the future, there is no need to disclose the house was built in the factory. During our third refinancing, the appraiser found out that our house was a modular home through the city record. He called me and asked whether our house was craned or rolled onto the foundation. After I told him it was craned to the foundation, he told me he knew the house is a modular home that meets the state and local building codes. He would consider it as a regular house. He appraised our house at the fair market value, using other neighborhood houses as comps. He did not ask for additional documentation.

If you want to build a good house with little headache, modular home is a good route. We love our house.
9 votes
Hey, why did it take 4 months after the home was placed on the foundation?
Flag Wed Sep 9, 2015
Tino, I am going to repost your story on my Active Rain blog. This is a great story and should be shared to others who have been put on the fence or put off all together by ill informed or in experienced RE Professionals giving inadequate or poor advice. Thank you for your contribution.
Flag Tue May 20, 2014
i'm planning to build a house using this technology and this information you shared is very helpful.
Flag Tue May 13, 2014
Very interesting! Thank you for your contribution.
Flag Wed Sep 26, 2012
forest, Home Buyer, Cupertino, CA
Sun Oct 7, 2012
TInoresident is there a way to contact you
1 vote
hi, I am very interested in finding out who you used for the modular. I am looking for one to put up in South Bay (hollister) ???
Flag Sun Feb 28, 2016
Cindy, call my realtor, Terry Frey at 408-221-9036. He was very involved in my project as well. Terry can take your contact information for me to reach out to you.
Flag Thu Jan 9, 2014
Hi Tinoresident,
we are considering building a modular house in west San Jose (95129) area. We really hope to contact you. Do you know how?
Flag Sun Nov 10, 2013
Hi forest, I am not a real estate professional. My profile does not allow you to contact me directly through trulia. Please give me your contact information, I will get in touch with you.
Flag Mon Oct 8, 2012
Let me contact Trulia about contacting me.
Flag Sun Oct 7, 2012
Richard Ho, Agent, San Jose, CA
Sun Sep 23, 2012
Luke- not from a permit standpoint but rather risky if you build to sell (even later) in a relatively expensive neigborhood like Cupertino. The buyers usually have higher expectation beyond what a modular home can offer. It is just being seen as "transient","poor construction quality" etc :( even though I personally do not have the same bias. The buyers would not see the same home value in a modular home compared to a regular well built construction.
For your better Wealth and Health. TM

Richard K. Ho, M.D., MBA, Realtor. ePro
License#01407461
Investor Coach and Strategist
Cornerstone Realtors,

6455 Almaden Expwy., Suite 98

San Jose Ca 95120

408-828-0189

Fax 408-649-5212

Please visit: http://www.trulia.com/profile/RichardHo/
http://www.DrHoRealty.com">
1 vote
Oh an to follow up...I did a modular home, title 24 home in Cupertino in 2014.

You may contact me at 831.345.6696
Flag Wed Jan 27, 2016
Richard, it says your an investor coach. Hopefully this is not an area you claim to be an expert in. The buyers should have a higher expectation and a modular home will deliver just that. Better insulative properties, kiln dried wood, engineered floor joists, 1.25 floor decking. The problem is that people aren't informed. Having built both stick and factory homes I can tell you the quality difference is enormous. oh and cheaper, and faster, and less wasted materials, happy neighbors (no noise). Its the only way to build in my mind.
Flag Wed Jan 27, 2016
The Medford…, Agent, Fremont, CA
Sat Sep 22, 2012
John is correct in his definition of modular vs manufactured. Problem is, much of what we see here in the Bay Area (not in mobile home parks but in normal neighborhoods) are "manufactured” homes and the only difference between them and their double-wide comparables in trailer parks is … their location. We’ve had almost no luck at all getting loans on these, regardless of the neighborhood.

On the other hand, if you are talking about modular homes that are pre-engineered to the site, sit on a totally normal foundation and are essentially indiscernible from normal stick-framed homes in the area (these can conform to almost any configuration and be multi-storied) – then those homes are essentially the same as other “normally” built homes in the area. Ironically, they are, in many ways, better – because they are built in very controlled environments, are fully engineered and superior in many ways – especially in earthquake country.
1 vote
Jlzfrom818, Home Buyer, Northridge, CA
Wed Jan 11, 2017
I live in Southern California and am considering buying a new modular home and have a few questions:

1.Can the space rental be written off on my taxes?
2. Can the interest loan be written off on my taxes?
3. Why is the interest so high?
4. Once I retire, any chance of getting some sort of senior discount on the land rental?
5. Do I have to pay property taxes if I rent the land?

I have tons more questions, but let's start with these.

Thank you.
0 votes
Jlzfrom818, Home Buyer, Northridge, CA
Wed Jan 11, 2017
I live in Southern California and am considering buying a new modular home and have a few questions:

1.Can the space rental be written off on my taxes?
2. Can the interest loan be written off on my taxes?
3. Why is the interest so high?
4. Once I retire, any chance of getting some sort of senior discount on the land rental?
5. Do I have to pay property taxes if I rent the land?

I have tons more questions, but let's start with these.

Thank you.
0 votes
kay, Home Buyer, Cupertino, CA
Wed Jul 27, 2016
I'm in need of the information. Live in Cupertino. Tinoresident or any one with his contact, can you let me know? please email me at kaymarket at gmail.com.

thanks a lot!
0 votes
Tinoresident, Other Pro, Cupertino, CA
Sun May 18, 2014
I just found out that people can contact me by e-mail through Trulia's mobile app.
0 votes
Hello I would certainly like you to contact me regarding modular home building. My husband and I are selling our home and moving to Vacaville, CA.
My email address is, cpjalapena@yahoo.com and if you give me your phone number and a time to call we would be so thankful.
Best Regards,
Kelly
Flag Sat May 16, 2015
John Arendsen, Agent, Leucadia, CA
Fri May 9, 2014
Tinoresident, I would like to repost your comments on my Active Rain Real Estate Blog. I've formed a group, called MANUFACTURED HOME SALES AND LENDING INDUSTRY, http://activerain.trulia.com/groups/manufacturedhomes, and would like to link it to that as well.

We have a Nationwide website presence in the Factory Built Housing Industry and would love to share your experience with our sphere of influence. Thank you once again for such an astute overview of your experience. More folks need to know this.
0 votes
Delores Fisc…, Home Seller, Bakersfield, CA
Tue May 6, 2014
No there is a big misconception about modular and manufactured homes. Modular homes are built to the same code as a site built home so it will sell like a site built home. Manufactured homes are built under the HUD Code. If these homes didn't re-sell like a regular home do you think the banks would even think of giving you a loan. I don't think so! There are a lot of people that put out bad information just because they are either a builder of site built homes or they have no clue. There are also some brokers that don't have a clue either and will tell you, you can't get a loan. they are full of B.S. Modular and Manufactured homes can be built identical to a site built home and actually they in most cases are built better because they are built in an enclosed environment where the weather will not harm the wood and also the builders are being watched while they are building your home. You also save a lot of money and get a lot of upgrades that are standard in these homes. You also can get, the same loans with a low interest rate. it depends on your credit scores. . Just like anything else if you take care of the home you will get a good price when you sell it just like a site built home. If all the homes in your area are selling for a certain amount, your home will also appraise like the comparable homes in your area if it is kept well. If you need more information you can call me at 661-323-3661 or go on my site at deloresa809.wix.com/rimerhomes
0 votes
John Arendsen, Agent, Leucadia, CA
Mon Jun 10, 2013
Tino, you, as a MOD homeowner, have probably made a better overall presentation and overview of the entire process than most MH and RE Profissionals I've ever known or worked with. You are entirely right about the entire process.

The only misconception I would clear up was not something you said but something your underwriter said. HUD Manufactured Homes like MOD homes can also be crane lifted. I know this first hand as a Silvercrest Dealer and Certified General & MH Contractor/installer.

We've crane lifted seveal HUD homes over the years for a variety of reasons i.e. accessibility, ease of installation, snow or water, etc. So an underwriter needs to do their homework and be absolutely certain.

BofA was correct telling you that once your home has been finaled you no longer have to disclose the nature of construction if it's a MOD. I can't tell you how many folks have purchased MODs over the years and didn't even know it.

Congrats on your very wise purchase and enjoy it.

http://www.onthelevelcontractors.com
http://www.mh-processing.com
0 votes
Victor M. Sl…, Home Buyer, Tracy, CA
Mon Jun 10, 2013
Hello Tinoresident, what manufacturer did you choose?
0 votes
John Arendsen, Agent, Leucadia, CA
Tue Sep 25, 2012
Thumbs Up to Tinoresident. That's about as good a summary as I've ever heard from a non industry related lay person. Thank you for a very accurate and astute overview of your experience. Now if we could only figure out how to educate RE Professionals as well as you.

In fact I'm hereby offering anyone who reads this thread a FREE FACTORY TOUR. If after seeing for yourself how the entire process is done you still believe that there are any differences between a SITE BUILT vs FACTORY BUILT HOME I will buy you dinner at your favorite restaurant and include a bottle of '02 Silver Oak. {:
0 votes
John Arendsen, Agent, Leucadia, CA
Sun Sep 23, 2012
Grace's comment is very articulate and for the most part spot on. One should consult with experts and local building jurisdictions before making a decision on any type of housing construction choices. In fact you have to or you won't be able to pull a permit.

However, when it comes to a Modular Home the best experts to speak with are licensed Modular/Manufactured Home dealers and general and/or manufactured home contractors that have experience in MH development.

An architect can be a good idea as well, however, many if not most Modular/Manufactured Home MANUFACTURING FACTORIES have pretty good on staff architects and designers that can be very helpful in leading you through the entire process.

Once again I encourage anyone considering a "MODULAR HOME" to log onto the following link: http://www.championhomes.com/home-plans-and-photos/modular-homes.

As a MH design and build dealer & developer, general and manufactured home contractor & Real Estate Broker who has been in this industry for 3 decades there is absolutely nothing that you can do with site build development that you can't do with "FACTORY BUILT HOUSING".

Do you want curvilinear architectural details? Offsets? Insets? Custom windows, doors, floor & wall coverings, custom countertops, appliances, etc? As Grace said you can do it all with Factory Built Housing.

That stated, I'd be remiss to pitch a client on the notion that "Factory Built Housing" at the end of the day would bill out for that much less than custom site built housing. Truth be known if you go real custom on Modular Home design & build the price difference is negligible and we've done both for many years.

However, where you do realize a savings is in turn around time, job site congestion, and loss of materials due to weather, pilferage and vandalism, etc. Additionally, the modules are built on well designed and constructed jigs for consistency and quality in a controlled environment using kiln dried and straight building materials.

As a side note another value added to "Factory Built" components is in ROI if you're an owner/investor developing a commercial project i.e. apartments, hotels, motels, strip centers, mid-rises, etc where every month of construction is not only added cost on borrowed money but is a loss of monthly revenue as well.
0 votes
John DL Andrenson. I don't really see how you are an expert in the field. There are billions of manufactured homes that are on land that the appraisers use and when you say they are only in run down parks that is a lie. So I say to you before you blurt out statements that are incorrect you need to get your facts straight I sell manufactured homes on land so I know for a fact what you are saying is not true.
Flag Wed May 7, 2014
John Arendsen, Agent, Leucadia, CA
Sun Sep 23, 2012
I have to reflect on some of the statements and observations on this thread with a bit of a grin while I'm gritting my teeth. LOL! Obviously some commenters haven't taken the time to read my comments on the difference between a "Modular" vs "Manufactured" (HUD) Home. Had they they wouldn't continue demeaning a "MODULAR HOME" as inferior to a site (stick) build homes.

Show me a bank that lends on traditional site built homes and won't finance a Modular Home in exactly the same manner with exactly the same interest rates, terms and conditions. Now if you're referring to a Manufactured (HUD) Home that's a different scenario.

Unfortunately Manufactured (HUD) homes get a bad rap. (Just for the record a Manufactured Home (HUD) is built exactly the same way and on the same assembly lines as that of a "Modular Home". However, they have to comp.

In order to find valid comps an appraiser cannot use "site built homes" or even "Modular Homes" that may perhaps be right next door on both sides and/or all around a "MANUFACTURED HOME" (HUD) in the same neighborhood. The appraiser must find other "MANUFACTURED HOMES" (HUD) to use for these comps and generally the only way to find them is in Manufactured Home Park/Communities.

Many of these MH park/communities are not only aging and dated they may be located in more geographically and socio-economically undesirable areas miles away from the neighborhood that the "Manufactured Home" is located in.

Many, if not most, of these park/communities have older manufactured homes and/or perhaps even PRE HUD "MOBILE HOMES" (built before June 15, 1976) that bring the overall comps down thereby making it worth far less than it really should be. But that's the real world in today's climate.

As RE Professionals we owe it to future homeowners (our clients) seeking valid and accurate advice on forums like Trulia and to each other to call a spade a spade. Before you blurt out statements that may impact and/or influence the buying decisions of unwary consumers who are in the hunt for quality built housing get your facts straight. Take a few moments to speak with the experts in a particular field.
Web Reference:  http://www.mh-processing.com
0 votes
Grace Hanamo…, Agent, Cupertino, CA
Sun Sep 23, 2012
Good question, Luke,

Personally, your best answers are going to come from contractors,appraisers, architects, the city planning department, the neighbors and your financial planner. In other words, you need a wider breadth and scope of opinions before embarking on an attempt to build a "different" type of home than would be expected in a consumer conscious city like Cupertino.

That's not to say that a modular home--not a manufactured unit--would not be well built or look in every way like a home built from the ground up, but there are expectations of "bells and whistles" and custom features from a newer home that cannot be supplied by a modular unit. Even if the modular home supplier can give you the two story cathedral ceilings, luxury interiors with marble and granite and custom cabinets, double wide entry, sweeping stairwells, wide open living spaces, three car garage, it's likely that you'll spend almost as much in a modular home that meets these standards as you would on a site-built home--the most notable saving would be time in construction.

Truth be told, Luke, the majority of the costs in construction are not in erecting the building, or making a foundation or even the design of the home. The majority of the costs in building any home is in the details...the cabinets,the colors, the fixtures, the surface coverings, the materials, and the windows. It's the little things that command the lion's share of the costs and those costs don't and won't necessarily change with the modular home.

So if you are thinking of building any home in Cupertino whether it be modular or site build, then work with a team of professionals to determine costs and value. Good luck!

Sincerely,
Grace Morioka
0 votes
lahouse4sale, Agent, Los Angeles, CA
Sun Sep 23, 2012
Even though this type of houses are very popular in the East, here in California - the big banks will not lend money to a buyer or refinancer (from my experience) but for some reason, they will finance an investor to get the modular home set up. My friend tried to get refinance from the same bank that lend them the money in the first place and they say no. The house is still in the market after 3 years, while neighbor houses sell within 6 months. They are still waiting for the modular home to sell so they can retire. It may be cheaper to build a modular home but its going to cost you in the long run. Good luck with your venture - Izzy (213) 221-1321
0 votes
John Arendsen, Agent, Leucadia, CA
Sat Sep 22, 2012
Juliana, FYI, one of the biggist advantages of a Modular Home is turn around time. Mid rise Hotel and Motel developer/Investors keen on realizing a quicker ROI are turning to Modular construction beause of the fast turn around time.

We have been doing this type of deveopment for almost 3 decades and clearly we can design, develop and build a Modular structure in about 1/3 to 12 of the time it takes to construch a site built structure. We're general and manufactured home builders and can and have done both for decades.

City and County building jurisictions are mandated by State and Federal law to accept them if there are not pre-existing CC&R's that preclude them in a specific development. Additionally, most building departments love the idea that the sites won't impacted with myriad tradesment.

Additionally, today's Modular homes are almost all LEEDS/green and environmentally friendly designed and built and there's very little if any scraps or waste. Anything that is left over can be recycled instead of going to the dump.

Lastly the materials used in Factory Built Housing are all cured, kiln dried and straigt pieces thereby reduicing the amount of warpage associated with damp or green wood. All components are built on jigs thereby minimzing the degree of error. Finally every home that leaves the factory is thoroughly inspected by a qualified independent inspection entity.
0 votes
Juliana Lee…, Agent, Palo Alto, CA
Sat Sep 22, 2012
I can not answer specifically about modular homes because I have not seen enough sales. In general homes built using alternative materials or methods take more time to build. The city inspectors are likely to have difficulty evaluating the construction, slowing the approval process. There have been several steel framed homes built locally, of high quality, which experienced long approvals and long construction times.

A home which has been built to code and has passed inspections is judged by the quality of materials and craftsmanship. If the modular home truly has no weaknesses, I don't believe homebuyers would judge it inferior. Keep in mind there have been many local tract builders each having different strengths and weaknesses. These strengths and weaknesses are what affect the home's value rather than the name of the builder.

I did consider modular homes and alternative materials for my own home. The likelihood of a longer building cycle lead me to stick to conventional construction. I have a diary of the construction of my new home at:
http://www.julianalee.com/diary.htm

Good luck,
Juliana Lee
650-857-1000
No. 3 agent nationwide at Keller Williams
Web Reference:  http://www.julianalee.com/
0 votes
John Arendsen, Agent, Leucadia, CA
Sat Sep 22, 2012
First we must discern between a "MANUFACTURED" Home" (HUD) or a "MODUAR" Home UBC & IBCO. If it's a "HUD" manufactured home your appraisals would be predicated on comps of similar MH's within a reasonable proximity to your home. This can often time be very difficult as the only comps may be in a resident owned MH park/community. These communities tend to have much lower comp values which could impact your appraisal and or resale potential.

By contrast a "MODULAR" Home which goes down the same assembly lines and is built the exact same way a "MANUFACTURED" Home and/or any site built home is for that matter, is trailerd to the jobsite and crane hoisted onto a poured in place stemwall foundation.

A modular home meets the exact same standards as any conventional "stick" site built home and are appraised by using comps from any/all homes in reasonable proximity to the MODULAR home and not HUD manufactured homes.

Unlike others have stated on this thread there is absolutely no downside risk involved with a MODULAR home. In fact we've designed and built award winning LEEDS and green MODULAR projects with curvilinear architectural detailing, stucco siding and tile roofs and you couln't tell the difference between them and any upscale custom built home.

Might I suggest that you as well as the others who have commented on this thread take a few moments to check out this link for a more in depth and accurate overview of the Factory Built Housing Industry.
http://www.championhomes.com/home-plans-and-photos/modular-homes

Feel free to log onto any of our very user friendly and informative websites for additional information.

http://www.onthelevelcontractors.com
http://www.mh-processing.com
http://www.chadofalltrades.com
http://www.intimatelivinginteriors.com
http://www.sandiegorealestatetoday.com

We're a family owned and operated General and Manufactured Home Contractor, Manufactured Home Dealer, Real Estate Brokerage, engineering, architectural, landscaping and Interior Design companies with over 100 years of combined experience. Please feel free to contact me anytime. My email address is onthelevel@cox.net and my cell is 760 815-6977. Good luck and I'm very happy you reached out to the Trulia community for valid and factual information and knowledge.
0 votes
The Medford…, Agent, Fremont, CA
Sat Sep 22, 2012
Many lenders will still not lend to manufactured homes. Doesn't make sense, but it's very real. This could affect resale because you will have a smaller group of potential buyers.
0 votes
Igor Reznikov, Agent, Campbell, CA
Sat Sep 22, 2012
Risky? Depends on what you mean by risky.

You won't be able to sell it for nearly the same price, so as long as you're aware of that, there's no risk :-)
0 votes
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