Personalized Loans Help Increase Affordable Manufactured Home Developments Across the US
NC’s ability to tailor creative construction loans helps developers meet the specific needs of factory-built homes
More than 10 million American households spend more than 50% of their income on rent. As home prices continue to rise, demand for manufactured and factory-built home development has increased, due to greater community acceptance, a burgeoning financing market, and increased quality.
This means increased demand for capital investment, largely for construction costs. NeighborWorks Capital’s strength in creating loans uniquely tailored to the project means we have offered such loans to organizations in many states. Oftentimes they are in rural locations, but not always, as we saw with one New Jersey development. We consider the whole project, and understanding the takeout is an advantage we offer.
Each of the following developments had unique needs and specifications. NeighborWorks Capital was able to work closely with each organization to tailor a creative loan product that would help them build more affordable homes in areas that need it most. You can also learn more about this important issue in our Q&A with Stacey Epperson, President and Founder of the Next Step Network.
Select Manufactured/Factory-Built Home Loan Products:
One Roof, Minnesota: NC closed a $2 million line of credit with One Roof Community housing in November 2017. The line of credit provides financing for the construction of 17 factory-built homes in Duluth and Grand Marais, Minnesota, that will become part of their community land trust program. All 17 of these homes will be affordable to the local workforce; half of them will be affordable to households earning $54,000 (80% AMI) and the remainder will be for families earning $78,000 (115 % AMI.) One Roof has drawn funds for six of the homes. Four homes are in Grand Marais, and two are at the Hawk Ridge property in Duluth. Repayment will come from home sales.
NeighborWorks Umpqua, Oregon: NC provided a $1 million bridge loan to help NeighborWorks Umpqua cover construction costs for infrastructure upgrades for Newton Creek, a 50-space manufactured home park for low- and middle-income families in southern Oregon. NeighborWorks Umpqua’s work helps preserve much-needed affordable homes in a region where manufactured homes are integral. Once a heavy logging region, the local economy is transition to a service sector. Just three months before the state’s completion deadline, funding fell through, leaving NeighborWorks Umpqua in a bind. Based on their previous positive experience working with NC staff and seeing firsthand with NC’s flexibility and tailored solutions, they turned to us. With the additional time, NeighborWorks Umpqua then secured a $1 million permanent loan commitment from the Network for Oregon Affordable Housing (NOAH) to complete the project.
Affordable Housing Alliance, New Jersey: NC granted a $1.5 million line of credit to Affordable Housing Alliance (AHA) in 2014 for the Bayshore Bungalows Program, an initiative to provide high-quality, energy efficient factory-built modular homes for sale to households impacted by Superstorm Sandy. The project is in partnership with Next Step Network, a national nonprofit promoting the development of factory-built homes, and has received strong support from NeighborWorks America. Most of the homes will be located in Union Beach, NJ, and others will be in other communities along the south edge of Raritan Bay. The Bayshore Bungalow Program includes five separate home designs ranging from 700 to 1,600 square feet that can be placed on 25- or 50-foot-wide lots. The homes are designed to withstand future storms and meet FEMA standards. The line of credit was intended to allow for a constant pipeline of up to 12-15 factory modular units, with buyers to purchase the completed units at a final sale price of $130,000 to $210,000 using insurance proceeds and state subsidy.
Better Homes, New England: NC made a $700,000 interim development loan to AHEAD to provide high-quality, energy efficient factory-built homes for sale to low- and moderate-income households. Next Step US partnered with AHEAD, making them an approved dealer to provide these homes in Maine, New Hampshire, and Vermont. The initial three-year line of credit was for one model home and up to 25 homes with buyers under contract. The loan has been used on 13 homes. Funds were drawn for hard costs of purchase, installation, and site work for the homes. Draws are secured by assignments of the factory orders and site work contracts.