Posted on 11/22/2011 8:41:51 AM PST by Kaslin
Dear Dave,
I’ve heard you tell people not to buy mobile homes. We bought one when we moved out of our apartment, and it’s been much cheaper for us. Why do you feel this way?
Debbie
Dear Debbie,
It’s simple. Mobile homes go down in value. When you buy a house, it goes up in value in the long run. From a financial standpoint, mathematically, when you buy a mobile home, you’re buying a very large car in which to live.
Now, I’m not necessarily against manufactured homes. But the phrase “manufactured home” can mean different things to different people. My test goes something like this: If it’s a type of housing that doesn’t look like it had the wheels yanked off, then it will probably go up in value over the years.
There’s nothing wrong with renting an apartment for a while. When you pay out rent, that’s all you’re losing in the deal. But when you buy a mobile home, you’re losing out with the payments and you’re losing money every day as the thing goes down in value.
That’s why I tell people not to buy mobile homes!
—Dave
Dear Dave,
My stepdaughter is 17 and will be starting college this fall. Her dad and I want to help her with expenses, but she’s chosen a private university (with the help of her other parents) that costs $250,000 for an undergraduate degree. We don’t want her going into student loan debt, but we can’t afford that kind of money, and she’s really pressing the issue. What do you suggest?
Christina
Dear Christina,
The biggest problem I see is that you’ve got a 17-year-old girl wagging the dog. I can tell you right now this wouldn’t happen at my house. When it comes to the parent-child relationship at that age, the adults tell the children what to do. It doesn’t happen the other way around.
If this child is going to take your money, then she needs to take your advice too. If she’s not willing to be reasonable and take your advice, then she gets none of the money. There’s no undergraduate degree on the planet worth $250,000. The whole idea is absurd, and somebody needs to say that out loud.
This girl can work, and she can go to a state school and get a great education for about a fourth of that price. Since you’re in Texas, there’s absolutely nothing wrong with the University of Texas or Texas A&M. They’re great schools. And at that price range, I’m sure it would allow you guys to pitch in and help out some.
But seriously, a quarter of a million dollars for an undergrad degree? I don’t think so!
—Dave
We had considered having it shipped to TN when my husband was on orders for Germany in 1977, but I told him that I don't want to step in another mobile home again and so we just sold it
58K X 4 years is $232K. 58K X 5 years is $290K.
And that is the most expensive school in the country. What are the chances this girl got into Sarah Lawrence? There are so many better places academically to attend. Even the Ivies aren't nearly that pricey - around $50K all told for Princeton and Harvard - and you get the Ivy degree which is still worth a great deal (if you can put up with all the nonsense to get it).
More likely to be a middle tier private school which would run between $35 and $40K per annum. Still not pocket change, but considerably less.
I detect exaggeration, either by Ramsey or his correspondent.
Up until 2008 FHA did insure financing of manufactureds on acreage, so long as the foundation construct complied with specific requirements. The supports had to be mortared, not dry-stacked, and the tie-down material requirements were more stringent. Has that changed since?
You can sometimes get excellent deals on mobile homes on lots. You often pay only the cost of the lot, which you recoup when you sell, often at a profit.
If you give me the choice of a mobile home with 10 acres in the country or living on top of one another like stacked wood, I’ll take the trailer every time.
WTH??? Tell her the "private" option is off, if it's on you to pay for it!!! Are her "other" parents ponying up???
I couldn't wait to shake the dust of New Jersey from my sandals. And yes, my poor parents paid for my education, as we paid for our daughter's. And it was money well spent.
There’s nothing wrong with renting an apartment for a while. When you pay out rent, that’s all you’re losing in the deal. But when you buy a mobile home, you’re losing out with the payments and you’re losing money every day as the thing goes down in value.That’s why I tell people not to buy mobile homes!
Once again Dave misses the mark with his "one size fits all" advice.
If the PITI and association fees on a mobile home adds up to less then, the same, or just a smidgen more than rent of a comparable property then the mobile home makes more sense.
Dave treats his audience like children. As a functional adult I can run the numbers and weigh my options accordingly.
Ditto. Can always re-build at a later time, if desired. My first home purchase was a mobile home in 1981, and when I sold it in '84, I got $1,000 equity proceeds at closing. Not bad for an Air Force E-4 with a family.
I'll take a mobile home that I own with a little space over a rented apartment any time.
What a load of horse hockey. I would invite him to show me ANY house that has gone up in a 20-year period, AFTER inflation is adjusted out. TRUE inflation (vis-a-vis the price of silver), NOT the Consumer Price Index.
Why does anyone listen to Dave Ramsey, other than the advice to get out of debt?
I totally agree. And while Dave is correct in saying a mobile home will decrease in value somewhat... what “increase” in owned value is seen in renting? I resent paying someone else’s mortgage.
The primary question with a mobilehome is who owns the land under it? If you’re in a rental park, the rent on that land is going to continue to increase over time. Although various rent control schemes may impact short term increases, in general the park will be able to increase the rent when you re-sell. The net effect of the increase will reduce the resale price and you end up in a situation where the comparison with the consistent loss in value when owning a car is pretty accurate.
If, on the other hand, you own the land under the coach, the appreciation will usually track the increase in land prices in your area, reducing and sometimes cancelling the depreciation on the coach.
The big landlord/tenant battle in rent controlled parks these days is over the desire of tenants to sell-off the right to remain under rent control to the next purchaser of the coach. In some cases, that right can represent more than half the sales price. Park owners, on the other hand, think they should be able to raise the rent to market value when a tenant moves out. They seem to have the “quaint” notion that it’s their land, so they have a right to profit from its increase in value.
Individuals who buy into rent controlled parks under a promise that they’ll always be able to pay discounted rent for their plot are taking a huge risk. Rent laws are usually subject to change every time the City Council majority changes. If they adopt “vacancy decontrol”, you’ve just spent a large chunk of money for an empty promise. Park residents in Oceanside, California are currently having that experience.
The politics surrounding mobilehome rent control laws can get pretty noxious. Marxist activists love to get involved in the battles. It’s educational to watch a bunch of supposedly conservative senior citizens making arguments right out of Das Kapital.
Motor homes, to me, are perfect. Bad neighbors? Pull in your cord and hoses and move! Most have their own generators. They are the perfect earthquake kit.
<$250,000 for an undergraduate degree
No way in Hades is an undergraduate degree worth that kind of money. How many want to bet that the step daughter wants to be an English or Women’s Studies major - something she could do at State U for a lot less money. Even if she were in the hard sciences where there might be some real value to the degree, I’d have to tell her no deal. They’ve got labs at State U, too.
I’m a professor, I’m an education snob, and I believe in the value of ‘signaling’ in terms of choosing the right college, but costs don’t necessarily indicate value or expertise. There are many excellent state schools with excellent programs. Step dad and daughter need to sit down and figure out what her interests are (which will probably change the minute she lands on campus) and make a choice based on the program, not the school’s advertising pitch.
Re: the college issue: Sounds like the kid is playing off one set of parents against the other. Great life lesson she’s learning there: how to get money by selling off her affections. </sarc>
Many universities have five year programs for engineers and the hard sciences.
http://www.brown.edu/Administration/Registrar/guidelines/integrated_progs/index.html
If students are disciplined and very hardworking, they can sometimes complete a degree sooner, of course. AP credits are a help.
He is thinking about the Golden Age of the USA. In that time the country is so attractive to foreigners that millions of them want to immigrate, thus increasing the population size and leading to scarcity of housing in cities and places where usable land is limited by geography.
It does look, though, that the USA has already jumped that particular shark. Few people will be attracted by confiscatory taxes, mandatory health insurance with no guarantee of treatment, social strife, high crime levels, wasteful government, cavity-searching TSA, and a civil war looming on the horizon. In such conditions the influx of immigrants who can buy a house will drop. (Illegals from Mexico, by and large, don't buy houses even if they have the money; they live ten per room, and they save the money for sending abroad.) Emigration is also likely, especially migration within the country (from CA to anywhere, for example) - this also frees up the living space. Even those homeowners who don't migrate may lose their jobs, be unable to pay absurd property taxes and be forced to sell the house. Home ownership is directly linked to the wealth of the society, and that is falling for quite some time already.
Exactly correct. When I got my Electrical Engineering degree, that's the plan I was on. I worked my butt off in the summers, on a co-op program with an engineering firm.
My daughter's college, Davidson, has a similar dual-degree program, but it's not a standard undergraduate course as it requires extra study and you wind up with two degrees.
One was enough for her (and us) - B.S. in Biology.
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