Friday, January 25, 2013

Senior Housing is a Loser for Small Modular Home Builders

Baby Boomers are looking to join with other Boomers as they age. Car ads are showing how the Gen Y crowd is staying home and living their lives through social media while their parents are out on the town with friends. Sad but very true.

Boomers usually turn to smaller homes when they become empty nesters. So where do they turn? They get on the Internet and Google retirement communities in the areas of the country where they want to live. The keyword here is community.

How many small modular home builders, the life blood of most modular home factories, actually have retirement communities? You could probably count them on one hand. Putting in a community is financially prohibitive for small builders even if they joined forces. It takes millions of dollars just for the infrastructure, landscaping and promotions before the first house can be sold. A small modular builder usually doesn’t have that just lying around.

I’ve talked with some speakers and builders that went to IBS and the turnout for the seminars was very good. But did you know that even though small builders attended them, the vast majority of will never take the advice to the next level?  Most of the marketing info that was disseminated was only going to be implemented by the big developers because the small builder is just that, small. Without marketing or business plans, a bucket of money for marketing and promotion or even enough to upgrade their current website, how will they ever become a player in the retirement community game?

So how can the modular home factory break into the retirement community business? They might connect with a developer, design a series of homes exclusively for them and probably hold their on paper until the houses are set and finished which could be up to 60 days.

The only way a modular builder could profit from this is to do the set and/or finish work to complete it for the developer. But they better be prepared to lowball their pricing as there are companies out there that do this every day at low, low cost. I have seen this first hand on the East Coast.

What’s left for the small modular home builder that wants to get into the retirement home business are open lot retirement developments, where modular housing might not be welcomed or possibly reserved for mobile homes only, or on single family lots, the traditional type of homes they usually build.

Retirement housing….could be a big waste of time for most small builders.  

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