After a long winter we are now getting some nice days, and pretty soon, the grass will be growing so fast that you can watch it grow! Before this hits, it is the perfect time for a good community – wide clean-up. And it is also a great time to do a walk-around of your home to see what (if anything) is needed.

On Saturday April 2, I will pick-up items to haul to landfill. We will begin at 9 AM. If you get your stuff out to the side of the road in front of your house we will pick it up. If you need help getting it that far call me 573-265-2600.

If your skirting panels are in need of repair or replacement, Call Jimmy Bell at 573-578-5781

If mildew has attached itself to your home, and you need to pressure wash the exterior of your home- let me know that as well, Call Jimmy Bell at 573-578-5781

We have ordered some new house number vinyl lettering to replace those house numbers that have faded and curled, and we also have bought lettering for the side of your mailboxes. According to the supplier, we should receive them in a couple of weeks.

Recently, I was questioned by a new resident about pizza delivery options here at Lakeside. I need your opinions. Who would you recommend? Please contact me.

Several years ago while in Iowa City I spotted some new buildings being constructed that caught my eye, so I went to investigate a little further. At the time, I was looking for a project to do in Rolla MO and these buildings seemed to offer something that was not available back home. Now I will describe them to next but keep in mind that the aha moment really doesn’t have to do with building description (please bear with me). They were 16’ tall 40’ deep and 120’ feet long wood framed, painted metal sided each of these buildings were divided into 4 sections. Each section had one 14’ tall 10’ wide roll up door, and one entry door, 2 windows and a covered porch area.

These units were marketed to small businesses that had outgrown the work from home phase, but were not yet big businesses. They were offer for lease at a price of $595 per month or they could be purchased for $59,000.

At first I had the thought “who in the world would pay $59000 for part ownership of a barn.” As I drove away the thought of offering those buildings in Rolla was at the forefront of my mind. Yes, I thought nothing else comparable is available in Rolla, $595 per month is much less than the larger commercial buildings that I have seen offered, and really not much more than some real dumpy places that weren’t as big as these but my thoughts were stuck on leasing.

Then the Aha moment came, when I considered the prospect of leasing one of these units from the perspective of the user of the building it looked very different. They had a need for a stable place to do business. No desire exists to pack up and move a businesses equipment and inventory unless it is absolutely necessary, and more importantly you don’t want your customers to not know where you are. So the length of the lease needs to be several years, also a lock of monthly expense is desirable. With this in mind the $59000 isn’t much at all. $595 per month stays the same, the differences are that the $595 won’t increase during the term of a loan, but it most likely would during the renewal of a lease. With 90% financing  and $595 per month the building unit is free and clear in 10 years, and really since moving out of the building is not desirable until it has been out grown, we are probably looking at a 6 year need at minimum. At the 6 year mark only $26,000 is owed, which in the worst case scenario – the unit sold for $26k and the former owner walks away.

I think many would be better off were they to buy a home rather than lease; that is if the deal fits together like these commercial buildings did. Notice that no one ever suggested to stretch the budget to the breaking point to be able to afford all the bells and whistles, and the day of having the debt paid in full was 10 years out, not 30 years as most houses are typically financed.

This all brings to mind these great mobile homes that I sell here at Lakeside Community. Typically, people finance these homes for 5 years or less, with payments no higher than rents would have cost them anyway.

And still some will ask as I did about those commercial buildings “Who would buy that?”

The LORD has blessed me with many nice things; I have a nice house, a nice pickup truck, a nice car, nice furniture, nice clothes and many other nice things. But when I consider the value component, one purchase made 14 years ago stands out. It was… a new mobile home. I was in the business of selling mobile homes, and business was good at the time. So good that I set off to open another sales lot in Northeast Missouri right across the Mississippi River from Quincy IL, at first I rented an apartment and for the first time in my life experienced living with neighbors above, below, an on the side of me, the floors were squeaky and this exacerbated the noise problem.

I had lived in my own house in Rolla Mo before moving to Quincy, it was a 900 sq ft house built just after WWII 2 BR-and 1 Bath with a full basement. I had my old house fixed up pretty nice by this time, but the business was just busting at the seams and was very fulfilling and since I devoted 7 days a week 10-12 hours a day to it; the apartment’s shortcomings were easily overlooked.

I considered buying a site built house in Quincy, but between the purchase price, and the very high property taxes of that area, I could not get peace of mind about any home I looked at. Now, do understand that I could afford an expensive house at that time, I just felt like everything was WAY overpriced.

One day when I learned of a lot coming available in a nicely maintained Mobile Home park in Quincy, I ordered myself a new 16×80 mobile home. It was a Patriot 2 bedroom 2 bath, the living room measured 22’ long X 15’-3” wide, It had a very nice set of cabinets in the kitchen, with a full set of appliances, The master bedroom was of generous size and had a very nice master bathroom, the from bedroom and bath were of good quality and size as well.

I remember well that first morning going into my new kitchen to brew some coffee thinking to myself “this thing is great!” Here I was in the business of selling these homes and I was duly impressed by the value. Yes, I paid dealer cost, so yeah that did keep the cost down some. As I recall, I paid about $27,000 for this mobile home and then paid out about another $3500 to have it set up and an air conditioner installed. This was about $4000 under retail price of this unit. All of the nice new modern features that this house had that my old house back in Rolla did not, of course its size and the quiet it provided stood head and shoulders above the apartment that I had been renting. And all of this comfort and space for just a bit more money than the Chevy Silverado that I was driving at the time. I really liked my Chevy, but the mobile home sure felt like a much better value.

While it is true that most things we purchase cost a lot of money, how many can you say deliver a great value for your hard-earned dollar?

In most cases prudent lenders will not exceed 35% of household income to housing cost; Using this as a guide a family with $40,000 annual income (take home) would qualify for a mortgage with payments of $1,167 per month. Property taxes and Insurance are escrowed – meaning that an estimate of their annual costs are divided by 12 and that amount is applied to an escrow account each month before the remainder is applied toward the mortgage balance. I’ll estimate $3300 per year for escrow or $275 per month, leaving $891.70 per month to be applied towards principle and interest. With 20% down payment, and an excellent credit score, you would qualify for a mortgage rate of 5% (this is a historic low) and the amount of your mortgage would be $166,100.

So we now see that with $33,220 down payment plus the mortgage you have$199,320 to work with in your housing selection.

Lenders have found that by keeping this ratio under 35% that failure of debtor is unlikely.

But is this a good plan, going into debt for 30 years? I think not! Aside from the enormous drain on your wealth that 30 years of payments will produce, 30 years of life usually include about 4.25 major life events that will test your preparedness. An auto accident (or any of a multitude of other pitfalls) leads to a drop in income for the year in which you are recovering – can you better survive this challenge with or without house payments?

The fact that everyone else does things this way is not a good reason to subject your family to this much risk. Conventional wisdom = universal stupidity.

Try this instead; Live below your means. Consider a less expensive home. I know of no greater bargain in today’s marketplace than a good pre-owned mobile home sited in a great land-lease community.

If you must finance your home purchase, do so only once. After that initial purchase – keep making that payment to yourself and you will soon have the cash to buy outright that next home, then the next. And all the while, you exposure to risk will be greatly diminished.

Much improvement in quality of life is achieved by the very nature of the manufactured home. With no shared walls, and no one living above or below you makes for a much quieter home. This is a reality that many an apartment dweller can appreciate.

Off street parking which is provided on all lots at Lakeside Community is another area where many potential problems are diffused before they begin. In many types of housing parking on the street is the only option, in others a “common ground” parking arrangement is the norm. In either case, when company stops in or deliveries are made – the neighbor loses their parking space, often grumblings begin.

Now I will mention even more serious matters. At Lakeside Community the first step a resident must undergo is to submit to a criminal background check. Safety of you, your family members, and your property are at risk here. Most good quality townhouse and apartment operations will do this as well, but single family residences are oft times owned by a non-professional property manager, they have acquired this house through an inheritance, second marriage, job transfer or some other life event and are “Accidental Landlords” without the tools for screening residents, let alone the wisdom that comes from experience. The sex offenders, thieves, dopers, thugs and shysters quickly notice the incompetence and move in on these unsuspecting folks as none of the professionals will permit these deeply flawed individuals to move in. The neighbors bear the brunt of the unintended consequences of novices making mistakes in judgment.

Next up are community guidelines that every resident agrees to in writing before moving in. No car repairs, excessive noise, junk piled in the yards, pets roaming, unsupervised children out at all hours. These are all issues with which many residents of different types of housing units suffer silently as there is simply no mechanism outside of city and county ordinances to curb the nuisance to the neighbors. Whereas at Lakeside Community it is made abundantly clear to every applicant before move-in that these things will not be tolerated. Consequently, it occurs rarely. But when it does occur, the infraction is called to the attention of the lot leaseholder and should the nuisances persist, an eviction will commence. No such legal standing exists in other types of housing, dissatisfied residents can only “vote with their feet” and move.

You may say that all sounds good, but what if management won’t keep up their end of the deal, and gets lax in their standards? Well, that certainly would not be in the best interest of Lakeside Community’s residents; but neither would it be in the best interest of Lakeside Community’s owners. A bad neighborhood results in higher vacancy, slower home sales, lower home sale prices, increased maintenance, security, and theft loss. Higher legal fees are another consequence of allowing the neighborhood to go bad.

Community ownership is clearly on the side of good residents, and offers real world solutions to maintaining good-quality neighbors.

My goal in conservation of energy is to save dollars, you may think that goes without saying, but let me assure you that monetary savings is not the goal of all who offer energy saving devices. Many such devices are trying to reduce energy consumption in order to stop global warming or other such environmental concerns which are not part of my decision making.

So, what can save you money year round? The water heater, or rather switching the electric water heater off when not needed can save energy usage every day. We have probably all come home to a light that has been left on unintentionally and thought it a waste of money. But the water heater uses much more energy than dozens of light bulbs and we never consider shutting it off. Really the only way we can shut it of is to flip the breaker and since that is pretty inconvenient and since breakers wont hold well to daily switching something else is needed – a simple light switch.

By installing a light switch and turning off the water when not needed a consistent $100 per month saving was reported by my friend Greg Meade! That sounded too good to be true, so I asked more questions and here is what I found: First, Greg lives in Ocala FL where electricity costs $ .16 per KWH, when I checked with our local provider (Intercounty Electric) I found that I am charged just under $.10 per KWH. So Greg’s savings would amount to $62.50 per month or $750 per year in savings was he and his family to live here in mid Missouri. Here is what Greg wrote in his email:

A $2.00 switch saves over $100 per month in electric. We have electric heat and last Nov I installed a simple light switch in utility room to TURN OFF WATER HEATER WHEN NOT IN USE! Year over year we saved 1404 in electric and rates have increased twice in this time Wow. Our provider said up to 40% of bill is keeping water hot.

We have ours on a timer now (29 bucks) and we have hot water 5-8 AM. I can come in at 2 and still catch a hot shower…we run dishwasher at 7 or so.

So as you can see, this involves some thought about the hours that your family uses hot water, and keep in mind that it will probably take a hour to heat the water, so if yours is a jump out of bed and hit the shower kind of routine the timer would be needed. I’ll write about other energy savers in the future, but I doubt that any will produce this good of a return on investment.

Instead, these “experts” advise you should buy a site built house, chiefly because their value won’t decline, and will usually increase. While there is much to debate on those two points, I think the whole discussion misses the larger point, and that is the overwhelming, undeniable advantages to residing in a home that is “free and clear” of debt. Furthermore, the debate neglects the total cost of ownership, taking into consideration the associated costs of property taxes, homeowners insurance, upkeep, and mortgage interest.

I think this entire line of thought is one that has led many Americans into the unusual circumstances of at the same time earning more than ever, yet having so heavy a debt burden so as to make them feel more strapped than ever before.

I’ll give you an example of a typical deal at Lakeside Community: A very nice manufactured home 1120 sq. ft. with 3 bedrooms, 2 Bathrooms, central air, range, refrigerator, dishwasher, washer, dryer, deck, and storage shed is currently for sale at $17,900. The 12 year old manufactured home is in excellent condition, and financing is available with the following terms 20% down ($3580) $390 per month payments for 43 months, the amount financed is $14,320 @ 9% with 0 points, closing costs, title fees, or other fees. The mobile home is sited in very clean and quiet Lakeside Community. You will be charged $165 per month in lot fees, included in which are your water bill, sewer bill, trash service, and we cut your grass.

Now, let’s contrast this purchase with a typical site built comparison. 1100 sq. ft. 3 BR, 1 Bath 40 year old ranch style house. It comes with no appliances, or outbuildings, or decks. The price for such a house in good condition is $79,900 finance terms are 5% down payment ($3,995) leaving a balance of $75,905 financed for 30 years @ 6% $455 per month…but wait… in order to get that 5% down – 6% mortgage you’ll need to pay 1 point ($759) and you will need to pay closing costs ($1,100) and since you didn’t pay at least 20% down, you will need PMI until you reach that 20% equity mark so that will cost an additional $51 per month for the first 9 years. So, you walk away from the closing with a mortgage balance of $77,764, a monthly payment of $466 + the PMI of $51 for a total of $517 per month for 9 years – then the PMI drops off and your payment will be 455 for the next 21 years For that first 9 years of ownership – you will pay $55,836. Lets see how much you would have paid if you would have bought that nice mobile home: payment + lot fee totals $555 for 43 months $23,865 then the house is paid for and all that is owed is the $165 lot fee Total cost for 9 years ownership $34,985 for that nice mobile home – That is $20,851 less than the site built house at the 9 year mark – but remember there is still another 21 years of $455 monthly payments or an additional $114,660.

Of course, there will be some lot fees involved in that mobile home during that 21 years, and lot fees are bound to increase during that time, so lets assume that the overall average of lot fees will be $250 per month $63,000 or $51,660 less than the site built house.

Oh but there is more! Remember that lot fee of $165 – it included water, sewer, trash, and lawn service Water service will cost you $25 per month
($300 year) at the site built house, and sewer charges cost another $40 ($480 year)per month, and the trash service costs another $25 per month, ($300 year) and getting the lawn mowed costs $40 a pop, and usually it gets mowed 24 times ($1,000 year). That stuff adds up to $2080 per year and the property tax costs $550 per year and the homeowner’s insurance costs $400 more than that mobile home policy would have cost. So, all totaled there are $3030 in checks that I need to write each year for the opportunity to enjoy the appreciation in value that is sure to come from owning the site built house. At the 9 year mark your cost of ownership including payments and the other associated costs would be $90,558. With another 21 years to go at $8490 per year or $178,290, bringing the 30 year total to $268,848.

Now how much was the 30 year total for that nice mobile home? $97,985 that is how much. And don’t forget – we factored in some anticipated lot fee increases – while we didn’t calculate any increases for water, sewer, trash and lawn services on that site built house…do you think they might cost more after 10-20- 30 years? Huh? I know that I do.

Here is the point: that even if this site built house would double in value (and that just doesn’t seem likely to me), it would still cost $109,000 more to own.

But the even bigger issue of wealth accumulation is being ignored – after the 43 month mark the nice mobile home is paid for, freeing up $390 per month and adding a lot of “piece of mind.” Were that $390 per month invested @9% for the 317 months that you would have been making payments on that site built house – you would have accumulated $503,000. In an account with your name on it!

And lets us never forget that 100% of all foreclosed houses had mortgages. Think on that for a moment; if you were to suffer a decline in health such that you were unable to work, would you rather have a paid for house, or a debt laden
House? There is no question that a debt free home reduces the downside risk when the unexpected bump in the road occurs – and talk to the people that you know well – those unexpected bumps in the road happen to most of us several times during our lives. People get injured – (I’m just talking about relatively minor things – broken limbs, emergency appendectomy and the like) – and they are financially wiped out before healing.

So, tell me how big a deal is all of this so called appreciation? Not so big a deal when compared to the advantages of living in a paid for house. And yes I realize that people usually don’t live in the same house for 30 years, or even 9 years. The benefits work just as well when trading up to another house in which you can pay for quickly, or better yet; after paying for that first house keep making that payment TO YOURSELF, when you trade houses, you pay all cash with no mortgages, building wealth, and reducing your exposure to risk.