About one week ago, I wrote a blog post about all of the crime and drug dealing at the apartment building where I live in downtown Dickinson almost causing me to move. I don’t want to live here, I would like to get out, but I don’t think that I could escape the drug problem by moving to a more expensive apartment building in Dickinson, the occupancy rates are so low at the new apartment buildings, that they will rent to anyone.
This past week, I began looking at the real estate multiple listings for properties in this area, and I found one that was very low priced in Belfield, North Dakota, which is 24 miles west of Dickinson.
This property, which I will give the details of below, was perfectly fine with me, though many people would not find it appealing. You have to keep in mind, that my first year in Dickinson back in 2011 during the oil boom, I slept in a 1978 truck bed camper, and I took showers at the company where I worked, or at the Tiger Truck stop. My second year back in Dickinson in 2013, I slept in an enclosed utility trailer that was 7 ft x 14 ft, with no water and no sewer connections. In 2011 and 2013, I was very cold when the temperature was below 0 degrees Fahrenheit outside, while trying to live in a camper with one electric heater.
The property that I saw in the Dickinson real estate multiple listing guide last week that interested me, was a 3 br, 1 ba, 1,000 square foot manufactured home on a 75 ft x 140 ft owned lot, for $25,000. According to the website Realtor.com, for a 30 year mortgage at 6% apr, the combined monthly payment for the mortgage, property tax, and insurance would be $106 per month, total.
Because I can’t park my equipment trailers and some of my vehicles at the apartment where I live now, my combined storage and rent payment is $500 per month. Which is better, $500 per month to live in an apartment building with drug dealers and crime, or $106 per month to live in your own home, on your own land?
$25,000 is pretty cheap for a 3 br, 1 ba home on its own lot, for this area, or for any area. From 2009 to 2015 during the oil boom, the rent for this manufactured home would have been $2,000 per month, which equals $24,000 per year.
I went and looked at this manufactured home, inside and out, on Friday of last week, and I took a video of it which I will show below. I liked this manufactured home, it was fine with me, the yard, the outside, and the inside. On the good side, it is fully furnished, and all of the furniture, washer and dryer come with it. On the bad side, the roofing shingles on the south side are cupped, and will have to be replaced. A new roof will cost about $5,000.
The real estate agent was pleasant and professional. He told me that the property had been purchased by a company that needed to provide a place for three workers to live, but now that this company no longer does business in North Dakota, they just want to sell this property. Other prospective buyers had offered to make a large cash down payment, and make monthly payments to the property owner, but all of these offers were declined. The company wants to receive complete payment at one time, and be done.
A little over a year ago, I received a mortgage application package to complete from Dakota Community Bank where I have an account. When I spoke to the loan officer again at Dakota Community Bank on this past Friday, she said that Dakota Community Bank will no longer lend money on any manufactured home whatsoever, no matter how new it is, or how much owned land is involved. Later I had a short discussion about a personal loan using my vehicles as collateral, but most of these vehicles are not in North Dakota, and their value would be assessed at wholesale trade-in value, which is nothing.
I talked to someone at ENG Lending in Dickinson, and their policy is that they will loan money on a new manufactured home at the dealer, but not on a used manufactured home. I spoke to a loan officer at Gate City Bank in Dickinson, and they said that they looked up this property, and would not loan money on this property because the area that it was in was zoned commercial. I suspect that Gate City Bank was just looking for a reason to excuse themselves from lending on an older manufactured home.
I was told that I would have a high likelihood of getting a loan from the bank in Belfield where the home is located, Choice Financial. I went to Choice Financial Bank on Friday last week, discussed this with loan officers, but they have not called me back. I don’t think that they can do anything with an older manufactured home either.
In a way, this whole process was funny and unbelievable to me. All throughout Dickinson, all of the business owners, real estate agents, property managers, property investors, business people, financial people, and bankers, like to talk and make announcements about how the economy in Dickinson is booming, growing, expanding, and taking off. Yet all of the bank owners have so little faith in the economy in Dickinson, that they have issued instructions that no loans are to be made on manufactured homes even if they are on owned land.
The other thing that is kind of funny and absurd to me, is that this property is not 3 times my annual income, not 2 times my annual income, but ½ of my annual income. In many parts of the U.S., people are getting home loans, where the cost of the home is 3 to 4 times the person’s annual income. Yet in Dickinson, I can’t get a loan to buy a home on owned land, that is ½ of my annual income. Or, I could probably be approved to buy a new car in Dickinson for $35,000, a car, whereas I can not get a loan for a lesser amount, for a 3 br, 1 ba home, where I would live, for less money than I have been paying for rent the past four years.
I could put the whole $25,000 purchase on my credit cards, I receive credit card checks that I can use just like a regular check with no discount to the recipient. But my interest rate would be 18%, which is about $4,500 per year in interest alone. Why would I want to pay about $375 per month, just in interest?
I discussed with the real estate agent, making a cash offer for $18,000. The real estate agent said that this proposal had already been made to the property owner, he refused, he will accept nothing less than $25,000.
The real estate agent, each of the bank loan officers, the other bank personnel, and the Stark County personnel that I spoke to in the past several days, were all pleasant, polite, and professional. I like this manufactured home, it is fine with me, I can afford it, I don’t mind paying the asking price, and I don’t mind living in Belfield. I just could not get financing.
There were many other people who also wanted to buy this manufactured home, on its own 75 ft x 140 ft lot. The loan payments on this property, would be lower than just about anything you could rent in this area, even lower than the rent on an old studio apartment. However, no one could get a loan, the owner would not accept a large down payment and finance it, nor would the owner accept cash payment for a lesser amount.
I got a lot of insight from this. No matter what the talk is on the street, in the newspapers, and on television about how well the economy in Dickinson is doing, the people with money, the people who know what is really going on, are not about to loan money on manufactured homes, even manufactured homes on owned land, for at least three reasons.
One, they expect the economy in Dickinson to decline, people to continue to lose their jobs, and they expect people to default on their home loans. Two, with the economy in Dickinson declining, and people defaulting on their home loans, who are they going to get to buy a foreclosed manufactured home, or who are they going to get to rent a foreclosed manufactured home? Three, with the economy in Dickinson declining, wealthy people and bank owners do not want to be stuck owning multiple manufactured home properties that people have defaulted on, these things will be worth pennies on the dollar there are going to be so many vacancies in Dickinson.
Think about this, on the other hand, if the bank owners and the people with money in Dickinson, truly believed that the economy in Dickinson was expanding, they would not hesitate to make loans on manufactured homes on owned land, for at least three reasons.
One, with more job openings expected in Dickinson, people would not be losing their jobs and defaulting on their home loans. Two, so what if someone defaulted on their home loan while the economy was growing, it would be easy to find someone else to buy or rent a foreclosed manufactured home. Three, so what if someone defaulted on their manufactured home loan when the economy was expanding, the value of manufactured homes on owned property would be going up and up, who wouldn’t want to own assets that are appreciating in value?
At this point, I don’t care, I am done trying to work this purchase out. I will just sit back and watch this manufactured home not sell, and continue to decline in value. I don’t care if someone else finds a way to purchase this home, to live in, or to own this home as an investment and rent it out. I have nothing against this home, I like it, but it will need a new roof soon. Here is the video, if you want to make an offer on this home, just look on any real estate site for Belfield, North Dakota.