I’ve been trying to decide what my dumbest purchase was. The reason I was having a hard time coming up with one, is (1) I’ve made more than one really dumb purchase, and (2) a lot of good actually came out of my dumbest purchases, making them not seem so dumb.
I finally decided that even though good came out of this particular purchase, buying our manufactured home in 1997 qualifies as the dumbest purchase my husband and I ever made.
In the fall of 1997, I was 4 months pregnant with our first child. We were living in an older, 2 bedroom apartment in a decent part of town. The rent was dirt-cheap. However, I had always heard that couples should buy their first home before having children, because it gets harder to qualify for your first home after you have kids.
In addition, my husband and I wanted me to be a stay-at-home mom, and we knew we’d never qualify for anything on my husband’s income alone. That should have been a big clue that we had no business buying a home.
We couldn’t qualify for a mortgage on a stick-built home, so we went to our local used car lot manufactured home retailer, and took a look at a few homes. The agent sent us off to look at two older manufactured homes first. I still remember them. The first one wasn’t on it’s foundation really well. The floor was actually slanted.
The second home we looked at was something out of the 70s. Think psychedelic daisy wallpaper all over the bathroom. Yes, it was that bad.
Finally we were sent to a 1989 single wide home. It was in a park next to a rock quarry. Despite the horrible view and the fact that the home was in the middle of an industrial area, the home itself was really cute. I began to envision living there with my husband and new baby…cooking in the kitchen…and oh my goodness, there was a dishwasher! Long story short…I fell in love.
We went back to the office and told the lady we wanted to make an offer, but admitted we had never purchased anything so big anymore. Yes, we admitted we were newbies. And we didn’t have a down payment.
The lady told us how much we would need, and we borrowed the down payment from Jim’s dad. (We paid it off in full in 3 months.) If I remember right, we even offered $24,000, which was the asking price for the house. I still cringe thinking about it.
We took out a 15 year, fixed rate loan (the one thing we did right), and moved in to our new piece of real estate. But we didn’t own the land, so it really wasn’t real estate.
We lived there for 5 years, before moving, and for the most part it was a good 5 years. But there are several points which qualify this as our dumbest purchase ever.
- We didn’t research. We made an offer after only seeing 3 homes. We knew nothing about the buying process or negotiation.
- We didn’t take into account that space rent would go up. By the time we moved out, our mortgage had remained the same, but our space rent had gone up a couple hundred dollars, making our budget very tight.
- We didn’t take into account that manufactured homes depreciate in value. That presented a huge problem when we tried to sell. And we had to sell. It was very stressful.
- We didn’t realize that if the owner of a manufactured home park sells the park, the people living in the park can be forced to sell their homes. Fortunately that didn’t happen to us, but with industrial development all around us, it weighed heavily on our minds.
- We didn’t notice the signs of an impending crash in the manufactured housing market. The signs were there, much like the signs of the mortgage crisis today. Unfortunately the worst of the crisis hit right around the time we had to sell our home. Again, it was very stressful.
- Most of all, we decided to cave to the pressure to keep up with the Joneses and buy a home when we weren’t ready to.
In the end it was a good place to live for 5 years. And despite the bad decision making on our part, when we had to sell, everything worked out in quite the miraculous way. If you’re interested in what happened that made us need to sell our home, what we went through when trying to sell, and the amazing way it all worked out in the end, check back here Sunday when I post about how God showed us He really can work everything for good. Even dumb purchases.
What’s the dumbest purchase you’ve ever made? Please share! It can’t be much worse than mine!
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We always learn from our mistakes. For me it was my first car purchase. It was a hunk of junk and cost me £2000. It didn’t last long. I’ve always been very careful since.
Well, I guess I will share my parents dumbest purchase since it burns a hole in my brain and became a true eye opener for all my future purchases.
My Dad retired and Mom a “home maker” sold their big house at the end of 2005 to buy a brand new double wide “mobile home” with the intentions that it would be their home in town and they would travel 1/2 the year in their camper. Sounds like a plan and their dream.
Well, Mom decided she was not keen on the “mobile home” thing and Dad decided it was best to “upgrade” it as best he could. Oh, forgot to mention that when they set up their insurance they did not take their time and state their belongings and other assets…under insured.
In the Spring of 2006 they bought a huge barn $4000 for the back yard (they were accustom to a 2 1/2 care garage), $1500 in landscaping AND $10,000 in porch that pretty much wrapped around the home (oh, not on owned land, in a home park). As stated earlier, under insured and to add to that they are now $15,000 more uninsured.
In November of 2006 they lost it all in a tornado that hit. Lets just say, $30,000 does not replace everything they owned and up until the first of this year they were still paying for the beautiful porch and yard barn.
My parents went from living a middle to upper middle class lifestyle to struggling to pay the bills on a monthly basis.
Ouch! Lets just say, even though I was renting at the time, I doubled my renters coverage AND took pics of assets and have them in a “safe” place just in case.
I remind them all the time at least they were not home and not injured but that does not take away the anguish my Mom feels every time she sits down on the $100 second hand couch (when she is accustom to chenille) or the frustration of fighting with the press board dresser drawers (when she had the luxury of cherry bedrooms sets). Yes, it seems materialistic when you put in perspective that they were not injured but lets face it, you work hard all your life to have something when you retire…now they have what they had when they were first married. Very little.
My husband and i bought a modular home last year. We paid more then we wanted but that was after 3 other offers were outbid by people who were transporting them over 1000 miles to an area where housing prices were ridiculously high. I still think it was a good purchase, our payments are reasonable, and it is a 1998 so has better insulation and double pane windows for economical heating and cooling costs. Its also a good way to get into the housing market, easily resalable as where I live in Canada our real estate market is still going strong and showing no signs of slowing. If and when we do want a more expensive home the bank will know we are good for it. Otherwise I own a 3 bedroom 2 bath home I could be quite pleased to live in long past our 10 yr mortgage.
@anonymous – Thanks for sharing your insider information. :) I agree that today’s manufactured homes are very nice. Even the ’89 model we bought was very nice to live in, and they can be a great option for people, if you put them on land.
And maybe it’s just the area I live in, but in the last 7 years I’ve seen three parks close, and stories run pretty rampant about elderly people in the parks who don’t have a lot of options. Sure, there’s a payoff, if there’s not enough notice given. In the state of Oregon, at least as it stood 7 years ago, they didn’t have to pay you anything, if they gave you 18 months notice, though.
A lot of the people who had to move were people who lived on little more than social security and owned their homes outright. There’s no way they could find a place to move that cost less than their space rent. And other parks won’t take older homes. So the residents are stuck.
That’s been my experience here, and the laws may be different from state to state.
I work in the manufactured housing industry and the reason we prefer not to use the term “trailer” is that the homes sold now are entirely different from the “trailers” that were sold in the 70s!
For the record, manufactured homes have government regulated construction standards (as opposed to local inspections of standards for stick built homes) and can qualify for standard mortgages under certain conditions. Since that is definitely not my area of expertise, I am not going to try to describe those conditions.
Additionally, it isn’t as simple as it sounds for a community owner to sell the property and evict all the residents. In most cases, the owner (even the largest, nationwide companies) has no desire to displace the families in the community and the process would take place over a fairly long period of time. That isn’t to say it wouldn’t be a major disruption for most residents, but it is very unlikely to happen. From my personal experience, we did consider closing up a property, but did not do it because we could not find a suitable property to which we could relocate the families in our existing community (the owner was unwilling to consider selling unless the families could be relocated).
I appreciate you sharing your story (I think my dumbest purchase is probably a $900 crib for my first baby that wasn’t slept in until she was several months old, when I definitely did not have the money to pay for it, but that’s another story), but I’m glad you had several good years in the home.
Oh gosh… My dad bought a trailer. (“Manufactured home” to you Yankees.) He is a Navy retiree, has an income from that and has been working for most of the years since he left the Navy. He should have access to a VA loan, but he won’t even try to get a mortgage on a regular house because he thinks he’ll be a target for age discrimination.
Meanwhile, the trailer took a direct hit from a tree during Hurricane Rita. It’s still structurally sound, but my brother and I think there is a leak and that it’s affecting the wall underneath the plastic layer (what would be wallpaper in a real house), based on what it looks like from a certain angle. Dad’s speaking of when he passes away, how he wants the trailer sold and then the proceeds split between me and my brother. But with trailer depreciation and the condition it’s in now, and Dad blowing us off when we mention there might be something wrong, I doubt there will be anything left financially.
I mean, I don’t *care* in the end, I would be too torn up over losing my dad, but if his intention was to pass something on to us, this was not a good way to do it.
Eesh. Well at least a house is something you get use out of. It’s not like something expensive you never use.
Yikes! $24,000 for a used mobile home without land? Eeek! Oh well, we live and we learn. Your life would not be the same without that experience.
Off the top of my head, I would have to say that is was the 2004 (2003?) Kia Sedona. We said we’d never buy another new vehicle again and we did. It got horrible gas mileage (14 mpg) which really ate up our budget and about a year later we had to pay Kia $1,200 to take it from us b/c they would only give us $12,000 for it. We had to sell it so that we could move and buy a house. What a huge money loss!
Well, we bought a mobile home in 1984 – paid full price – and financed it at 14% interest. How horrible is that????
Sounds like it wasn’t that dumb of a purchase, you did get a nice place to live for 5 years. Maybe you didn’t think it through and made a lot of mistakes, but you learned through the experience and that can make a big difference!
Take Care
LJ
HI! In 2002 I was a single mom who had never been married. I was dating and he proposed. We planned a simple outdoor wedding to the tune of $1,000 of our own money. Well, once my mom heard of this she would have nothing of it. Her first daughter’s wedding had to be special (oh and it was only 3 weeks from when we got engaged.) So my mom cashed out her 401K and spent about $16,000 on my wedding. Don’t get me wrong it was an amazing day, but I did not want her spending her retirement on it (I didn’t know she did that, I thought maybe she had money saved for my wedding?
-ignorance on my part.) This was my dumbest purchase, because I am sure the $1,000 wedding would have been just as fun.
By the way we were divorced in 2006, so that really makes it a dumb purchase. AHHHHH!!!!!