Deliver the American Dream for Less

Decades ago the modular building system produced homes that were often sneered at by conventional site builders, who pointed out that these homes were often limited to boxy configurations and ho-hum floor plans.

But with the advent of computer-aided design in the 1990s, manufacturers dramatically expanded their designs.

Now customization is king and the homes being built with this system can be found in any neighborhood.

"What we can accomplish today is pretty damn wonderful," says Barry Altman, owner of Quality Crafted Homes (Southampton, NY),which builds multimillion dollar mansions on Long Island. "Years ago I had site builders spitting on my shoes because I built withmodulars. Today those same builders are buying homes from me."

Now cathedral or tray ceilings, open foyers, hardwood floors,custom cabinetry, built-ins, granite countertops and upscale lighting are allcommonplace. Today's modular homes can have 12/12 roof pitches with multiple lines thanks to hinged roof systems, piggyback trusses and other configuration innovations. Cutaways, bump-outs and staggered configurations are breaking up the once boxy exteriors.

No Retail Please
Despite these technological advancements in design, manufacturers don't deal directly with consumers. That's where you come in, as the builder. Here's how it breaks down:

BUILDERS
Builders are responsible for working with buyers to make selections on the design of the home and materials specifications. Modular homes today are completely custom, which gives independent builders an advantage over production builders who limit their clients to two or three designs in a subdivision.

CLIENT DESIGN DECISIONS
Unlike site building, where design changes throughout the long construction process, modular construction happens at warp speed. This is why clients have to make design and material decisions before construction starts. This phase of the process is often accomplished through model homes and three-dimensional software to let buyers see what the rooms will look like in relationship to the building site. This software capability allows builders to communicate construction drawings to their manufacturers over the Internet.

PLAN APPROVAL
Once plans are finalized, the modular manufacturer submits the plans electronically for approval to state-approved, third-party plan review agencies, which ensure the home will meet building code requirements in the state where the home will be located. The manufacturer also contracts with third-party inspection agencies that are licensed by the states to perform the in-plant inspection while the home is in production. When the housing sections or modules are complete, the third-party agency places a label on the home certifying that the home has been built in conformance with the approved plans and complies with all provisions of the building code for that state. This exempts modules from inspection by local code officials.

FACTORY CONSTRUCTION
Modular homes are built in a factory setting where craftsmen use the latest tools and equipment and all raw materials are stored under roof, eliminating any water damage or mold issues. Structures leave the factory in sections that are up to 90% complete, wrapped in plastic to protect them from the elements. The sections typically come with bathrooms and kitchens fully finished, doors hung, and flooring and windows installed. Exterior treatments can run the gamut, from stucco and siding to brick.

TRANSPORTING MODULES
Carriers transport the modules to the job site, usually before the day of the set. These modules can be as large 16' wide and 64' long, which means authorization can be required for certain regions, including escort vehicles and permits.

SET ON SITE
Set crews or modular installers are either provided as part of a manufacturer's operation or they are veteran subcontractors. These crews fly the modules in with the help of a crane, complete roof sections and make the home weather tight-often in a matter of hours.

Final Finishes
Builders then complete final turnkey finishes, which includes water and sewer hookups, HVAC and mechanical, and framing of garages and porches (sometimes these are panelized to speed construction). Buyers are able to move into their new home just two or three months after signing a contract. This short construction cycle is what's appealing to many builders and buyers, since it reduces interest on construction financing and adds predictability to what is often an unpredictable process.

Blurring Between Modular & Manufactured
The growing popularity of this system is causing many HUD-code manufacturers to add modular homes to their product mix. By upgrading plumbing, framing and other systems within the structure to meet statewide building codes, the homes can qualify for modular status. This opens their product line to more desirable financing and often more favorable zoning.

A growing number of manufactured housing producers offer a hybrid product they refer to as an "on-frame modular," which is a home that meets the state building codes, but is built on the same frame used for manufactured housing.

This on-frame phenomenon is dismaying to many longtime modular producers and builders-not just because of the increased competition. It's also not the steel frame that they take issue with. The problem is one of appearance: Many look like HUD-code units. The shallow roof pitches and boxy features don't sit well with the modular industry, which has spent the last decade trying to reassure anyone who would listen that they don't build homes that look like manufactured homes.

Why on-frame and why now, just when modular homes are gaining a reputation for quality and cutting-edge design? The answer is not complicated. The HUD-code industry has been in decline for the past few years, so many companies are scrambling to open new markets. As for their appearance, it's usually related to the physical limitations of the manufacturer's factory. The lower ceilings and narrower construction lines that are common within HUD-code factories preclude the construction of more complex designs, such as 12/12 roof pitches or 16-wide units. Other manufacturers simply don't want to reconfigure and retool their factory because it is too cost prohibitive, particularly when the majority of its orders are for HUD-code units. Plus, many of the HUD-code companies are public, which means they must answer to stockholders' concerns over short-term return on investment.

This blurring of product lines between modular and manufactured naturally confuses building inspectors, state and regional elected officials, and builders-not to mention consumers, who didn't need any help in this arena. This is why many traditional modular manufacturers employ various verbal contortions to distance themselves from the name and all its confusing connotations. Instead they describe it as "off-site construction." (Not surprisingly we argue for the term "building system.")

Meanwhile, some HUD-code dealers try to capitalize on the growing reputation for quality in modular homes by mounting huge roadside signs over their HUD-code product that say, "Yes! We Have Modulars!"

We only bring this to our readers' attention because they will need to be aware of this trend when choosing a modular producer. The best way to choose a manufacturer is to compare material specifications, designs, floor plans, cost and quality of service.

INCREASE YOUR DEPTH OF TALENT
Do you have a staff of architects, engineers, sales consultants and technical consultants at your disposal? Modular manufacturers do. As a modular builder, you can make their team your team, without increasing your payroll or overhead. Other advantages modular manufacturers can offer over traditional site building include:

Guaranteed pricing for specific time periods
Guaranteed delivery dates
Estimating services
Reduced crew sizes, meaning a smaller payroll and less insurance costs for the builder
Increased quality: manufacturers employ third-party inspectors
Construction unaffected by seasons
Building in a controlled environment
Less on-site waste and pilferage
Sales and marketing advice/training
Buyer lead referral systems
Advertising: regional and national campaigns to bring in buyers
Volume discounts on materials, which means offering less-expensive homes or earning higher profit percentages
Annually updated home designs
Less hassle with inspectors as modular homes are built to pre-emptive statewide building codes
Technical support
Warranties on homes

What Are Producers Looking For?
Ideally, modular manufacturers look for builders, developers and entrepreneurs who are financially stable and who already have a strong reputation in their building communities.

The products and support programs offered by modular manufacturers can vary greatly within the industry. Some manufacturers want builders to only offer their product in exchange for extensive training, support programs and technical help. Others may only shrug if their builders also offer a competitor's product from time to time.

Manufacturers rarely charge any kind of franchise fee for becoming a modular builder. Many, however, do sell a "builder's kit," the cost of which is often reimbursed on the first home order. A kit usually contains marketing materials, buyer contracts, subcontractor contracts and product samples for buyers to select design options.

Many manufacturers encourage builders to invest in one or more model homes. The prevailing reality in the industry is that builders can't sell from the back of a pickup truck anymore and be effective. The investment in a model home can vary from $50K to more than $200K, depending on your market and any model program discounts offered by the manufacturer.

Undercapitalized modular builders sometimes use spec homes as models, exhibiting them until they sell and repeating the process until they have the volume to support a full-time model home. (The recommended volume for a model is 10 or more home sales per year.) Successful modular builders report that a well-decorated model home can quadruple sales.

Modular producers often reward their top producing builders with paid vacations and other prizes. Before you go shopping for manufacturers, realize that some focus on affordable homes exclusively, others offer a wide range of sizes and plans, and still others only target the upscale custom home market.

Modular Homes Stronger Than Site Built, FEMA Says
Proponents of modular homes have long maintained that the building system produces structures that are far stronger than site-built housing. For instance, to withstand the stresses of highway travel and being lifted by a crane, modular sections use more materials and are built better. In fact, modular sections contain up to 30% more building materials than a comparable site-built home, drywall is often both glued and screwed to wall studs and triple headers are used over window openings and around stairwells.

Recently, the Federal Emergency Management Agency (FEMA) confirmed that modular homes withstood a hurricane far better than site-built housing. In its report "Building Performance: Hurricane Andrew in Florida," assessment teams from FEMA concluded that modular homes withstood the 131-155 mph winds of the Category 4 storm in August of 1992 far better than site-built housing.

"Overall, relatively minimal structural damage was noted in modular housing developments. The module-to-module combination of units appears to have provided an inherently rigid system that performed much better than conventional residential framing. This was evident in both the transverse and longitudinal directions of the modular buildings," according to the report. (Get your free copy by calling 800-480-2520; ask for publication number FIA-22, item 3-0180.)