The Malibu beach house that Mike Dituri bought four years ago was a bargain at less than $200,000, a 29-year-old double-wide within walking distance of the beach.
Some might have seen a boxy trailer, but Dituri saw Shangri-La.
A retired contractor, he spent another $200,000 to bring his vision into focus at the Paradise Cove mobile home park. He tore the 1,440-square-foot unit down to the floorboards and built a new home on the original chassis. He installed Saltillo tile floors throughout, vaulted the ceilings and opened them up with skylights. Then he walked to the beach and went surfing.
In September, however, Dituri reluctantly decided to sell his weekend retreat, hoping to recoup a little more than his total investment. To his surprise, he better than doubled his money, selling the place for more than $800,000.
Dituri calls the increase “unbelievable,” but real estate agents and mobile-home-park managers say it’s a typical tale in the trailer-park transformation that’s occurring on beaches in Ventura County, Malibu, Newport Beach and beyond.
The value of mobile homes within walking distance of the surf has shot up tremendously in the last few years, reflecting a dramatic change in status for these dwellings. These trailers aren’t the housing-market dregs; they’re a sensible solution for some seeking the life of Malibu Barbie.
Mobile homes with breathtaking views of the Pacific hover in the $1-million range in places such as Malibu’s Paradise Cove and nearby Point Dume Club, a steal when compared with the $10-million price tag on similarly situated conventional homes.
Kirk Murray, a Realtor with Pritchett-Rapf & Associates who has sold many mobile homes in Malibu, watched last year as one went for $795,000, and then sold again for $995,000 two months later. Another month after that, it was on the market again for $1.25 million.
Those willing to forego an ocean view can find units in some of the choicest parks for less than $500,000.
Owning a mobile home, however, differs from conventional homeownership, particularly when it comes to the dirt underneath the home.
There’s the old saying: Buy land because they aren’t making any more of it. But mobile-home ownership defies such wisdom because, in more than 90% of the parks in California, the purchase does not include the land. As a result, owners have to pay hundreds -- if not thousands -- in rent each month on top of their mortgage payments.
It’s a matter that caused some disappointment for Joanna Goodwin when she paid more than $500,000 for a 1,500-square-foot home at the Point Dume Club in Malibu.
“I feel ... sad that I don’t own the land,” said Goodwin, who has been investing in real estate since 1997. “But I don’t feel threatened that I’m going to lose my investment.”
State laws, local rent controls and the difficulty involved in rezoning property all serve to quell fears some mobile-home owners might harbor about losing their prized location.
Certainly, Goodwin is not alarmed, and neither is Clay Dickens, vice president of Community West Bank in Goleta, which lent $25 million to mobile-home buyers in 2004.
“It’s a very safe bet,” Dickens said of mobile-home ownership in Malibu. “The chance of these ever not being a mobile-home park is nonexistent in my lifetime.”
Protection is provided in the law and in the government bodies that oversee land use in the area, such as the Malibu City Council and the California Coastal Commission. On top of that, Malibu is one of many communities with rent controls.
For example, at Point Dume Club, rents can be increased only 15% each time a home is sold. In addition, homeowners such as Goodwin take comfort in knowing that their rent is limited to a 2% increase each year.
Goodwin, 53, closed escrow on her home in December and is planning to move in sometime in the next few months. For her, the purchase means paring down her possessions and simplifying her life. Goodwin, whose children are grown, is looking forward to a more relaxed lifestyle. Her goal, she says, is to infuse her spirit with the serenity of the sea out her window.
“If you’re driving through Point Dume, it ... appears to be a conventional trailer park,” Goodwin said. “But, if you walk through my front door, you’ve walked into a Ralph Lauren ad.”
Her home has two bedrooms, 2 1/2 bathrooms, an office, a great room, a slate foyer, a fireplace with a slate hearth, distressed pine floors throughout, bead-board wainscoting, a wraparound deck, ocean views and an English country garden that was tended by a woman who, Goodwin says, had “10 green thumbs.”
Meanwhile, down the coast at the Lido Peninsula Resort in Newport Beach, the structures run the gamut. There are two-story manufactured homes, typical double-wides, as well as 50-year-old trailer cabanas, some of which still have hitches on the front and wheels underneath.
Manager Don Funk said the community has 214 spaces, some with ocean views. The 22-acre park has a private beach and is surrounded by boat slips owned by the same company that owns the community.
Homes recently put on the market at Lido range from a 600-square-foot mobile home built in 1976 listed at $92,000 to a 1,400-square-foot cottage with a garage and decks for $399,000.
Prices are lower than in Malibu, but rents are higher because Newport Beach does not have rent control. Current rents at Lido range from $1,200 to $3,785 per month, and annual increases are capped at 6%, per leasing agreements.
Funk said Lido’s two-story manufactured residences are one of the main attractions because they are not what many new buyers expect. There’s drywall on the inside as well as double-pane windows and pitched roofs.
“There’s nothing mobile home about it,” Funk said. “It’s a whole new standard.”
The same can be said for other mobile-home communities where homeowners have redefined the standard.
Dickens, the lender, said he has seen many opulent custom-made homes in mobile-home parks along the coast. “I’ve closed on a five-bedroom, four-bath Tuscany villa with floors from a castle in France,” Dickens said.
“These things are incredible,” he said, adding that the mobile homes enjoy views similar to those of conventional homes in the $10-million range.
But it’s not just villas with stucco walls and tile roofs that are selling at exorbitant prices. Trailers such as the 1972 factory model that Dituri bought four years ago are drawing lucrative offers as well.
The obvious key is “location, location, location,” he said. “You put one of these double-wides in Sylmar or Palmdale and it’s going to be worth squat.”
When it comes to coastal sales, many of them are cash deals.
Some banks don’t like the idea of lending money on a movable house that gets most of its value from its location. Those who are willing to make the loans will often lend no more than $350,000 and require a 20% down payment.
“It all depends on the client,” said Dickens, whose bank approved a mobile-home loan of $500,000 for a residence at Point Dume Club.
The interest charged is higher too. Consider that a $350,000 loan for a mobile home probably would have an interest rate of 8.75%, whereas a comparable loan for a conventional home would enjoy a 5.75% rate.
Terms are different as well. The typical mobile-home loan is a “30 due in 10,” which means payments are amortized over 30 years, but at the end of 10 years, the borrower has to refinance. The longest period offered for a fully amortized loan on a mobile home is 20 years, Dickens said.
He added that the mortgage interest on a mobile-home loan is tax-deductible because it applies to a residence, but because the loans are typically smaller, so is the tax benefit.
One savings is in property taxes. A mobile home is considered personal property so it’s assessed at its factory, or blue book, value.
For example, a mobile home that sells for more than $1 million could be assessed at $200,000 or less, so the annual property tax would be about $2,500, using an average tax of 1.25%, including fees and assessments, according to the Los Angeles County assessor’s office. In contrast, a conventional home assessed at $1 million would pay about $12,500.
The tax savings, however, can be offset by space rent, which is not tax-deductible and often increases annually.
At Point Dume Club, rents average $1,250 a month, with the highest topping $2,000. But at the Ventura Marina Mobile Home Park, which is limited to seniors, the low end is $455 and the high end is about $600.
“We have excellent rent control, and I don’t think that will ever change,” said Georgia Johnston, assistant manager of the Ventura park and a resident for the last 18 years. The only two homes on the market in the park in January were priced at $299,500 and $250,000.
R.C. Bessire of Bessire & Casenhiser Inc., a Walnut-based company that manages 67 mobile-home parks in California and other states, including Lido Peninsula Resort, offered an example of how coastal rates can vary from inland ones. A space at one of his company’s parks in the Central Valley, he said, goes for $235 at the low end.
But even if a buyer can afford rent and qualifies for the mortgage, or pays cash outright, it still doesn’t mean he or she is in. There’s one last hitch.
The mobile-home park also gets a say.
Some coastal parks have instituted income requirements similar to those at some apartment complexes, Dickens said. In some cases, income must be at least three times the combined total of both the space rent and the mortgage payment.
Dickens has even seen requirements that say tenants must make four times the combined total. That would mean a buyer with a $350,000, 30-due-in-10 mortgage at 8.75% -- a monthly payment of $2,753 -- and a space rent of $450 would have to make $12,812 a month to make the cut. That’s an annual income of $153,744.
Regardless, few of those who’ve owned a beachside mobile home express regrets, except maybe Dituri.
“I loved it up there,” he said of his weekend getaway at Paradise Cove. “I hated to sell it.”
T.J. Sullivan’s e-mail address is firstname.lastname@example.org