The manufacturer's own sales rep can be the most honest voice in a prefab pro forma

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Consider a small operator planning to drop three prefab units on three lots he already controls in a first ring suburb, and an investor sitting in on the manufacturer's sales call to hear how the delivered price gets built. The rep walks through the box. Unit price lands right around the number everyone quotes, low six figures, and it covers the shell, fixtures, and appliances. The operator asks what the total installed number looks like in that county, and a rep worth trusting will go quiet for a second and then say the delivered price is honest but customers still average 60 to 90 percent on top of it once site work, foundation, utility trenching, crane day, and permits are added, worse on sloped lots. A rep who tells a buyer to walk away from his own product if the pro forma assumes an all in number below that range is telling the truth about the part he doesn't sell. A model built at $145k per unit against a real number closer to $210k is the gap that kills these deals. Rents around $1,500 in that submarket work fine at $145k all in and do something very different at $210k. That's the arithmetic worth running before committing to any prefab pro forma: get the installed number from someone with no stake in underselling it, not just the unit price.

6 replies

jordan_ellis2CapitalPRO

The box price and the installed price are basically two different products, and it took me until now to get that through my head. That crane day line is going in my notes.

megan_doyle15PassivePRO

Wait, so the manufacturer's price doesn't include the foundation? What does it sit on when it shows up?

omar_haddadPassivePRO

@megan_doyle15 usually a stem wall or piers somebody local pours before delivery, and that somebody has to be scheduled around the crane, which is scheduled around the factory. Sable, 60 to 90 percent over is consistent with what I see, and on a sloped lot I've watched site work alone eat six figures.

devon_pierce SS4APRO 15

The honest rep is the part that surprises me least, actually. Manufacturers get blamed for blown budgets they had nothing to do with, so the good ones front-load the bad news.

joe_delgado5ActivePRO

$1,500 rent against $210k all in is a long, long wait. I move too fast for that math but I respect people who'll sit on it.

gregpowell66 AC4BPRO 19

The item most often underpriced is the utility trench, because its length is set by where the house happens to sit rather than by anything in the drawing set. Two identical units on two identical lots can land 9k apart in pipe alone.

The manufacturer's own sales rep can be the most honest voice in a prefab pro forma

6 replies