Shell Homes As Investment Tools

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Trends in housing make for interesting investmenst. When the shell home technique was introduced in the middle of the last century, sharp investors took the risk. This historical article offers a look at why this market was attractive then.

The shell home technique is opening up a broad and relatively untapped housing market. Increasing public acceptance of this concept has resulted in the industry enjoying an estimated 50 percent sales expansion in 1960 versus a sharp decline in over-all U.S. housing starts.

As between a shell home and a prefab, the former appears preferable. A shell home costs about 25 to 33 percent less than a prefabricated structure, and there's no outside labor for finishing the interior. The savings come primarily from do-it-yourself labor as well as from mass production of a more limited number of designs.

A typical three-bedroom shell home with 800 square feet can be bought for no money down and up to six years to pay. The "down payment" consists of the property, which must be owned free and clear by the house buyer. Despite heavy financial charges, monthly payments generally are less than rents paid for substandard housing.

It is obvious that this type of house fulfills the need for low-income families, especially in the southeastern United States. Some 44 percent of all U.S. families are estimated to have incomes below $4,000 a year.

Leading the shell home field is Jim Walter Corporation, which accounts for more than half of all shell homes built in the U.S. Its homes are offered in various sizes, ranging in price from $1,000 to $3,000.

Jim Walter has compiled an outstanding growth record. In the fiscal year ending Aug. 31, 1960, it earned $3.5 million in selling 13,000 homes compared with only $393,000 on 3,015 units in 1956. That's about 800 percent earnings growth in just four years or an annual growth rate of 200 percent.

Especially promising is its credit financing business, with its time charges earned rocketing tenfold to $5 million between 1957 and 1960, while its gross profit on sales only tripled.

The outstanding growth of the shell home industry during the past five years has been accelerated by the new availability of financing for this type of house, since standard mortgage financing was not obtainable for incomplete housing. That's why some shell home producers make it an important end of their business to arrange credit financing for their customers.

The lucrative shell home market has lured many companies into the field. Most noteworthy is Certain-Teed, the second largest producer of asphalt roofing products, which has become the first fully integrated manufacturer of shell housing in this country—being able to offer raw materials, finished parts, financing, and semi or fully completed structures. Certain-Teed offers its "package" in these four stages: (1) the basic shell; (2) a shell with necessary material for completion; (3) a livable shell; and (4) a completed home.

Other large companies of building materials are eyeing the shell home field. Johns Manville is one of them. There is the possibility of an eventual merger between shell makers and building material producers.

And, then, of course, there are the ever-ready aluminum producers, who always look for putting more aluminum into everything. As a matter of fact, the nation already has its first aluminum shell home built in Florida by Major Realty Corporation in collaboration with Aluminum Company of America. Designed in a contemporary style and finished in an unlimited choice of colors, the model is priced at $2,950.

Advances in housing continue to make this market segment a popular choice for investors. Do your homework, and you may find new opportunities are building all the time!

This article is a small snippet from

"Revealed: The Surefire Way To Make Unreal Profits Using A Secret Formula For The Stock Market"

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