The rising popularity of building homes using recycled shipping containers is impossible to ignore. Using the containers provides some obvious benefits, such as saving money, saving time, and incredible strength and durability. But the process provokes plenty of questions and concerns from potential container-home builders. Many wonder how they could possibly build their dream home within the seemingly-obvious limitations of using rectangular metal containers. We rounded up all the information on shipping container homes that we could find, with the goal of clearing up the misconceptions about container-homes and providing any potential home-builders with the myths and facts about shipping container homes.
FACT: Building with shipping containers can mean huge savings.
To homeowners and builders, one of the of the most desirable traits of shipping container homes is the tremendous cost savings. Using containers saves the costs associated with structure, weather-proofing, and exterior cladding. Some sites estimate that building with containers can lead to a cost savings of up to 40% as compared to traditional construction methods. To break these savings down further, containers have a lower cost per square foot than any other base structure; building with shipping containers can save roughly $70 USD per square foot. This means a savings of $70,000 for a 1,000 sq/ft. home, or a whopping $210,000 in savings for a larger 3,000 sq/ft. home. It makes sense, given that two 40-foot containers can be purchased for less than $8,000, and some containers can be snagged for just over $1,500.
Beyond monetary savings, using containers also means saving precious time–and when building a home, time is money.
FACT: Building regulations and codes are another headache for container-home builders. May we suggest just one thing: Know the building code! “What is allowed? Every location has its own sets of rules and standards. This means a generic product, but climate, fire regulations, etc. are not. Bottom line: If you don’t have extensive experience building with shipping containers and a thorough knowledge of your local building code, it’s best to seek help from professionals who will help you get the job done hassle-free.
FACT: Shipping container homes are strong and durable.
There’s no doubt or disparity when it comes to the strength of shipping containers; in fact, many would agree this strength is the containers’ best feature. Containers are the strongest structure available–stronger than wood, concrete, and even regular steel buildings. The containers are resistant to any natural disaster available, including tornadoes, earthquakes, and even hurricanes. Shipping containers, whether single units or multiple connected units, can withstand up to 100MPH winds when rooted on foundation, or 175MPH winds when anchored with pylons, making container-homes extremely solid especially during earthquakes. Even after a direct hit, the structure would never collapse; “it would be the most perfect safety cocoon in an earthquake, [at] least 100 times safer and stronger than a conventional housing structure.” Source: www.isbu-info.org/faq
FACT: Shipping container homes are green and sustainable.
Some estimates suggest that there are around 24 million empty, retired shipping containers on our planet. Most containers are retired after only 10 to 15 years use, but they can last decades longer. Containers are truly eco-green structures, made from 85% recycled steel and fully recyclable if demolished, and reusing them saves new building materials.
Homes built from shipping containers are becoming increasingly popular, and that should make it easier to obtain a conventional home loan for one. Due to increasing popularity and a greater degree of comfort on the part of banks and their underwriters, there are a great number of options available to borrowers. Lenders typically don’t disburse money on properties that aren’t built yet, so you’ll need to investigate what options are available to you:
• Out of Pocket: Can you fund the construction out of pocket, and refinance it when the construction is complete?
• Construction Loan: Finding a bank, most times a local branch, to provide a short term construction loan, typically broken into disbursements based on progress, could be available in your market. However, at the end of construction you’ll need to refinance the short term loan into a long term mortgage, which may carry a second set of fees.
• Single Close Construction Loan: Some banks offer single close construction loans. These loans give you all of the flexibility of a construction loan, and automatically modify into a mortgage at the end of the construction period. Addressing how to finance the construction phase is the first hurdle, but this is typical for any convention or non-conventional new home construction. After speaking with several mortgage professionals that lend locally, the general consensus comes down to the following factors:
• Credit worthiness: This applies to all loan programs, however it should be said that borrowers with a strong credit rating will be give the underwrite slightly less concern of the bank having to deal with a default on a non-conventional property type.
• “On the Grid”: it’s perfectly acceptable to have alternate power sources, and it’s fine if the power the majority of the power and water to the house, however the house must be connected to the power grid.
• Comparable Properties: It’s very important, if not vital, to have the appraiser look for comparable properties within a reasonable distance. Ideally, the comparable properties would also be container housing. If no container housing is in the immediate area, the next best bet is modular or prefab housing. Any type of property that illustrates similar houses are marketable in the area. The big concern of the underwriter is “if the borrower defaults on the mortgage can the bank sell the property and regain the capital?” It’s important to note that just because you feel that you are able to meet all of the criteria; it’s up to the final judgement of the underwriter. From my experience, it’s always best to approach mortgage underwriters with a “how can I make you comfortable with this property?”, as opposed to an adversarial and argumentative approach.
Finding a bank to lend on a home built from shipping containers may not be as simple as obtaining a conventional mortgage, however the end result will surely be worth the effort. As always, any and all questions are welcome.