Are Mobile Homes A Good Investment
Emerging data points to a manufactured home industry that is quickly becoming the preferred choice. Rising sales, lower costs, and an ability to enjoy larger homes with equivalent amenities and luxury items favor the manufactured sector. Since agencies such as HUD implemented rigorous quality construction mandates and offered government-backed mortgages, the scales have tilted well to the manufactured preference. But the lynchpin may be the fact that low monthly mortgage premiums and long-term savings make manufactured homes a far superior financial choice for hard-working families.
Ray Gritton has been in the manufactured housing industry for over 40 years when he started his first dealership in Modesto in the 1970s. Since then he has worked for large corporations in charge of hundreds of dealerships and now owns 13 locations in 5 different states.
Experience : Building Modular Homes
* Please keep in mind that all text is machine-generated, we do not bear any responsibility, and you should always get advice from professionals before taking any actions.
* Please keep in mind that all text is machine-generated, we do not bear any responsibility, and you should always get advice from professionals before taking any actions
Is Buying A Manufactured Home A Good Investment
Purchasing real estate is generally a good investment, whether it is undeveloped land, traditional site-built/stick-built homes, or manufactured homes.
That said, if you are looking to invest in or buy a manufactured home, but are on the fence about it, then you have come to the right place. In the past few years, manufactured homes have been very much in demand for a variety of reasons.
In fact, one reason, in particular, is because they are becoming more of a lucrative investment. This is not too surprising as todays mobile homes are completely different from those of yesterday.
investors/buyers are changing their tune when it comes to manufactured housing.
Don’t Miss: Current Interest Rates For Investment Property Loans
Is It Worth Buying A Manufactured Home
manufactured homeshomesmanufactured homeshomes
. Also asked, do manufactured homes last long?
Manufactured homes do not last as long as site-built homes. Reality: Manufactured homes are built with virtually the same construction materials and techniques as site-built homes. The study found that the habitable life of manufactured homes depends on the year of manufacture.
is it cheaper to build a house or buy a manufactured home? Manufactured homes can cost an average of $62,600, compared with $272,200 for a single-family site-built home . Not only are manufactured homes cheaper to own than site-built homes, they’re cheaper to build and maintain.
Likewise, what are the disadvantages of buying a manufactured home?
- Build Quality. Lower-end manufactured homes often achieve their affordable prices not only through the efficiency of factory construction, but also through lower quality construction methods.
- Undesirable Layouts.
- High-Quality Manufactured Housing.
Why you should buy a manufactured home?
Manufactured homes offer a housing option that doesn’t only involve less construction waste and better use of resources compared to conventional homes they can also be equipped with intelligent, eco-friendly features like low-E windows, programmable thermostats, cool roofs, upgraded insulation and many more.
The 20 Best Manufactured Homes For You And Your Family
- Sunset Bay 2 Home.
Fort Lauderdale Poised For Unprecedented Growth This Decade
Another term, manufactured housing, is often swapped with modular housing. Manufactured housing, however, is a type of modular housing, created under stringent rules and regulations defined by the National Manufactured Housing Construction and Safety Standards Act of 1974. It is those manufactured homes, situated in four- and five-star lifestyle communities, that represent ideal investments. According to the Manufactured Housing Institute, approximately 22 million people live in manufactured homes nationally.
How It Works
When a homeowner acquires a stick-built house, he or she also owns the foundation on which it is built. This is not always the case with a manufactured home, however. In many cases, the site on which a prefabricated house is reassembled is owned by another entity.
Put another way, that entity would own the real property , and lease it to the resident income flow comes from both collected rents and outside investments. The prefab house, meanwhile, is considered personal property, rather than real property, according to the U.S. tax code. And, if the land-owning entity is interested in attracting high-end tenants, that entity will own and operate a high-end manufactured housing community.
Such communities are far from images conjured by the so-called trailer parks of the mid-20th century. They might offer a variety of residential amenities, such as fitness centers, swimming pools and even an on-site lifestyle director.
Why It Works
Working As An Investment
You May Like: What Is Investment Risk Management
Final Thoughts On Mobile Home Investing
If done properly, it can be very profitable to invest in mobile homes. Nevertheless, this isnt an investment for everyone. If you have interest in expanding your portfolio elsewhere, sign up for our informative e-letter below. Well provide you with helpful tips and ideas to gain financial freedom in your life.
As with any investment, its important to determine if investing in mobile homes is in line with your financial goals and portfolio going forward. But make no mistake, this is a lucrative industry that is largely untapped at the moment. You can invest in mobile homes at a low cost with the potential for great returns.
About Corey Mann
Corey Mann is the Content Manager of Investment U. He has more than 10 years of experience as a journalist and content creator. Since 2012, Coreys work has been featured in major publications such as The Virginian-Pilot, The Washington Post, CNN, MSNBC and more. When Corey isnt focusing on Investment U, he enjoys traveling with his wife, going to Yankees games and spending time with his family.
Renting Vs Buying Your Manufactured Home
There are many pros and cons to both buying and renting a manufactured home. Each option has its benefits and drawbacks. Ultimately itâs about deciding what is right for your family, your finances, and your future.
There are a few different ways you can go about putting yourself in a manufactured home:
Read Also: Return On Investment For Bathroom Remodel
The Drawbacks Of Investing In A Manufactured Home
There are some drawbacks that come with purchasing a manufactured home. Usually, if it isnt on a permanent foundation. You may not be able to get a traditional mortgage to buy one. Similarly, if you dont own the land or arent in the process of buying it as well most mortgage lenders wont finance the purchase.
Even if you do buy land and want to put down a permanent foundation. You may not be able to place a manufactured home just anywhere. Local zoning laws may prohibit them in certain areas. If thats the case, getting an exception can be incredibly challenging, and may not even be possible.
There can also be insurance concerns. Manufactured home insurance is generally more expensive than typical homeowners policies. They may not be at risk of greater damage during certain kinds of catastrophic events, such as fire, high winds, and floods. In some regions, manufactured houses have a higher rate of theft claims, something that causes elevated insurance rates for all owners in the area.
Appreciation Isnt The End Of The Story
Another biased belief is that youll always gain more equity when you buy a big expensive home. The reasoning goes something like this: 20% appreciation on a $200,000 house is $40,000 while a 20% gain on a $50,000 mobile is just $10,000, so buy as much home as you can afford That sounds reasonable, but it ignores an important factor:
Your ongoing costs are higher with a more expensive home, and that can offset any equity gain from appreciation.
A bigger home costs more to heat, cool, and maintain. A bigger mortgage means higher interest charges. A higher price also means higher property taxes and insurance rates. You could easily spend $750 more per month to buy the biggest home you can afford, versus something smaller and less expensive.
That $750 per month is $9,000 per year extra versus living in a cheaper mobile home. What if you saved and invested $9,000 per year? Ten years down the road you might be much further ahead than if you had bought an expensive house.
And yes, in my case I did save and bank a lot more money because my housing expenses were so low. This was especially true after I quickly paid off the mortgage loan.
Also, the whole buy as much as you can afford argument assumes real estate values will go up. What if they dont? What if they drop? In that case
Also Check: How To Start An Angel Investment Fund
Maintenance And Repair Costs
Another reason why buying mobile homes a good investment for you is because routine maintenance and repairs are relatively inexpensive.
Since you are buying the modular home outright, you are responsible for its upkeep and repairs. The good news is common electrical issues, plumbing repairs, and so on will cost you a lot less than if you had the same problems with a conventional stick-built home.
Top Things To Know About Buying And Renting Mobile Homes
Are you interested in buying or renting a mobile home? Before you sign anything, make sure youve done your research and know what youre getting into. If you dont, you could end up wasting time and money on things that couldve been avoided. To get you started, were going to take you through the top things you need to know for just about every buying or renting situation you can think of. This will cover buying and renting mobile homes for personal use, buying for investment purposes and more. Lets get started.
Don’t Miss: Mortgage Loan Rates For Investment Property
Tips For Buying A Mobile Home For First
- Not every homeowner is buying a home as an investment, and not everyone can afford a conventional house. If you want to buy an affordable place to live without a lot of property maintenance, buying a mobile home may be the perfect option. Ready to look for land to put your mobile home on? Start your search on Trulia.
Site Location And Other Costs
If you’re moving into a manufactured home park community , check the community fees and any rules involving your home, including construction requirements and restrictions. If you’ll be on your own property, find out if local zoning laws permit manufactured homes on your site.
You’ll also want to make sure you understand all the extra costs involved in transporting and setting up a manufactured home on a site. Part of the negotiation is often who will pay for the move costs you or the home dealer . And while a manufactured home is easier to set up than a newly constructed one, you will still need to connect utilities and have a foundation and underpinning in place.
Recommended Reading: How To Start A Real Estate Investment Firm
Finding The Right Land
Another issue with modular homes is finding the right land that you can use to put your home on.
The reason for this is because you need the land to be of a high quality so that you can build your home properly, but the other issue is that some types patches of land will only allow certain types of buildings pn which may not include a modular home, so again you need to consider this fact if you would like to place your home in a more urban area.
You will also have to pay for the actual land that you want to build the modular home o n which can be very expensive when it comes time to purchase it.
The added expense of the land can really turn a person off of the idea of purchasing a modular home.
Mobile Homes Can Be Safe
If youre in an area with a lot of tornados a mobile home will probably never be as safe as a brick house. Plan accordingly Although tornadoes were rare where I lived, I has a cement-block well pit I could climb into and close, just in case.
Youre safer buying mobiles made after 1976. Thats when new HUD standards went into effect. In fact, post-1976 mobile homes have lower rates of fires than site-built homes.
Don’t Miss: Setting Up An Llc For Personal Investments
A Mobile Home Is Housing Crash Insurance
Proportionality of gains is true of losses as well. A 20% drop in value is $40,000 on a $200,000 home, but only $10,000 on a $50,000 mobile. And actually, because people always have to live somewhere, lower-priced homes generally fall less in value, even on a percentage basis. So if you suspect home prices are topping out, it may make sense to buy a mobile home just to keep your investment in real estate to a minimum.
For example, in 2005, when my wife and I lived in Tucson, Arizona, we looked at houses and it was clear we were in a real estate bubble. A small two-bedroom house cost at least $150,000. As friends jumped in and bought even more expensive houses, we bought an old mobile home on a rented lot for $9,000 cash.
Lot rent was $300, saving us about $200 per month versus our previous apartment. In 2006 we sold the mobile for $9,000 and moved to Colorado, where we bought a small house for $65,000. Had we bought that $150,000 home in Tucson we would have lost at least $40,000 as prices plunged in the coming years.
Meanwhile, even though we bought at the top of the market in Colorado, we sold that $65,000 home for $72,500 a few years later . Im convinced by this that low-priced homes cant lose nearly as much value as higher-priced ones because people have to live somewhere. And mobile homes are some of the lowest-priced options.
The Pros Of Renting Mobile Homes
- Low Entry Barrier
- One of the most appealing aspects of renting mobile homes is their low cost. However, investors can often find used mobile homes for under $10,000, which is way less than a brand new home. Some folks will sell their mobile house for less than $1,000 to avoid paying lot rent.
The inexpensive cost of a mobile house allows people to begin investing in commercial real estate. Mobile homes can be bought for under $5,000 with some legwork.
- Higher ROI
- Low initial investment means great potential ROI.
A $2,000 mobile house with a monthly profit of $100 after lot rent and expenses is a 60% return.
Recommended Reading: How Much Do You Invest In Crypto
When Is Buying A Mobile Home A Good Investment
- When placed on private land, a mobile home is real property and will appreciate similarly to a site-built home.
- Of mobile homes placed on leased land, there are a variety of factors that affect the value and appreciation of the home.
- Overall, factory-built homes bring many advantages over site-built homes that contribute to making buying a mobile home a good investment.
A recent study published by the Federal Housing Finance Administration showed that manufactured homes on land appreciate similarly to site-built homes. Once placed on land, the mobile home legally is real property rather than personal property. The fact that your home was built off-site in a controlled environment is an advantage compared to a home where the building materials sit out in the elements. The controlled environment also allows a manufactured home to be built faster than a site-built home.
Lower Repair And Maintenance Costs
Nothing makes a buyer happier than knowing that their product will have a low upkeep and maintenance cost, which is exactly what mobile homes offer.
With these style homes, most repairs you can even think of happening to a traditional real estate home will most certainly cost less if the same happens to a manufactured home.
Ultimately, these homes will save you time and from the stress of dealing with contractors.
Recommended Reading: Why Investing In Gold Is A Bad Idea
Manufactured Homes Are The New Mobile Homes
While still often referred to as âmobile homesâ the manufactured homes of today have essentially replaced older mobile homes and have become a reliable, reasonably priced housing option for people of every age and income. In fact, mobile homes have not been produced since the late 1970s. Todayâs manufactured homes are created with much better construction techniques and have much higher building standards, which means more longevity and better value.
If youâve made the smart choice to move into a manufactured home, it means youâre ready to live an affordable yet comfortable lifestyle. These homes are a perfect option for anyone looking to downsize to a manageable home size or save on monthly expenses. Luckily, manufactured homes can be accessible and affordable for those looking to lease or rent, and for those looking to buy or invest.
Can You Really Make Money In Mobile Home Renting
Yes, you can!
Theres a lot that comes along with mobile homes that many people struggle with.
Now, dont get the wrong idea
Its not impossible to make money with real estate, but if youre gonna put in the amount of grueling work to do this business , you might as well bring in some REAL money while youre learning the ropes.
The program that helped skyrocket many online businesses to over $40,000+ per month is so simple that making money really does become second nature.
Recommended Reading: Best Investment Platform For Small Investors
Questions To Ask When Buying A New Home
Whether you are building a traditional home or choosing to go with modular construction, it will be essential to get some basic questions answered.
Here is a list of questions to ask a builder. Make sure you get these questions answered to your satisfaction before moving forward.
Many people end up disappointed when building a home for lots of reasons. Vetting the builder is a critical exercise.