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Are Manufactured Homes a Good Investment?

Community of Trailer Mobile Homes in Sunny NeighborhoodAs a Homestead rental property investor, you are probably always on the lookout for a good deal on a property. You might be wondering whether manufactured homes are a wise financial decision. It can appear to be the best choice for your next rental property at first glance. In many different areas of the U.S.A., manufactured homes are very common. But before choosing a manufactured house as your next investment property, you need to weigh a number of benefits and drawbacks. 

One of the greatest benefits of purchasing a manufactured home is that they are frequently less expensive than other types of single-family homes. Their cost per square foot might be much lower than that of other properties, even those of the same age and size, due to how manufactured houses are constructed and installed. And where new construction may be out of reach for you as an investor, a new manufactured home will likely be considerably more affordable. They are also easier to construct, frequently taking half as long as conventional homes. So for about the same price as a fixer-upper that would take months to get ready for your first tenant, you could buy and rent a brand-new home right away. 

Quality and eco-friendly design are additional advantages of purchasing manufactured homes. Today’s manufactured homes typically match or exceed the quality of conventionally-built homes, in contrast to previous decades. There is a higher likelihood that the manufactured home you purchase will be structurally sound, attractively constructed, and energy efficient because of the strict factory standards. The majority include upgraded insulation beneath the foundation and within the walls. In addition, they provide energy-efficient windows, on-demand water heaters, and other appliances and fixtures that conserve energy. All of these green features can reduce utility and maintenance costs. 

However, investing in manufactured homes has some disadvantages. Finding a good place to build a manufactured home is one of the biggest challenges in purchasing one to use as a rental. The price of the land must also be taken into account when calculating the investment property’s total cost, even though the home may be relatively inexpensive. Cost, zoning, and land availability issues could be too difficult to overcome, particularly in urban or suburban areas. 

Finding and purchasing a pre-existing manufactured home may help overcome this obstacle, but it brings up a second common disadvantage of manufactured homes: their depreciating value over time. The question of whether manufactured homes appreciate sufficiently to make them worthwhile investments for rental properties is up for debate. In some areas, the future value of manufactured homes may be severely constrained by an ongoing stigma. 

Finally, a manufactured home may be more difficult to finance than other types of real estate. Not all mortgage lenders view manufactured homes as “real property.” Some lenders might decline to provide you with a loan large enough to pay for the land and the home itself because they believe that a manufactured home is temporary. Although this objection might eventually be overcome, it adds new challenges for rental property investors. So, are mobile homes a wise investment? The most appropriate response is that they potentially could be, subject to factors like quality, location, and financing availability. 

Are you looking for your next investment property? Our Homestead property managers help connect rental property investors with off-market deals you can’t find elsewhere. Contact us online to learn more!                            

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