Why You Should Invest in Manufactured Homes in 2023

There are a lot of different roads to take when it comes to purchasing a home as an investment property. From buying single units, condos, apartments, townhomes, vacation rentals, or even tiny houses, the choices are endless. However, purchasing a mobile home is an alternative to investing in real estate that is frequently disregarded. 

Many people are under the impression that mobile homes cannot be used as a profitable investment in real estate because they do not hold the same value as traditionally built homes. Nonetheless, purchasing a manufactured house as an investment has grown in popularity in recent years. It has shown to be a rewarding investment for a number of astute real estate investors. 

Did you know that the United States has over 22 million people living in manufactured homes? In fact, one of the most significant unsubsidized sources of low-cost housing is mobile and manufactured homes. 

This raises an important question for many potential investors, including yourself: Should I put my money into manufactured homes? 

Let us answer this in detail!

An Overview of Manufactured Homes 

Manufactured homes, also referred to as mobile homes, are a form of real estate constructed in a factory before being shipped to their final location. Mobile homeowners have the option of placing their homes either on property that they own or on land that they lease. The house may be made up of a single unit, or it might be made up of numerous components that will be shipped separately and then erected on the property. On-site work includes establishing connections to sanitary, water, and electrical infrastructure. To give the impression that the structure was traditionally constructed, it may be surrounded by siding or blocks, or it could be affixed to a solid foundation. 

Construction of manufactured homes takes place in a strictly regulated atmosphere and is performed by skilled tradespeople. In most cases, the completion of a house will take between two and three months. The ability to stockpile materials means that delays in the scheduling process are kept to a minimum, and quality is ensured through training and specialization. A simplified schedule makes the construction process highly effective; in most cases, only a limited number of models are accessible. However, in recent years, the availability of custom choices has grown more widespread. 

Investing in Manufactured Homes – Pros & Cons 

It's essential to recognize the advantages as well as the downsides of any circumstance; however, it is especially important to do so when it comes to a financial one. When considering whether or not purchasing a manufactured house represents a good potential for financial gain, you should first ensure a thorough understanding of how this question pertains to your unique circumstances. 

Advantages:

It is affordable 

Compared to purchasing a conventionally constructed home, the price of a manufactured home is typically far more reasonable. According to a recent survey, the average cost of a site-built home is $107 per square foot, but the average price of a manufactured home is $49 per square foot. Because of the low cost of these investment properties, you might find that your monthly mortgage payment is only $200 or $300. 

It is faster to install  

The construction of a mobile home can be finished in as little as two to three months, while the typical stick built house can take up to six months or even longer. Purchasing a prefabricated home is a process that progresses quickly from one step to the next because a skilled labor force constructs the house in a managed atmosphere. Because the materials have already been stocked up, the quality is guaranteed, and delays are kept to a minimum. The completion of the installation at the location takes only a few days and the investment property is ready to rent. 

It is versatile  

Purchasing a manufactured home provides longer-term alternatives for modification, in contrast to constructing traditionally built homes. Investors in real estate might get their feet wet with a simple building and then build on that foundation as their needs evolve. For instance, you may improve the quality of manufactured houses by installing permanent foundations, site-built garages, decks, patio covers, and awnings. Another option is to alter the outside siding to be made of stucco, hardboard, wood, vinyl, or metal. 

It is eco-friendly 

Mobile homes are known for their high level of environmental and energy efficiency. A high level of energy efficiency must be achieved in mobile homes for them to comply with HUD rules. This can be accomplished by installing on-demand water heaters, energy-efficient windows, insulated skirting, "belly wrap," as well as insulation under the home and in the walls. Further improvements in energy efficiency can be made with the installation of water-saving faucets and fixtures, energy-saving appliances, and energy-efficient lighting. 

It has structural strength 

Every manufactured home that is put up for sale in the United States must have a "red seal" affixed to it  that cannot be removed. This demonstrates that the home has passed what is often referred to as the most rigorous certification process in the building industry. 

It is safe 

Manufactured homes are built to be energy efficient and wind resistant by their design. Because of restrictions on the federal level requiring limited combustible materials, escape windows, and smoke detectors; mobile homes are among the safest dwelling options that can be found on the real estate market today. 

Disadvantages:

Availability of land 

There is a severe lack of land available in many cities and towns in the United States. Finding land to put a prefabricated house on might be difficult for real estate investors, despite the relatively lower cost of purchasing a manufactured home. Even in situations where land is easily accessible, the prices could be too high to make the investment worthwhile. 

Prevailing stigma 

Even while mobile homes and other alternative dwelling designs have become more popular in recent years, there are still some regions where people look down on those types of residences. The zoning regulations in some areas do not allow for the placement of manufactured homes. Because of this, real estate investors are left fewer locations when it comes to installing a manufactured home. 

Long-Term Value  

The values of manufactured homes are more likely to decrease with time, in contrast to the values of traditionally built homes, which are more likely to increase. Considering that the property tax bills for a manufactured home are typically relatively modest, purchasing one can prove to be a benefit in the short run. However, over time the resale value of manufactured houses may decrease due to depreciation. 

Meeting lender requirements 

It is possible that financing manufactured houses will be a very challenging issue. Lenders typically offer mortgages to purchase "real property" that includes land. Even when placed on piers or concrete slabs, mobile homes frequently do not satisfy the requirements for obtaining a mortgage. On the other hand, the mortgage application will have a better chance of being accepted if the investment property has either a basement or a concrete foundation. 

Take Away

When weighing the benefits and drawbacks of mobile homes, the benefits consistently win out over the quality of the production process and the lower cost compared to stick built homes. Mobile homes are becoming increasingly popular and are regarded as a strong and favorable alternative to traditional residences. Rising sales, low expenses, and the freedom to have a home with amenities similar to a site-built home are selling features for the individuals who rent them, making this asset a winner as an investment opportunity. 

So coming back to the question: should you invest in manufactured homes? It is a definite yes from us!