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Are Manufactured Homes A Good Investment?

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As a Homewood rental property investor, you are probably searching for a good deal on a property constantly. You might be wondering if manufactured homes are a wise investment. It may appear to be the best option 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 home as your next investment property, there are a number of benefits and drawbacks to take into account. 

A manufactured home is often more affordable than other single-family home types, which is one of its biggest benefits. 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 your price range as an investor, a new manufactured home will probably be significantly less expensive. In many cases, the construction time is halved compared to traditional houses, making them quicker to build. 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. 

The high quality and environmentally friendly design of modular homes are other advantages. Today’s manufactured homes are often on par with or superior to traditionally-built homes in terms of quality. 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 foundation and walls of the majority already have upgraded insulation. They also provide on-demand water heaters, energy-efficient windows, and energy-saving fixtures and appliances. All of these green features can reduce utility and maintenance costs. 

However, investing in manufactured homes has a few disadvantages. Finding a suitable location to build a manufactured home is one of the biggest obstacles to buying 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 with this issue, but it also raises a second common drawback of these homes: long-term value. Whether manufactured homes appreciate sufficiently to make them worthwhile investments for rental properties is up for debate. In some communities, the future value of manufactured homes may be severely constrained by an ongoing stigma. 

Lastly, it may be more difficult to finance a manufactured home compared to other property types. The term “real property” is not often used to describe manufactured homes by mortgage lenders. Some lenders might decline to provide you with a loan large enough to pay for the land and the home itself because they feel that a manufactured home is temporary. Although this criticism may be overcome with time, it offers additional hurdles for investors in rental property. Therefore, are manufactured homes an excellent investment? The best response is that, depending on the setting, level of quality, and availability of financing, they might be. 

Are you trying to find your next rental property? Our Homewood 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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