Manufactured homes are often priced much lower than other types of single-family homes. This is a big advantage. Because of their design and construction, manufactured homes usually have a lower cost per square foot compared to similarly sized properties. And if you are an investor who does not have enough budget for new construction, you will find that a new manufactured home will be more affordable. This type of home is also faster to build, often cutting construction time in half vis-a-vis traditional homes. Comparing that to getting a fixer-upper, you can buy a brand new home and rent it out immediately to your first tenant!
Other advantages of investing in manufactured homes are the quality and eco-friendly design. Unlike before, today’s manufactured homes usually have the same or better quality than traditionally built homes. Manufactured home factories follow very strict standards so there is a very high chance that the one you buy will be structurally sound, attractively designed, and energy-efficient, as well. Most also have upgraded insulation both under the foundation and inside the walls. They also offer on-demand water heaters, energy-saving fixtures and appliances, and energy-efficient windows. All these eco-friendly features will help you have reduced utility and maintenance costs.
There are also drawbacks to investing in manufactured homes. Finding a good location to build a manufactured home to use as a rental can be a challenge. You will have to add the cost of land to the relatively low cost of the home to come up with the overall price of your investment property. You may encounter cost, zoning, and land availability concerns, especially in urban or suburban areas.
Acquiring a pre-existing manufactured home may help overcome this challenge, but it brings to light the second disadvantage of manufactured homes: long-term value. There is still some debate as to whether manufactured homes hold value enough to make them into rental properties. In many places, manufactured homes still come with that stigma, which limits their future value.
Lastly, financing for manufactured homes is typically harder to secure compared to other types of property. This is because many mortgage lenders don’t consider manufactured homes as “real property.” The perceived impermanence of a manufactured home may cause some lenders to refuse to loan you enough to cover both the land and the home itself. Even if this stigma may be overcome after some time, it is a pressing problem current rental property investors must hurdle.
So are manufactured homes a good investment? If you overcome the challenges of location, quality, and ability to secure the financing, they could be.
Are you looking for your next Jefferson investment property? Your local team at Real Property Management Stellar can help! We help connect rental property investors with off-market deals that you can’t find elsewhere. Give us a call today at 706-864-5456 to learn more!