As a Frisco rental property investor, you are probably always on the lookout for a good deal on a property. You might be wondering if manufactured homes are a wise investment. It might appear to be the best choice for your upcoming rental property on the surface. In many different regions of the nation, manufactured homes are quite common. But before deciding whether a manufactured home is the best option for your next investment property, you should weigh a number of advantages and disadvantages.
One of the greatest benefits of purchasing a manufactured home is that they are frequently less expensive than other types of single-family homes. Due to the manner in which manufactured homes are constructed and installed, their cost per square foot can be significantly lower than that of other properties, even those of comparable age and size. And where new construction may be unaffordable for you as an investor, a new manufactured home will likely be considerably more affordable. In many cases, the construction time is halved compared to traditional houses, making them quicker to build. This means that you could purchase and rent out a brand-new home for roughly the same price as a fixer-upper that would take months to prepare for a tenant.
The high quality and environmentally friendly design of modular homes are other advantages. 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 a few disadvantages. Finding a decent place to construct a prefabricated home for rental purposes is one of the greatest challenges associated with the purchase of a manufactured home. Even though the residence may be inexpensive, the cost of the land must also be taken into account when calculating the total cost of the investment property. Cost, zoning, and land availability may provide insurmountable obstacles, particularly in urban or suburban settings.
It may be possible to get around this problem by locating and purchasing an already-built manufactured home, but doing so raises a second issue with these homes: their long-term value. It is debatable whether manufactured homes appreciate sufficiently to make them worthwhile investments as rental properties. In some communities, the future value of manufactured homes may be severely constrained by an ongoing stigma.
Lastly, financing a manufactured house may be more difficult than financing other property types. Many mortgage lenders do not classify 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 perceive 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 a worthwhile investment? Depending on location, quality, and the ability to obtain financing, the best answer is that they can be.
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