As a Frisco rental property investor, you are, at all times, on the lookout for a good deal on a property. You may be pondering if manufactured homes are a good investment. On the surface, it may quite seem like the ideal option for your next rental property. Manufactured homes are popular in many different parts of the country. Although there are certain pros and cons that you should think over first before finally deciding if a manufactured home is the right choice for your next investment property.
Definitely, one of the top advantages of procuring a manufactured home is that they are often lower in price than other kinds of single-family homes. With how manufactured homes are built and installed, their cost per square foot could be significantly lower than that of other properties, even those of similar age and size. And where new construction can thus be out of your price range as an investor, a new manufactured home will presumably be considerably more affordable. They are, moreover, way faster to build, generally cutting the time of construction to half of traditional homes. That implies that you could potentially buy and immediately rent a brand new home for roughly the same cost as a fixer-upper that will take months to make it finally ready for your first tenant.
Additional benefits of investing in manufactured homes include the quality and eco-friendly design. Not like the years prior, today’s manufactured homes are usually the same or better than traditionally-built homes in quality. Factory standards for manufactured homes are very meticulous, which increases the odds that the one you procure will be structurally sound, attractively designed, and energy-efficient, likewise. Several come complete with upgraded insulation both under the foundation and in the walls. They also grant on-demand water heaters, energy-saving fixtures and appliances, and energy-efficient windows. All of these eco-friendly features can enable you to reduce utility and maintenance costs.
However, there are various drawbacks to investing in manufactured homes. Part of the major hurdles to having a manufactured home to put to use as a rental is finding a good location to build it. Even though the home’s cost can really be relatively low, the cost of land must also be factored into the investment property’s overall price. The cost, zoning, and land availability may sadly prove to be insurmountable challenges, especially in urban or suburban areas.
Going in search of and investing in a pre-existing manufactured home may help you win over this challenge, but, on the flip side, it opens up a second common disadvantage of manufactured homes: long-term value. There is some debate in relation to whether manufactured homes appreciate enough to make them worth buying for rental properties. In several localities, there is a lingering stigma pertaining to manufactured homes that can severely limit their future value.
The last point, it may be increasingly difficult to finance a manufactured home compared to other types of property. This is related to the fact that a lot of mortgage lenders don’t consider manufactured homes as “real property.” The perceived impermanence of a manufactured home may cause most lenders to refuse to loan you a fair amount enough to cover both the land and the home itself. Despite that this objection may be overcome with time, it presents additional hoops that rental property investors must jump through.
So, returning back to the question, are manufactured homes a good investment? The correct answer is that they can be, depending on the location, quality, and ability to secure financing.
Are you looking for your next Frisco investment property? Your local team at Real Property Management Focus can certainly help! We help connect rental property investors with off-market deals that you can’t find elsewhere. Give us a call today at 469-820-0088 to learn more!
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