A good deal on a property is probably something you look for constantly as a Dunwoody rental property investor. You may be unsure as to whether 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. Before deciding if a manufactured home is the best option for your next investment property, you must weigh several pros and cons.
Oftentimes, manufactured homes are more affordable than other types of single-family homes and this is one of the greatest advantages. Due to how prefabricated houses are constructed and installed, their cost per square foot can be much less than that of other properties, even ones 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 cut in half compared to conventional houses. That implies you could purchase a brand-new home and rent it out immediately for roughly the same price as a fixer-upper that would take months to prepare for its first renter.
The high quality and environmentally friendly design of modular homes are other advantages. Unlike in the past, the quality of manufactured homes today is typically comparable to or even superior to that of traditionally-built homes. You have a better chance of getting a manufactured home that is structurally sound, attractively constructed, and energy efficient because of the strict factory standards for manufactured homes. Most have enhanced insulation beneath the foundation and within the walls. They also provide on-demand water heaters, energy-efficient windows, and energy-saving fixtures and appliances. These eco-friendly attributes can all lower utility and upkeep costs.
But investing in manufactured homes has some disadvantages as well. 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. Especially in urban or suburban communities, the cost, zoning, and availability of property may provide insurmountable problems.
This problem might be solved by locating and purchasing an existing manufactured home, but this also raises a second typical drawback of prefabricated homes: long-term value. It is debatable whether manufactured homes appreciate sufficiently to make them worthwhile investments as rental properties. In some areas, the value of manufactured homes is severely hampered by an enduring stigma.
Lastly, it may be more difficult to finance a manufactured home compared to other property types. Manufactured homes are not commonly regarded as “real property” by mortgage lenders. Some lenders might decline to give you a loan large enough to pay for the land and the home itself because they feel that a manufactured home is temporary. While this objection might eventually be overcome, there are still additional requirements for rental property investors to meet. Are manufactured homes a wise investment, then? The best response is that they might be, based on factors like quality, location, and financing availability.
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