Most Grapevine rental property investors are always looking out for good deals on properties. You might have been wondering if manufactured homes are a good investment. When you first think of it, it would seem like an ideal option to add to your rental properties. You can see many manufactured homes in different parts of the country. However, there are some pros and cons that you should think about before you decide if a manufactured home is a wise choice as your next investment property.
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. If new construction is not within your budget yet as an investor, a manufactured home will be much more affordable. They are also faster to build than traditional homes. For roughly the same amount you would spend on a fixer-upper that would take months to get ready, you could buy and immediately rent out a brand new home to your first tenant.
Other benefits of investing in manufactured homes include the quality and eco-friendly design. Present-day manufactured homes are made with the same or better quality than traditionally-built homes. With the strict factory standards set in place for manufactured homes, there is a very high likelihood that the one you buy will be structurally sound, attractively designed, and energy-efficient. They also have upgraded insulation both under the foundation and in the walls. They also offer on-demand water heaters, energy-saving fixtures and appliances, and energy-efficient windows. You can save a lot on utility and maintenance costs with these eco-friendly features.
On the other hand, investing in manufactured homes also has its drawbacks. One of the biggest challenges to buying a manufactured home to use as a rental is finding an ideal location to build it. 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. If you are eyeing a rental opportunity in an urban area, cost, zoning, and land availability will be a big challenge for you.
To overcome this challenge, you could look for and buy a pre-existing manufactured home. This will bring us to the next common drawback of manufactured homes: long-term value. There is still an ongoing debate as to whether or not manufactured homes appreciate enough to make them worthwhile rental property investments. Some areas still have a stigma about manufactured homes and this can limit 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. This is currently one of the greatest hurdles for rental property investors.
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 Grapevine investment property? Your local team at Real Property Management Five Star can help! We help connect rental property investors with off-market deals that you can’t find elsewhere. Give us a call today at 682-831-1300 to learn more!
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