After days of research I simply can not figure out if investing in a few manufactured houses is a good idea or not. I dont quite understand why they dont hold their value as well as a regular home (or maybe they do! Tell me if I am wrong!). In cash flow they seem like a good Investment, in my area they rent for the same price as a regular home, but when it comes to 30 years from now, will I be completely screwed over? They have a foundation, siding, drywall, a shingle roof.... in my mind there really isnt a difference. What is it that I am missing here?
All the manufactured houses around here are on their own land, not leasing or renting the land. The majority are on about an acre or more as well! I've never read that about the financing though.. I will have to look into that. I plan to purchase with cash then go back in and BRRRR them, get a refinance and buy the next house with cash and repeat.
Here is a good overview article about mobile home investing. The information may or may not apply to your area.
The Cold, Hard Lessons of Mobile Home U.
There is a big difference with mobile home (HUD) homes and Manufactured homes that meet the
International Residential Code (IRC) building standard. Manufactured IRC mod home sand are just like a stick built home. They also don't have the same financing issues as HUD Mobile homes and can use conventional financing. Many people say that the manufactured home are build better because they are build indoors in a controlled environment. They are not getting rained on or snowed on during the building process and you can drug test your employees at the factory, vs. a job site contractor. Below is a picture of a manufactured home, it was set on a foundation in one day, back in 2004. Sold in 2017 for $490K $250/sq.ft.
Here is a stick build "brick" home within just a couple blocks in the same neighborhood with a 3 car gar. that sold for $460K $247 cost per sq. ft. (5 months after the above home sold). The brick house about 15% less Square ft., but the basement was finished, the Manufactured home had an unfinished basement.
So I would say the manufactured home on owned land has kept it's value comparable with a stick build Brick house.
We need to be precise with our terms. All of these are "Manufactured" homes.
1. Single Wide Mobile Home sitting on blocks. Could be in a park or on own land. Here in New Mexico these are considered personal property.
2. Multiple Section (Double/Triple) Mobile Home sitting on blocks. Could be in a park or on own land. Here in New Mexico these are considered personal property.
3. Multiple Section (Double/Triple) Mobile Home attached to permanent foundation. Usually, the foundation is concrete pillars that the home sits on and is attached. Then it uses traditional mobile home skirting. Almost always on own land, but doesn’t have to be. Here in New Mexico these are converted to “real property”.
4. Modular Homes are a completely different animal. They have a full foundation. Can be a basement or crawl space. They look like a traditional site-built home. The biggest thing with “modular” is they can participate in market appreciation. Here in New Mexico these start out as “real property”.
Hope this helps!