Modular home construction for rentals, are you doing it?

Question

So, after over 10 years of looking at properties and suffering from analysis from paralysis I finally am closing on my first rental at the end of this month. I am wondering about the opportunity of building modular homes (1-4 units) on vacant lots, and renting them out. Are any of you doing this or know if anyone doing this in our area?

When I was a renter I did not care what type of home it was, and I assume no one else does either. So far it looks like modular homes can be purchased/constructed at cheaper rates than stick built, and I don't think they would rent differently. I am not looking to place them in higher end neighborhoods so customizing them would not be an issue. Anyone have any thoughts / advice on this tactic?

Thank you for your time!

Joe Gutmann · Answer

Thank you for the reply jason, but modular homes are not manufactured/mobile homes. Modulars are built to the florida byilding code standards, not hud/dmv. I am not sure that modular homes have to be disclosed any differently than stick built but I will be checking with the lawyer on friday.

Jason Brown · Answer

Congrats on the first deal!

I don't know of anyone in our area doing that modular home strategy. Although they may cost more, I do believe a house will command a higher rent than a mobile home in most areas.

Perhaps you can generate better cash on cash returns doing what your talking about. For ease of funding and long term value however, I have to think houses will be much better.

If I were you, I'd show up to Larry Harbolt's meeting on Monday and ask for opinions during the discussion portion of the meeting.

Good luck!