A good deal on a property is probably something you look for constantly as a Brandon rental property investor. You may be unsure as to whether manufactured homes are a wise investment. It may appear to be the best option for your next rental property at first glance. Especially as the popularity of manufactured homes is widespread across the nation. But before choosing a manufactured home as your next investment property, there are many benefits and drawbacks to take into account.
One of the biggest benefits of purchasing a manufactured home is that they are frequently less expensive than other single-family home types. The way manufactured homes are constructed and installed can result in a significantly lower cost per square foot than other types of properties, even those that are similar in size and age. 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.
Design that is high-quality and environmentally friendly is another advantage of purchasing manufactured homes. Today’s manufactured homes typically match or exceed the quality of conventionally-built homes, in contrast to previous decades. The likelihood that the manufactured home you purchase will be structurally sound, attractively designed, and energy efficient is increased by the strict factory standards for manufactured homes. The majority include upgraded insulation beneath the foundation and within the walls. On-demand water heaters, energy-efficient windows, and energy-saving fixtures and appliances are also available. All of these green features can reduce utility and maintenance costs.
However, investing in manufactured homes has some disadvantages. Finding a good location to construct a manufactured home for rental purposes is one of the greatest challenges associated with the purchase of a manufactured home. Although the cost of the home may be relatively low, the cost of land must also be factored into the overall price of the investment property. Especially in urban or suburban areas, the cost, zoning, and availability of land may present insurmountable obstacles.
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. Manufactured homes may increase in value to the point where purchasing one makes sense for rental properties, but this is up for debate. Some places may severely restrict the future value of manufactured homes due to an ongoing stigma.
Lastly, it may be more difficult to finance a manufactured home compared to other property types. Many mortgage lenders do not classify manufactured homes as “real property.” Some lenders might decline to provide you with a loan large enough to pay for the land and the home itself because they perceive that a manufactured home is temporary. While this objection might eventually be overcome, there are yet additional hurdles for rental property investors to clear. Therefore, are manufactured homes an excellent investment? Depending on location, quality, and the ability to obtain financing, the best answer is that they can be.
Are you in search of a new investment property? Our Brandon property managers help connect rental property investors with off-market deals you can’t find elsewhere. Contact us online to learn more!
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