If you’re itching to become a homeowner but can’t afford the high price tag for a conventional home, mobile or industrial homes may be just the thing for you.
Mobile homes have come a long way since the 1970s, both structurally and aesthetically.
The new models are based on the HUD code and look nothing like the campers you see in Trailer Park Boys. They are spacious, easy to customize and look almost like a traditional home.
That being said, there are some considerations to consider before buying, such as the value of the land it will sit on, the long-term cost, and financing options.
Are mobile or ready-made homes a good investment?
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Mobile homes are considered affordable housing, but that doesn’t mean they’re very cheap. You still have to invest several thousand dollars to buy it, so it’s only natural to ask yourself if this alternative accommodation will be worth the investment in the long run.
Sean Henga former investment banking analyst who specializes in commercial real estate and equity says the answer to that question will depend on what you want out of your motorhome.
“If your main goal is a place to live, then a mobile home can be a great solution.”
But if you’re looking to buy a mobile home primarily to build wealth, you might be better off buying a traditional home.
Why?
Well, according to Heng:
“Buying a mobile home is like buying a car. Its value will immediately begin to depreciate, and in just a couple of years it can cost significantly less than you bought it.
He also notes that selling mobile homes can be a headache, so be aware of this before buying.
More: Truth? Your home is not an investment
How Mobile Homes Differ From “Traditional” Homes: Cost Comparison
| Mobile House | “Traditional” house | |
|---|---|---|
| Purchase price (average) | $81,900 | $331,533 |
| Utilities | $250 per month | $400 per month |
| Homeowners Insurance | $300 to $1,000 per year | $1200 per year |
| Property tax | Depends on the city and state, and whether you own land or not. When renting a plot in the park, taxes are included in the rent. | $2000 per year |
| Service | $1,448 per year (subject to $1/sq.ft maintenance rule) | $3018 per year |
| Land value | $2,000 to over $10,000 (purchase) 200-2000 dollars per month (when renting a plot in the park) |
Included in purchase price |
| Transporting it to its final destination | $2,500 to $10,000 depending on distance and size (this may be included in your credit) | N/A |
Many new homes are eco-friendly, which means they cost less.
Remember the HUD code I mentioned earlier? It was revised in 1990 to make mobile homes more energy efficient and more resilient to natural disasters such as hurricanes.
Features of the new models:
- Water heaters on request.
- Energy saving windows.
- Higher levels of insulation around the perimeter, including under the house and around electrical outlets.
- Water-saving plumbing and faucets.
Some models even feature energy efficient lighting and are ENERGY STAR certified, which means they produce fewer greenhouse gases than most properties.
So not only are they good for your wallet (because you’ll spend less on utilities), they’re also good for the environment compared to many traditional homes.
How much does a mobile home cost?
The most significant attraction of choosing a mobile home over a stick-built or site-built home (also known as a “regular” home) as your residence is their price.
According to Zillowa typical US home costs over $330,000, a figure that grows every year and makes my heart skip a beat every time I think about it.
On the other hand, mobile homes sell for an average of $81,900. Latest data from the Industrial Housing Institute. But some models can cost as little as $50,000, so you can buy your own home for less than a third of what you would pay for a regular home.
In addition, mobile homes are cheaper to maintain than traditional homes due to their size, plus you save money on property tax.
More: Why You Should Pay Attention to Property Taxes When Buying a Home
How to move a mobile home? (And how much does it cost this Price?)
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Let’s say you have a job that requires you to move to another city or state, and you have a regular house or apartment.
If this happens, you have two options: rent your home or sell it while facing the stress of finding a lease or buying another home in a new location. But, if you have a mobile home, you can always take it with you.
It will cost you money and it won’t be as easy as you think. You will need to hire a professional company to make the move.
Brad Shechtmanmanaging partner at American Mobile Home Communities, says that, depending on the distance and size of your mobile home, you could pay between $4,000 and $8,000 to move it. However, it is a cheaper investment than starting from scratch if you need to move forward in the long run.
Is it harder to get mobile home financing?
Mobile homes are affordable, but most of us don’t have $80,000 to buy out of our own pocket, which means you’ll have to look for financing options.
With a traditional home, you can always apply for a secure mortgage to help finance your purchase. But with a mobile home, getting a mortgage can be tricky.
Let me explain.
Since mobile homes are, well… movable, they are not considered real estate. Instead, they are considered personal property, just like a car or motorhome.
Mortgage loans are real estate loans, in other words, real estate that is attached to the land. So, in order for a lender to issue a loan, your mobile home must be placed on a permanent foundation and you must own the land on which your mobile home will stand.
Majority mortgage lenders will issue a loan for Crossmode mobile homes, which are higher quality models placed on a permanent foundation, are energy efficient and feature plasterboard interiors, among other things, making them comparable to a traditional home.
These models still cost less than $200,000, but they are more expensive than your average motorhome.
The advantage, however, is that you can claim a lower an initial feeas they are usually eligible for conventional loans secured by Fannie Mae and Freddie Mac, FGAand VA loans.
What if you don’t own the land or don’t want a CrossMod home?
Good question. If so, you can always apply for a “movable property mortgage”.
A personal property loan is designed specifically for personal property and is the most common financing option among mobile home owners.
The catch, however, is that “mortgage loans have shorter terms than traditional loans, and they do have higher interest rates,” he says. Ravi ParikhCEO Rover Passa company that connects users to campsites.
Personal property loans typically have a repayment period of up to 20 years instead of the usual 30 years you get with a traditional mortgage, and interest rates can range from 7% to 10%.
So your monthly payments will be higher than with a mortgage, but Parikh also notes that this means you’ll be able to pay off the loan faster, plus you’ll also be able to deduct interest paid from your taxes the same way. you would with a mortgage.
You can also take personal loan to finance your mobile home. However, they have even higher interest rates than personal property loans and their interest is tax-free, so they should be your last resort.
You will need to secure the land
One of the biggest challenges when buying a mobile home is finding a place to put it.
There are two ways to do this: either buy a piece of land or rent it.
The latter option is the most economical and easiest, as you won’t have to spend money on land improvement or property taxes – in most cases. But that doesn’t necessarily mean it’s super cheap.
Shechtman, from American Mobile Home Communities, says that while some mobile home parks may charge as little as $200 a month, these low-cost options are usually limited to remote areas. If you want to live close to an urban area, you can expect to pay a couple of thousand or more, which ultimately increases the cost of homeownership.
Similarly, buying land in an urban area is much more expensive than in a remote area, plus you will have to deal with community zoning laws that can potentially cause serious problems.
If the land is not developed, which means that if the space is not properly subdivided or prepared to connect your utilities, you can expect to be paid $10,000 or morebetween fees and permits to get everything right for your new home, in addition to the cost of the land.
Are mobile homes depreciating in different ways?
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Unlike traditional homes, which increase in value over time, mobile homes rarely increase in price. On the contrary, over time they lose their value. says Parikh from RoverPass.
“Typically, mobile homes depreciate between about 3% and 3.5% per year, which is slightly lower than the average home depreciation rate of 3.636% per year. However, keep in mind that only the value of the buildings can be depreciated, not the land itself.”
They depreciate faster than locally built homes because mobile homes are considered personal property, not real estate. This means it starts to lose value as soon as it leaves the factory, so you rarely get a return on your investment or make a profit on a sale.
Even so, they can still serve as an asset, especially with proper care and maintenance.
Melanie Mussonfinance expert in MobileHomeInsuranceQuotes.orgsays that even though mobile homes aren’t as valued as timber-frame homes, they’re still a step ahead of renting from a financial standpoint.
“When you rent a house, you don’t own the value of it. With a mobile home, even though it depreciates in value, you still own the value it has.”
In other words, you can still do a little money from it if you decide to move on, either by selling it or renting it out.
Summary
Modern mobile or industrial homes are affordable, versatile, safe, and aesthetically pleasing, making them a great option for a starter or permanent home.
But whether they are right for you will depend on your intended purpose.
If you are looking for affordable accommodation, then look no further. But if you want to accumulate wealth in the long run, it might be better to save a little longer and buy a regular house instead.