Are Manufactured Homes a Good Investment?
Evaluate manufactured homes as an investment. Get a balanced perspective on their costs, appreciation, and long-term financial implications.
Manufactured homes offer a unique path to homeownership. Understanding their characteristics and financial implications is important for those considering this housing option from an investment standpoint.
Defining Manufactured Homes
Manufactured homes are factory-built dwellings constructed under a federal building code administered by the U.S. Department of Housing and Urban Development (HUD). This federal standard, known as the HUD Code, regulates design, construction, structural durability, transportability, and energy efficiency. These homes are built on a permanent chassis and transported in one or more sections to their final site.
A key distinction exists between manufactured homes and older “mobile homes”; the term “mobile home” refers to factory-built residences constructed before June 15, 1976, when the HUD Code became effective. Unlike modular homes, which adhere to local and state building codes, manufactured homes are governed by a single national standard. This federal oversight ensures consistent quality and safety.
Initial Cost and Financing
Upfront costs include the purchase price, which varies by size and features. A new single-wide manufactured home might average around $86,600, while a double-wide could average approximately $156,300, excluding land costs. The total cost also depends on whether the home is placed on leased land within a community or on land owned by the homeowner.
Financing options for manufactured homes differ from those for traditional site-built properties, especially when the land is not owned. Chattel loans are common for homes on leased land, treating the home as personal property rather than real estate. These loans have shorter terms and may carry higher interest rates compared to traditional mortgages. For manufactured homes affixed to owned land, conventional mortgages may be available, requiring a down payment between 5% and 20%.
Government-backed programs also provide financing avenues. Federal Housing Administration (FHA) Title I loans can finance a manufactured home even if the land is not owned, with down payments as low as 3.5%. For military service members and veterans, VA loans offer 100% financing, eliminating the need for a down payment. Fannie Mae and Freddie Mac also offer programs like MH Advantage, with down payments as low as 3%.
Value and Appreciation
A common misconception is that manufactured homes depreciate like vehicles. However, data indicates that when properly sited and maintained, especially on owned land, manufactured homes can appreciate at rates comparable to site-built homes. Between 2000 and 2024, manufactured homes appreciated at nearly identical rates to site-built homes, growing approximately 5% annually. Land ownership is a key factor influencing this appreciation; homes on leased land do not appreciate as much.
Several factors impact a manufactured home’s value, similar to site-built homes. Location plays a significant role, with homes near desirable amenities, schools, or employment centers potentially increasing in value. The age and overall condition of the home are important, as are any upgrades or renovations that enhance it. The overall health of the local housing market and community quality (if in a park) influence value retention and potential appreciation.
Ongoing Expenses and Resale Considerations
Ownership of a manufactured home involves several recurring costs. If the home is located in a manufactured home community, lot rent is a primary expense, ranging from $500 to $1,200 per month nationally, depending on location and amenities. This fee covers the use of the land and community services, but it does not build equity for the homeowner.
Property taxes are another ongoing cost, assessed differently based on land ownership. If the manufactured home is on owned land, it is taxed as real property. If the home is on leased land, it may be taxed as personal property, though this varies by jurisdiction. Insurance for manufactured homes is distinct from traditional homeowners insurance, costing between $700 and $2,000 per year. Factors like location, age, condition, and chosen coverage limits influence premiums, and policies provide actual cash value coverage, which accounts for depreciation.
Reselling a manufactured home involves considering the availability of financing for potential buyers, which can be more limited than for site-built homes, particularly for older units or those on leased land. The home’s condition, age, and any upgrades contribute to its marketability. Market liquidity for manufactured homes can vary by region, making a strong local market important for a smoother resale process.