Like a lot of Cedar Park rental property investors, you are likely to be waiting and watching for good deals on a property. You could have wondered if manufactured homes are a good investment. It might appear to be an ideal option as a rental property at first thought. Manufactured homes can be seen in many different parts of the country. But you should consider some pros and cons first before deciding on getting a manufactured home as your next investment property.
An advantage of buying a manufactured home is its lower price compared to other types of single-family homes. It is because of the way they are built and installed that their cost per square foot can go much lower compared to properties of similar size or age. When you are an investor with a limited budget, a new manufactured home will be a much more affordable option. This type of home is also faster to build, often cutting construction time in half vis-a-vis traditional homes. This means that you can buy and immediately rent a brand new home to your first tenant instead of waiting for months for a similarly priced fixer-upper to be ready.
Other advantages of investing in manufactured homes are the quality and eco-friendly design. The quality of modern manufactured homes are the same or even, at times, better than traditionally-built ones. Manufactured home factories follow very strict standards so there is a very high chance that the one you buy will be structurally sound, attractively designed, and energy-efficient, as well. They also come with upgraded insulation both under the foundation and inside the walls. They also offer on-demand water heaters, energy-saving fixtures and appliances, and energy-efficient windows. All these eco-friendly features will help you have reduced utility and maintenance costs.
There are also drawbacks to investing in manufactured homes. One of the greatest hurdles to buying a manufactured home for use as a rental is finding a good location for it. While the home’s cost tends to be relatively low, the cost of the land must also be taken into account when coming up with the investment property’s overall price. Cost, zoning, and land availability can be great challenges, especially in urban areas.
You could acquire a pre-existing manufactured home instead, but this will bring up another common disadvantage of manufactured homes: long-term value. However, there is still some debate about whether manufactured homes retain enough value to make them worthy of purchase as rental properties. In many places, manufactured homes still come with that stigma, which limits their future value.
Finally, it can be more difficult to finance a manufactured home than other property types. This is because many mortgage lenders don’t consider manufactured homes as “real property.” The perceived impermanence of a manufactured home may cause some lenders to refuse to loan you enough to cover both the land and the home itself. Even if this stigma may be overcome after some time, it is a pressing problem current rental property investors must hurdle.
So are manufactured homes a good investment? They could certainly be, depending on the location, quality, and ability to secure financing.
Are you looking for your next Cedar Park investment property? Your local team at Real Property Management Longhorn can help! We help connect rental property investors with off-market deals that you can’t find elsewhere. Give us a call today at 512-580-3099 to learn more!
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