As a Jericho rental property investor, you are probably always on the lookout for a good deal on a property. You may be unsure as to whether manufactured homes are a wise investment. It might appear to be the best choice for your upcoming rental property on the surface. Especially as the popularity of manufactured homes is widespread across the nation. But before deciding whether a manufactured home is the best option for your next investment property, you should weigh a number of advantages and disadvantages.
One of the biggest benefits of purchasing a manufactured home is that they are frequently less expensive than other single-family home types. Due to the manner in which prefabricated houses are constructed and installed, their cost per square foot can be much less than that of other properties, even ones of comparable age and size. And where new construction may be out of reach for you as an investor, a new manufactured home will likely be considerably more affordable. Additionally, they are typically constructed in half the time required for traditional homes. In other words, you could spend about the same amount on a brand-new home and start renting it right away as you would on a fixer-upper that would take months to get ready for your first tenant.
Quality and eco-friendly design are additional advantages of purchasing manufactured homes. Nowadays, unlike in the past, the quality of manufactured homes is usually on par with or higher than that of traditionally constructed homes. It is more likely that a manufactured home you purchase will be structurally sound, attractively designed, and energy efficient due to the stringent factory standards. Most have upgraded insulation in the walls and under the foundation. In addition, they offer energy-efficient windows, energy-saving fixtures and appliances, and on-demand water heaters. Costs associated with utility and maintenance can be decreased by all of these eco-friendly features.
However, there are some disadvantages to investing in manufactured homes. Finding a decent place to construct a prefabricated 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. Particularly in urban or suburban areas, the costs, zoning, and land availability may prove to be insurmountable obstacles.
It may be possible to get around this problem by locating and purchasing an already-built manufactured home, but doing so raises a second issue with these homes: their 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. In some areas, the value of manufactured homes is severely hampered by an enduring stigma.
Lastly, financing a manufactured house may be more difficult than financing 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 a worthwhile 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 Jericho 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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