Real Estate Tips: When is a Manufactured Home the Right Choice?

For decades mobile homes have earned a reputation of poor construction. With ownership being primarily concentrated to people of low income and limited education the term Trailer Trash has been widely used to identify the average mobile home owner. Is this a fair assessment?

During the 1970’s Mobile homes became a cheap alternative to buying a house. With new home construction running an average of $50,000 to $60,000 for an entry level house, many people just couldn’t afford to own them. As the surge of Baby Boomer’s became adults the supply of existing homes just wasn’t large enough to meet the demand. Where could these seekers of the American Dream turn, they needed a place to live.

"Views taken on SS Marella, built for the Kaiser's Victory Ship (didn't come off)". 1920, Sydney Harbour.

Enter the mobile home, or House Trailer. They sprang up everywhere, for $10,000 you could buy a Brand New Single Wide Mobile Home. Many young growing families jumped in as there were few alternative options. The industry was obviously motivated to create quantity, not quality.

Gas was selling for $.32 cents a gallon, heating fuel oil was in the same category. There was no incentive to worry about conservation of any kind. The average mobile home was constructed of 2×2″ walls with 1/8″ paneling on the inside and stamped steel or aluminum sheets as the siding, or outer layer.

Produced by the thousands, cheap, and profitable they rolled off the assembly line in a matter of days. Young families had something new and shiny to call their own. But what did they really have?

There is nothing tougher on a home then a bunch of kids growing up. Put them into a structure with 2″ walls, 1/8″ paneling, and kitchen cabinets made of pressed sawdust board, how long does that new and shiny look last? Life went on, and they continued to make payments on there castle. The average loan financed their purchase for a period of 10 years.

If they were fortunate, the mobile home made it through the first ten years. Now, full of kids in high school, this house is just plain worn out. But it is paid for. Before you know it they were trapped in a life style that allowed dead cars to become the center piece of the front yard, hood up, sitting on cement blocks. With the occasional non-functioning appliance thrown on its side to complete the decor. A stereotype was born.

Over the years, after the initial baby boom surge, mobile home manufacturers realized they had developed a poor reputation. Wishing to remain in business, changes were made. The emphasis was still on low cost housing, as the cost of stick built homes had continued to sky rocket. But efficiency and energy saving had become the new order of the day. To remain a viable product they had to be built to last, and built to be cheaper to own then the McMansion’s that have become so popular. Known to blow over or off their footings with relative ease, states increased the requirements for a more substantial site preparation and requiring tie downs to prevent wind damage.

Today’s Manufactured Home, (Note the more respectable terminology) is constructed with 2×6″ walls, insulation and structural integrity is equal to or better than current stick built homes constructed to code requirement. The basic structure, usually complete with a trussed roof system, asphalt shingled roof and vinyl siding is as strong as any other home available. Windows are a low maintenance, double pain, insulated unit, that will last indefinitely. Doors are exactly the same ones you will find used in stick home construction. The interiors have done away with all the thin paneling in favor of Sheetrock.

These are quality houses that just happen to be movable. Many cities require that manufactured homes now be set up on concrete slabs, an excellent improvement over the old cement blocks on dirt installation. With a concrete slab you can expect the home to remain stable and good looking for many, many years to come.

Even still with all these improvements, manufactured homes will still Depreciate, rather then Appreciate, as you expect from a stick built home. Granted the depreciation has slowed down considerably, but none the less it is unlikely you will ever make money on the resale of your mobile home.

So the big question, when is Buying a Mobile Home the Right Choice.

A young couple, looking to just start out in life, needs cost effective housing that will increase in value. Some place, that when they are ready to move up in the ranks of society will help them rather then drag them down. Buying land is always a good investment, if their plan is to place a manufactured home on private land, they can make money. Throughout the years they live there, by adding improvements to this property, such as a garage, gardens, landscaping, etc. the total package increases in value. With a well maintained manufactured home as the main structure, the right setting can make the difference.

Placing a mobile home in a park, with your neighbor 10-15′ away will only bring the value down. Nicer manufactured home communities will bring it down a lesser amount, but it will still depreciate.

To avoid this depreciation think “Used”. By buying a used home, that is 3-5 years old, in an established community you easily save 30-50% from the cost of new. By improving your investment, new carpeting or laminated wood floors, up dating fixtures, painting or new siding, if needed, you can stop depreciation in its tracks. You can easily make money by flipping older homes that are showing their age.

If you are fortunate enough to own some land, and zoning will allow it, installing used mobile homes for rental property can also be a money maker. Buying repossessed homes is a good source for such a project.

Finally at the point in your life, when the kids are gone, it’s just you and your spouse. You don’t need as much room, and the cost and effort to maintain the large house has made it a chore rather than a pleasure. Just the taxes to own your McMansion is making it hard to get by.

This is the best argument for present day Manufactured Housing. Again the Baby Boomer’s come back into the picture. This is some of the best retirement housing on the market. Many communities have established a +55 rule to maintain a certain group of people and a certain way of life to their organization. There is nothing better on the snowy winter morning, when the previous evening has deposited 10-12″ of heavy white stuff in your driveway and road, then to know the most you have to clear away is the 10′ of sidewalk from your door to the street. The road, the driveway all maintained by the park’s maintenance people.

At this stage of your life, probably the last home you will own before you head for the nursing home, the last thing you want is high maintenance. Let someone else do the work. With a purchase price of about $40,000 and value slowly going down, your property taxes will start out low and are likely to go down rather than up. With the high level of insulation today, your utility bills will be a fraction of what the McMansion was costing you. If your lucky you can find a nice clean community that is on the city bus line, making trips to the grocery store possible when the day comes you shouldn’t be driving. And best of all, your cherished pet can come with you. Most apartments don’t allow pets.

Some times the trade off between depreciation and convenience is well worth it. Money isn’t every thing you know.

Source: Personel experience and observations spread over a period of 47 years and currently a manufactured home owner.