PAGE 6 - REAL ESTATE & HOME BUILDERS GUIDE - AUGUST-SEPTEMBER 2015
Traditional vs. manufactured homes
traditional home or the manufactured
home will be a “good” investment; we
are trying to get you to look at the costs
over the next several years. If you were
to live in the manufactured home, what
would your costs be for the first five
years, including repairs to the home?
What would that cost be for a
traditional
home?
With
that
information, you can then try to
determine if the cost of either changes
your decision in any way.
Tribune Content Agency
By Ilyce Glink and Samuel J. Tamkin,
Tribune Content Agency
: My husband and I just looked at a
Q
house that is in the perfect location
for us. We haven’t seen anything
similar within our price range. The
catch is that it’s a manufactured home
in a park, on a rented space.
We are debating whether living in our
ideal location is worth purchasing a
home under these conditions,
particularly if that home will require
rental payments for the land for as long
as we own the home. Some people have
said that manufactured homes
depreciate over time, while others say
that they can actually appreciate. All
homes in our area seem to at least hold
their value. Would this be a truly bad
investment?
: I don’t think we can tell you from
A
here whether an investment in a
manufactured home would be a good
or bad investment. The reality is that
you have to live somewhere and your
home is first and foremost a place to
live. That place to live should be in a
good location for you and where you
can thrive in a community.
A couple of things we’d like to see in
your purchase would be that the
manufactured home be a newer home
and that the home complies with the
Housing and Urban Development
(HUD) Code. In part, this code
requires that the home be permanently
installed on a foundation. We’d also
like to make sure that the home was
built after 1976 and complies with all
HUD standards.
A manufactured home is quite different
from a traditional home. In a
traditional home, the owner will hold
title to the home and land. The
mechanism for conveying title to the
home is usually via a warranty deed (or
other similar document) that gets
recorded with the office that is in
charge of land records in the county in
which you buy the home.
On the other hand a manufactured
home is more akin to a car or boat. The
home has a title and that title is
transferred in the same way that a car
or boat title might be transferred. The
secretary of state office in the location
in which the manufactured home is
located would issue a new title to the
home when you purchase that home.
The market for manufactured homes is
quite limited when you compare it to
the general real estate market and the
availability of lenders willing to lend
you money to buy a manufactured
home is a fraction of the size of the
overall real estate market. Where you
might find hundreds of lenders and
mortgage brokers willing to offer you
financing on a traditional single family
home, you might only have a handful
or less willing to offer you financing in
the manufactured home.
Frequently, the operator or manager of
the facilities or development in which
the manufactured home is situated has
one or more lenders that can offer
financing for the purchase of the
manufactured home. However, as you
have observed, one thing is to pay for
the manufactured home -- that’s only
part of the cost -- the other part, is
paying the rent on the land. That rent
might be high or might push you to
consider a single family community
over
the
manufactured
home
community.
We can’t tell you what to do, but you
need to look at the costs of owning the
manufactured home along with the
costs of renting the land. Then you can
make a side by side comparison as to
what the costs are and what you get for
those costs, and see what it would cost
you to live in each community over the
next five years.
We won’t assume that either a
If you can get any information on how
the prices of manufactured homes in
that development performed over the
last 10 years, how did that compare
with single family homes? The single
home got battered during the Great
Recession and you’d do well to
compare it with the development you’re
considering. If the prices didn’t change
much, you might assume that the prices
might not change much in the future
either. But if it’s cheaper for you to live
in the manufactured home and it’s in a
better location and development, it
might not be the best investment, but it
might be the right home solution for
you.
Finally, one last thing to consider is
how quickly do homes in the
manufactured housing development
sell? Have they sold quickly for the last
several years? Do people have trouble
selling them? The answers to these
questions can also influence your
decision to buy. If manufactured homes
in this “subdivision” have always sold
briskly, you know that if this turns out
not to be the right place for you, you
should be able to sell and move
elsewhere. But if these homes don’t sell
easily, having a manufactured home for
sale will tie you down.
We suggest taking out a piece of paper
and a pen and writing down the pros
and cons, as you know them today,
doing some research to fill out the list.
Then make a decision. Good luck.
(Ilyce Glink is the creator of an 18-part
webinar+ebook series called “The
Intentional Investor: How to be wildly
successful in real estate,” as well as the
author of many books on real estate.
She also hosts the “Real Estate Minute,”
on her YouTube channel. Samuel J.
Tamkin is a Chicago-based real estate
attorney. Contact Ilyce and Sam
through her website, ThinkGlink.com.)