modular home vs mobile home

Modular Homes vs. Mobile Home: Which is a Better Investment?

Modular homes and mobile homes are two completely different things. A modular home is a structure that is built in a factory, transported by truck to the buyer, and affixed to a permanent foundation. However, a mobile home is a structure that is manufactured and is never permanently attached to a surface. This structure is made to be movable whenever the owner pleases. These two different types of homes offer varying benefits, but which is the better investment?

Modular Homes

Modular homes and mobile homes are both completely constructed in a factory, but a modular home is eventually permanently affixed to a concrete foundation. It can be very difficult to discern a modular home from a traditional site-built house. Prefabricated houses are built in segments and later assembled using cranes. In addition to this, modular homes:

  • must conform to the same local, state, and region building codes as on-site houses;
  • are treated by the banks as “real property”;
  • follow the same market trends as site-built houses;
  • can be any size, but follow certain models;
  • are highly customizable and can be altered at any time;
  • can take anywhere from a few weeks to a few months to construct.

Mobile Homes

Mobile homes are another option for those looking to save a little money on their housing units. These homes are also called “manufactured homes” because they are manufactured by factories and then delivered to a plot of land using their own wheels. Rather than being permanently affixed to a foundation, mobile homes sit on steel frames. Mobile homes:

  • conform to Housing and Urban Development codes;
  • are inspected, but do not have to be approved by an inspector;
  • are only one story;
  • are not permanent and can move during turbulent weather such as a hurricane;
  • are transported on their own wheels;
  • are treated as “personal property,” similar to cars and boats;
  • are often placed on leased land;
  • are rarely customizable;
  • treated differently when it comes to lending due to their personal property status.

Appreciation and Depreciation

When it comes to investments, one of the most important things to consider is the resale value of the home—will it appreciate or depreciate? It’s possible that a modular home can depreciate, but mobile homes generally lose value over time. These mobile homes are much more likely to depreciate, which can cause significant losses. It’s similar to purchasing a car. The minute that the mobile home is towed off the lot, the price begins to decrease. However, the biggest asset for mobile homes is the land that it sits on. While the structure itself can depreciate, the land has a chance to increase in value.

Modular homes are much different because they’re so similar to traditional houses. They’re much more likely to fluctuate with the housing market. Unfortunately, there is a negative stigma attached to modular homes that can make their value depreciate. However, if they’re in a location that has a number of high-quality modular structures, they are much more likely to retain their value over a period of time. It isn’t guaranteed that a prefabricated home will lose its value, which makes it a much better option for investment purposes.

Last Updated: March 01, 2017