Here’s The Pros and Cons Of Buying a Manufactured Home Before You Sign a Contract
What You Will Read In This Article
When it comes to purchasing a home, the real estate market offers homebuyers site-built and manufactured home options to choose from. However, most homebuyers prefer the latter due to their affordability, mobility, and improvements in their quality and designs.
If you are one of these rational home buyers, you would like to research manufactured homes’ advantages and disadvantages to avoid pouring your money down the drain.
To make things easier for you, we have carefully researched and discussed the pros, cons, and other aspects of a manufactured home to help you make an informed investment decision.
What Is A Manufactured Home?
A manufactured home also called a modular home, is a home unit whose components are constructed in the factory and then moved to the site for installation. Compared to site-built homes, manufactured homes take less time to put up since their construction can happen concurrently on the site and the factory.
Additionally, manufactured homes surpass their site-built counterparts in quality because each manufactured house must conform to the safety standards set by the Department of Housing And Urban Development (HUD), enacted on June 15, 1976.
To confirm whether the manufacturer of your house adheres to these standards, you should look for your house’s ‘Data Plate‘- a paper certificate with all information about the construction of the house. You can locate the data plate in the main electrical panel, bedroom closet, or kitchen cabinetry.
Alternatively, you can look for the red HUD Label, which acts as a manufacturer guarantee that they built the house in conformity with the HUD code. Generally, the HUD regulations cover construction materials, design, energy efficiency, building strength, systems, and more.
However, the provisions of the HUD code keep on changing. You should ensure that your house conforms to the latest HUD updates before purchasing it from the company or real estate community.
Manufactured Home Pros
Below are the advantages of buying a manufactured home:
Manufactured homes are way cheaper than their site-built counterparts. According to the Manufactured Housing Institute, the average price of a manufactured home is $49 per square foot while that of a site-built home is $107 per square foot, excluding the cost of land on which the houses stand.
That means you can acquire more manufactured house space at a lower price than it would cost you to build the house on the site.
The reduced cost of the manufactured housing is due to efficiencies associated with the factory building process.
First, manufactured homes are constructed offsite. That means that they are free from the problems associated with the construction of traditional homes like destruction from bad weather, vandalism, wastage of the building materials, theft, and other problems resulting from the deployment of unskilled staff.
That means that there is no wastage of resources as you try to replace the destroyed or stolen materials.
Secondly, the manufacturing companies buy the materials in bulk at a relatively lower price, resulting in low production costs. The low production cost means a relatively lower price of the manufactured homes, which benefits the homebuyer.
The first question that is likely to hit your mind when you hear of a manufactured home for the first time is whether they are strong enough to overcome the weather extremes and last like their site-built counterparts.
However, you don’t have to hesitate to invest in a manufactured home due to questions surrounding its structural strength. All manufactured homes comply with the HUD code adopted in 1976. The HUD code is a set of safety standards that all home manufacturing companies must comply with, in their manufacturing processes.
These standards cover aspects like house construction, structural design, energy efficiency, transportation of the house to the site, and its assembly, among other aspects. To ensure adherence to the HUD requirements, manufacturers employ HUD-certified individuals to process the individual parts, deliver and install them on the site.
You can confirm whether your house meets the safety requirements by looking for a permanent red HUD label before purchasing the manufactured home.
Another good thing about manufactured homes is that they offer you various options for long-term customization. For instance, you can start with a small house if you have limited needs for space and then add more modules as your space needs increase.
Additionally, you can use a manufactured house as your temporary home if you plan to put up a permanent home later. Then, convert your manufactured home into a visitors’ place or your kitchen after constructing your dream home.
Further, you can improve your manufactured home with additions like decks, patio covers, site-built garages, permanent foundations or change its design to your liking.
Suppose you bought the manufactured home to act as your temporary residence, and your place seems congested after building a permanent home. In that case, you can disassemble your manufactured home, then transport it for installation to another site to act as a rental.
However, moving home can only work if you have multiple installation sites. Moving a manufactured home would involve some legal and logistic complexities though.
Another reason why you might fall in love with a manufactured home is its faster construction. Once you place your order for a manufactured home, it can take the manufacturing company 2 to 3 months to manufacture, test, deliver and install the manufactured house on your site. It will also take them another month to install the utilities and then leave to enjoy your new home with your loved ones.
The quick turnaround of the manufactured homes is due to the qualified personnel who process the house parts, transport and install them on the site. The availability of raw materials and the controlled production environment further eliminate delays in the production process.
Once your manufactured home is ready for delivery, the manufacturer will deploy a team of HUD-certified individuals to do the installation. Assuming that you consulted with your state’s local authorities regarding the installation of the manufactured homes, the installation team can take a week or two to install your home. That would be possible if you executed all the groundwork prior to installation.
While the installation might seem a simple job to you, it is essential to note that you can’t do it yourself because you need special equipment and skills to do the job perfectly.
For instance, the installation team will inspect the house and alert the manufacturer to correct any damages before installation. Then, use a combination of special machines like hydraulic jacks, cranes, rollers, etc., to move the heavy parts to their designated points.
They will also level the house, adjust the heights, fasten all the parts together and inspect the house to ensure that it complies with all HUD guidelines.
That said, you should always hire a HUD-certified team to do the house installation if your contract does not include installation or if you bought your manufactured home from a manufactured housing community.
Green Building Friendly
Manufactured homes are your go-to option if you are looking for an energy-efficient yet eco-friendly home. The houses are constructed according to the HUD code, which ensures that all manufactured homes are energy efficient with energy-efficient windows, insulated skirting, and insulation on the walls and under the home.
Manufactured homes also feature energy-efficient appliances, fixtures, and water-efficient faucets, constituent elements of the HUD code requirements. The HUD code essentially leaves little or no room for any aspect that may degrade the environment or wastage resources. It’s no wonder that manufactured homes are 27% more energy efficient than they used to be.
Manufactured homes are well insulated to minimize the transfer of sounds from one room to the next. The experience is even better if the house is made up of separate modules, as they feature separate insulation to inhibit the transference of sound.
Note: the transference of sound in a manufactured home may be higher in houses with metal frames than wooden frames.
Another argument supporting manufactured houses is that they involve fewer risks to put up. Typically, a significant percentage of their construction occurs in the company, where a HUD-certified workforce processes their parts.
That means that manufactured homes are free from vandalism, theft, misuse of materials, and errors associated with constructing the house on the site. This construction efficiency is one factor that accounts for the reduced price of manufactured homes.
Another good thing about a manufactured home is that the manufacturer and the transporter are liable most of the time. Should your house be destroyed during delivery, or should you experience leakages and structural problems during the enjoyment of the home.
Not Considered Mobile
All manufactured homes created before the 1976 HUD legislation are considered mobile, as they were built on temporary chassis to allow for their mobility. However, due to questions surrounding their structural strength and safety, the housing and urban development department came up with the HUD code to regulate the sector in 1976.
According to the HUD code, all manufactured homes should be considered permanent after installation on the site. That said, they are built on a permanent chassis to guarantee structural strength and durability. They are also connected to the local utilities like power lines, sewer lines, and the local water supply to make them indistinguishable from the site-built homes.
So when buying a manufactured home, be assured that it will give you the same comfort and advantages you can get from a site-built home.
Manufactured homes do not add value to the homeowners alone. The contractors involved in processing the house and its installation are key beneficiaries too.
For instance, the contractors operate from a central point, where the climate and the working environment are optimized to make it human-friendly. They do not move from site to site like the contractors for site-built homes. Operating from a controlled central point secures them from harsh weather conditions that may put their lives at risk.
Additionally, the HUD-certified contractors who work in controlled environments like plumbers and electricians get better compensation than the guys who move from site to site.
Another positive attribute of manufactured homes is that they are highly customizable. Like their site-built counterparts, the manufacturing companies would allow you to order a home of any structural design by either coming up with your own or modifying one of the over 100 pre-made designs they have to offer.
After your ordered home is manufactured and installed, you still have the option to modify it with additions that bring the true meaning of your perfect home. For instance,
You can color your living room with brighter hues to brighten the space and create a spacious feel. You can also fit the kitchen with cabinets and other additions that appeal to your inner chef.
Better still, you can modify the exterior with colors or concrete rendering to make it attractive to potential homebuyers. In a nutshell, you have limitless options to change your manufactured home to your family paradise.
After installation, you can convert your manufactured home into the luxurious home you have ever dreamt of. For instance, you can fill the living space with famous monuments and quality coaches whose color marries well with the accent wall, other colors in the room, and the fixtures.
Though the houses may come with smart locks, you may further enhance home security with surveillance cameras and safety alarms for break-ins, fire, floods, or other catastrophes.
That is not all; you improve the quality of your kitchen by making luxurious additions like heating drawers, washers, island sinks, and double ovens if they are not present.
If the above features do not meet your standards, perhaps adding lavish amenities like an infinity pool, sitting plazas, a gymnasium, walking tracks, and safe playing areas for kids will make your heart smile. The possibilities are endless. All you need is to get creative with your decorative needs.
However, the number of amenities you can add to your space depends on the available site space and your budget.
You don’t have to worry about financing a manufactured home if you lack equity. Like site-built homes, there are various sources where you can get external financing for your manufactured home. All you need is to work with the direct home agents, who will help you access financing for your manufactured home with ease.
Examples of the various sources of financing include:
Your direct home agent should help you secure financing regardless of the source. However, you can only qualify for external financing if you meet the minimum requirements of your lender in aspects like creditworthiness, debt to income ratio, the down payment, proof of updated employment and tax records, etc.
Need a Mortgage?
Manufactured Home Cons
By going through the above strengths, you may easily think that manufactured homes are all flawless. However, like their site-built counterparts, they have their downsides too.
Below are disadvantages of buying a manufactured home:
Still Have High Land Costs
While the factory construction process may save you some costs, the cost of buying land where you would install the house remains as high as the cost of acquiring a site for putting up a conventional home. The lowest average price of acquiring land is a few thousand per acre and goes as high as the local market demands.
The high land and construction costs leave most potential homeowners struggling to get the required funds, especially if they cannot qualify for external loans to finance the projects.
Still Have Limited Land Availability in Desired Markets
Besides the high cost, getting land where you can install your manufactured building is a problem of its own. This is due to issues like:
The shortage of available land is due to pressures from increased population, and environmental issues like bad weather, storm and cyclones, forest fires, ocean acidification, and other frequent natural catastrophes in given locations.
Another cause of land scarcity is social injustices where few powerful individuals own the extensive portions of free land in the best locations and are unwilling to sell or lease to willing buyers.
With the above factors, it becomes a bit challenging to secure land in the desired markets.
According to anecdotal reports by some homeowners, you may end up getting land in places without public utilities like power lines, water supply, and sewer lines, leaving you to finance these utilities from your pocket. Or get land in areas where the state laws do not allow installation of manufactured buildings.
Lingering Stigma of Manufactured Homes
In the early 1940s, the US government could use mobile homes (trailers) to host their soldiers and necessities in World War II. The mobile homes produced during the period were of poor quality since, according to sources, there wasn’t enough time for the manufacturer to figure out the best designs and materials for building the temporary homes.
Being of poor quality, the soldiers and other persons who used the mobile homes experienced harsh weather conditions like cold, water leakages, and other inhuman conditions. Even after the HUD code was enacted to guide the quality of the manufactured homes, some people have the same feeling that the houses never improved. This is evidenced by the prohibition of manufactured houses in some areas.
However, most people are changing their perception of manufactured houses as the adoption of Manufactured Homes has taken place in most states.
Sometimes Lenders Have Additional Requirements
When it comes to mortgage financing most lenders will finance the ‘real property,’ which usually refers to land with permanent structures constructed on it.
While this works well for site-built homes, it does not mean that you cannot get financing for your manufactured home. Most lenders would consider financing your home if it is not standing on wheels.
The only drawback is that it usually takes strict qualification requirements and less favorable financing terms, including high-interest rates.
Due to the lingering stigma of manufactured homes, most people believe that manufactured homes should depreciate like the mobile homes built before 1976. However, that has never been the case since the HUD code was enforced.
In essence, the HUD code ensures that the houses are structurally strong. And, with proper care, the manufactured homes can last as long as their site-built counterparts or even more.
Frequently Asked Questions (FAQs) about Manufactured Homes
Below are the common questions that people have asked about manufactured homes:
Are Manufactured Homes Different From Mobile Homes?
Yes. Manufactured homes are manufactured in a factory then delivered to the site for installation. They are constructed under the HUD code, enacted in June 1976. On the other hand, mobile homes refer to any manufactured home that was made before June 15, 1976. Also manufactured homes are typically permanent structures installed on foundations or slabs whereas mobile homes are meant to be mobile.
Is Buying A Manufactured Home A Good Idea?
Yes, buying a manufactured home offers a relatively cheaper way of living a luxurious life. This is because you can acquire and install a manufactured home at a relatively cheaper cost than the cost of putting up a site-built home. Then, customize the house with additions that bring the real meaning of a luxurious home.
Why Do Manufactured Homes Have A Bad Reputation?
As earlier mentioned, manufactured homes “inherited” a bad reputation from the manufactured homes manufactured before June 15, 1976. These manufactured homes had structural weaknesses since the manufacturer had no experience building manufactured homes, and the US government needed them to host their soldiers in World War II.
In other words, the government needed manufactured homes (mobile homes) urgently, and they couldn’t allow the manufacturer to conduct sufficient research. However, the 1976 HUD code improved the construction of manufactured houses.
How Long Will A Manufactured Home Last?
A properly installed manufactured or modular home can last just as long as a conventionally built home directly on a construction site when properly installed.
As you can see, manufactured homes are structurally strong as site-built homes. However, they surpass the site-built homes due to their better quality, relatively low construction cost, and versatility.
Their only drawback is the lingering stigma that they gained from the mobile homes constructed before enacting the HUD code. But, the stigma is gradually becoming a thing of the past considering the rate at which US citizens adopt manufactured homes.
Need a Mortgage?
About the Author: Kris Lippi is the owner of ISoldMyHouse.com, the broker of Get LISTED Realty and an official member of the Forbes Real Estate Council. He actively writes about real estate related topics such as buying and selling homes, how-to guides for around the house and home product recommendations. He has been featured in Inman, Readers Digest, Fox News, American Express, Fit Small Business, Policy Genius, Lending Tree, GoDaddy, Manta as well as other major websites. Read more about us here.