CRE Investing: How Long Do Manufactured Homes Last?

If you’re reading this, you’ve likely already shown an interest in manufactured homes, and it’s no wonder. Manufactured housing is booming, as the cost of site-built homes rises, supply shortages halt new construction and remote workers seek larger living spaces. But is a manufactured home a viable CRE investment option — I mean, there are all those unknowns to think about…

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How long does a manufactured home last?

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If you don’t like the interior, can manufactured homes be remodeled?

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What are the common problems with manufactured homes?

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To help answer these questions, we interviewed Jason Blackburn, a 30-year veteran in the modular housing industry and former owner of Lonestar Modular Homes.

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How Long Will Your Manufactured Home Last?

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Short answer? — longer than you’d think. According to Blackburn, manufactured homes will last 80 years or more, but that number is affected by the quality of building materials used. “It’s not a question of the exterior — manufactured housing will last 80+ years like a site-built home — but the materials used inside the home will dictate its shelf-life. If a [manufactured home] builder uses cheap materials to cut costs, those will reduce the lifespan,” Blackburn said. “Better materials inside equal a better, longer-lasting home — manufactured or otherwise.”

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Manufactured homes have gotten a reputation as being sub-par housing solutions, but Jason argued that this negative reputation is a myth. He went on to explain that manufactured home builders nowadays build homes that are equal to, if not better, than their site-built counterparts. “What people don’t know is that manufactured homes are built using the same materials as your average, everyday stick-built home. But… manufactured homes have to be built even sturdier because they have to withstand transportation. These homes will sometimes experience 100MPH shear winds during transport — a custom-built home wouldn’t survive that kind of pressure.”

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Do Manufactured Homes Hold Their Value?

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Yes — a manufactured home can hold or even increase in value, just like a site-built home. But there is a catch that Jason said most homeowners don’t know about… “Manufactured homes come out of the box with a title — they’re personal property, like a vehicle. However, if you surrender the title to the state and attach the home to the land it sits on, it becomes real property. Now that the home is real property, it can appreciate just like all the other homes around it.” However, Jason also warned that manufactured homes typically see less appreciation than a site-built home would. “The problem with appreciation [of a manufactured home] is there is a stigma that comes with these homes. So, while you might see a site-built home appreciate 5-6% in a year, a manufactured home might only see 3-4% appreciation — they typically lag by about two points.”

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Beyond the “real property loophole,” there is a second factor affecting the value of a manufactured home: condition of the home. Regular upkeep and preventative maintenance can extend the life and increase the value of a site-built home, and this fact is the same with a manufactured home. Jason cited an example of a manufactured home development he’d built in Texas in the late 90s. “We did a small development of manufactured homes — put a little extra into them — brick siding, better roofing, nice interiors. Those homes went for $150,000 back in 95-96. They’re worth $300,000 and up now. The homeowners have done a great job taking care of them, and the values went up with everything else in the area.”

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Is It A Good Idea To Buy A Manufactured Home?

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While we’ve established that yes — a manufactured home can last a lifetime and increase in value — are they a good investment for everyone? Jason believed so, from both a homeowner’s perspective and that of an investor. “Yes, absolutely — they’re great. I live in one right now, a big 6,000-footer with heated flooring. I also own a bunch that I keep as rent houses around San Antonio. They’re no different than any other house — except maybe that they’re built better. You can take custom building plans to a manufacturer and get exactly what you want.” Beyond the quality of build and customization, Jason highlighted another important bonus for would-be investors. “A manufactured home is going to be $30-40 cheaper per square foot to build. Maybe less right now with supply shortages, but you’ll be able to save a bundle if you’re just trying to build cash flow properties.”

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Why Manufactured Housing Is A Good Fit for Investors

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Blackburn holds several manufactured homes in his real estate portfolio, but he’s not the only investor taking advantage of these often overlooked homes. The word is out: manufactured homes have many qualities investors look for in an investment property, namely that they’re low-cost, high-demand and “sticky” (meaning tenants tend to stay for a longer period of time.) Investors looking to join in on the manufactured game can build a portfolio almost overnight, using sites like Mobilehomeparkstore.com — one of several sites that only deal in groups of manufactured and/or modular housing. There is also the option of working with a commercial real estate brokerage.

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But Don’t Forget the Land

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Without land to attach your manufactured home to, you won’t be able to take full advantage of any appreciation or equity you might have otherwise been able to build. Buying land for a manufactured home is no different from a site-built home. You’ll want a moderately flat lot with access to city water, electricity and sewer. If you want to go a little further off-grid, you can opt for a septic system and dig your own well.

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How are Manufactured Homes Built?

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Jason explained that HUD Code and local building codes ensure that manufactured homes are built to higher standards than are required from site-built homes. “Your typical site-built home is mostly 2x4s that you nail together to make a frame. Well, a manufactured home is the same thing, but those 2x4s need to be nailed, strapped and glued together. Shingle roofs, central heating, R-19 insulation in the floors — they’re no different than a site-built home — you just don’t need a concrete slab underneath to build on.” Manufactured homes are built using the same materials as standard site-built homes, but come under even more scrutiny due to increased regulations. These regulations are more strict in areas that experience extreme weather events such as hurricanes.

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Manufacturing Money

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Advances in building practices and increased regulation from the federal government have created a new housing product entirely. So much so that today’s manufactured homes aren’t anything like the “trailers” you might remember. Manufactured homes might be built in a warehouse and shipped hundreds of miles on a truck — but these homes are built to stay put and last a long time. They’re customizable, affordable, and (when built on a permanent base) increase in value. All in all, a manufactured home is a solid option for an intrepid real estate investor, or a first-time home buyer looking for a home they can count on.