The Truth About Mobile Home Appreciation and Depreciation

Mobile homes offer a tremendous amount of opportunity for savvy real estate investors, but if you’re familiar with the stereotypes about manufactured home appreciation (or lack thereof), you may be reluctant to add this housing type to your portfolio. Let’s dispel those myths with some solid facts.

First, as an investor, you will typically be looking at used rather than new mobile homes, and used mobile homes tend to hold their value. But you may be able to find mobile homes that are actually worth more used than they were new.

According to research conducted by Consumers Union, the large proportion of manufactured homes in rental parks contributes greatly to the lower appreciation experienced by manufactured homeowners as a whole, as land ownership is an important driver of appreciation. Average appreciation rates of manufactured homes packaged with owned land are statistically in line with the site-built market.

The industry’s standard practices when it comes to mobile home sales and lending may contribute to the perception of rapid depreciation. New mobile home loans often include fees, points, and overpriced, unneeded add-ons (such as vacations, cash rebates, and single-premium credit life) which raise the loan balance but do not add value to the home. Used mobile homes are often subject to higher interest rates than new ones (which is generally not the case with site-built homes).

If the buyer defaults and the mobile or manufactured home is repossessed, the lender will likely be unable to recover the entire loan balance on resale. While this creates the effect of depreciation, it is not technically depreciation. It does, however, create an opportunity for the mobile home investor, as evidenced by the abundance of newspaper classified ads for abandoned and repossessed mobile homes.

In general, residential property values are driven more by the value of the land than by the value of the dwelling. This is why attaching land to a mobile home will significantly increase the value of the home. As with site-built homes, mobile homes are subject to market demand; new tastes and demographic shifts can have an impact on demand for certain home styles, and that will affect value. Als

o, as with site-built homes, mobile homes that are in good locations and have been well-maintained will hold their value and even appreciate more than those that are not.

When it comes to mobile home appreciation or depreciation, don’t worry about average rates and overall perceptions. Approach each potential transaction individually and negotiate a deal that will generate profits for you.

Get Your Free Personal Consultation Today! Click here