Eli5… Manufactured Homes – Just as Good Yet Advised Against



My SO and I are in the market for a home (the market is insanely competitive). We found a home that checks a lot of our boxes, but it’s manufactured. Our realtor warned us against them and I don’t understand why. Something about financing being different?

In: Economics

Much depends on whether you will own the property or whether it will be in a community where you own the building but rent the lot. Unfortunately, many of those rental agencies have little regulation, so they just keep raising the rates for lot rental, and for utilities such as water and sewage, thus screwing people over. The fact that you are beholden to such a rental agency can be a real negative to living there and for future resale of the home. Thus, while a prefab can be a great home, the real issue is *where* the home will be. Not all lot-rental agencies are bad, and some areas have more government regulations regarding their operation.

Manufactured homes have features comperable to regular homes, as a place to live. However, they don’t have comperable features, as investments. Realtors are in the investment business.

So the biggest things you’ll run into from a financing side is some mortgage companies will not borrow for manufactured homes. The biggest reason is that manufactured homes tend to depreciate while fabricated homes tend to appreciate. No matter how you feel
about the quality of the build and workmanship in a manufactured home, for your mortgage company it just might not make sense.

Roughly a year ago John Oliver did a piece about manufactured housing and why it’s currently a pile of scum sucking property managers effectively cheating people out of their money.

They don’t appreciate as an investment, partially because of perception, partially because they really are more shoddily made than actual fabricated housing. Particleboard walls rather than plaster or gypsum board, stud distances that would be non-code in a fabricated house, plumbing that wouldn’t ever pass inspection in a fabricated house, etc.

The foundations have the worst aspects of pier-and-beam, and free board combined, often becoming twisted from the very weight of the building over time, and impossible to adjust. This also makes them impossible to move if you ever need to, we’ll circle back to that in a second.

Central heating is usually fairly easy, central cooling on the other hand isn’t. Swamp (evaporative in some areas) cooling is okay, but only if you don’t live anywhere with humidity levels higher than about 60% on average. But they have about the insulative effect of a sheet of paper, so it really doesn’t matter what kind of cooling and heating you have, you’re going to feel the seasons.

And then there is the land. If you own the land, your own acreage somewhere, the land will appreciate, but the house WILL NOT. It can actually have a negative effect for tax and appraisal purposes on occasion. But owning the land is still FAR preferable to renting.

When you rent land you have to pay rent AND mortgage, and the rents can be atrocious. Just enough land to hold the trailer, plus a couple hundred square feet, where you not only have zero control over what can be done on it, but also zero privacy. And for that “privilege” you pay as much or more than you would for an acre or even more land within about 30 miles, generally speaking. And then you have to pay “hookup” and “sewage” and “access” and sometimes a dozen or more extra fees, fees that are typically rolled into rent in an apartment. But not for pre-fab.

And then there are the property managers. You aren’t a customer, you are a product for them, and they will milk you for every single cent they can pull out of you, and bleed you even more. And the contracts are incredibly one-sided. You “own” the house, but can’t move it, because of the foundational issues mentioned above, and quite often because the houses are packed so closely together that there is literally zero room to get the house out. So, you want to move, you can’t take the house with you, but the property management company gets the rights of first refusal. AND they control how much you sell the house for, because of that right of refusal, and they control the appraisal, and all the other things that mean that when you do sell eventually (ANY house, regardless of prefab or onsite, you’ll sell eventually. You’ll need to move for work, school, family, whatever.) you don’t even break even, and certainly don’t come out ahead on the deal.

Prefabricated housing is terrible as it is now. Build a house on a property you own, it’ll be a better investment, and probably cheaper.

It’s because, at least in the distant and recent past, manufactured home were built with substandard build quality and materials, and being transported 100s of miles didn’t help the quality of them.

Banks are bureaucracies, similar to governments, in the end. Change is slow, difficult, and driven typically by extreme circumstances! So even if manufactured homes have gotten on par with stick built, it will be quite some time before banks change policy enough to recognize that.

Because when people hear “manufactured home”, they think “trailer”. All trailers are manufactured homes, but not all manufactured homes are trailers. It’s just stigma. However, I do know some people who live in manufactured homes that are not trailers, and I must say, the quality is not on par with a traditionally constructed home imo.

the biggest issue is that you buy a MH but rent the land that is sits on (there may be rare exceptions). And despite their names, MH are not really mobile. Once they’re put in place they tend to stay. That puts you at the mercy of the person who owns the land your house sits on.

They are also cheaply constructed and will not maintain their structural integrity over decades like a (well maintained) house will.