Do mobile homes generally appreciate in value? In other words, are they a good investment?

Asked by Camachoborracho, Pico, Santa Monica, CA Tue Mar 16, 2010

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9
Don Tepper, Agent, Burke, VA
Wed Mar 17, 2010
BEST ANSWER
No and yes.

You asked two entirely different questions.

Do mobile homes generally appreciate in value? No. The structure generally loses value. However, the next question is whether the home is in a park in which you're just leasing the land (a land-lease or ground rent) or whether it's somewhere where you actually own the land. If you're just leasing the land, then you have a depreciating asset. Period. If you own the underlying land, the land might go up in value, perhaps enough to offset or more than offset the declining value of the structure.

Are they a good investment? They can be fabulous investments. Absolutely. You can buy them for all cash, mark the price up a bit, and sell on terms. Google "Lonnie Scruggs" or "Lonnie Deal" for more information. Or, if you have the ability to rent them out, they'll often cash-flow very nicely. Or sometimes they do go up in value. Generally their value declines, just as a car's value declines. But their value is also determined by the cost of other rentals and sales of real estate in the area. Example (from real life): Suppose a 2 bed/1 bath apartment rents for $1,200. Suppose a 2 bed 1 bath condo in the same area sells for $170,000. In that case, you might find a mobile or manufactured home for $20,000. Now: What happens if real estate prices rise? (Maybe general market conditions improve. Or maybe a new company moves into town and housing becomes tight.) The apartment might now rent for $1,500. The condo might sell for $210,000. Well, what do you think happens to the value of the mobile/manufactured home? It'll go up in value, too. Maybe to $30,000. It doesn't sound like too much, but that's a 50% jump in value.

Plus, if the mobile home is saving you money every month over renting a stick-built home, or buying a home, then that's return on investment, too. And suppose you're saving $300 a month. That's real money that you can save, invest, or spend.

So, mobile homes aren't right for everyone. And, no, they generally don't appreciate in value. But they can be very, very good investments and in the right situation they can absolutely be the right decision financially.

Hope that helps.
3 votes
Hello- Very insightful, you answered a lot of questions I had that I never asked. Good on you.
Thank you.
Respectfully, Douglas Brown
Flag Thu Apr 16, 2015
John Arendsen, Agent, Leucadia, CA
Fri Aug 13, 2010
You've certainly received a broad array of answers albeit I didn't notice any Manufactured Home specialists in the midst so I thought I should offer my two bits worth. I've been in the Manufactured Home Industry since the 60's in one capacity or another. I started in this industry on the assembly line with Golden West Mobile homes while in college.

In 1986 I became a general contractor, 1987 a Manufactured Home Contractor and in 1998 I became a Licensed Dealer. For the past 25 years I have been a Manufactured Home Developer and have purchased property and installed many many new state-of-the-art HUD Manufactured Homes. I have yet to see any of my projects lose money. On the contrary. Everyone of my projects has been a very viable let alone affordable venture for all of my clients over the years.

However, having said that if you are purchasing an older home built before 1976 or older and it's in a rental/lease mobilehome park then it would not be a very good investment. Additionally, you must be very wary of parks with high rents. The rule of thumb is the higher the rent the lower the value of your home. I have a home in a rental park in Leucadia, California which is a tiny beach town in North San Diego County. The values in that park have gone down during the past decade as the rents went from $500 to $1000 during that time. The values for a doublewide went from $100,000 to as low as $40,000 because of the greed of the park owners. So be careful

However, if you want an affordable opportunity to own a home in a resident owned community or on a parcel of private property that you own or wish to purchase it is definitely the way to go and you can rest assured that if you purchase a new home you will not lose money providing your dealing with an experienced contractor and dealer. You stand to gain just as much as you would in any other RE investment. I will challenge anyone of the other commenters on that subject.
3 votes
Sonsie Conroy, Agent, San Luis Obispo, CA
Tue Mar 16, 2010
While it's true that as a rule, mobile homes depreciate rather than appreciate in value (and yes, they are harder to finance), the generally rising tide of home prices mitigates that depreciation in some cases. In CA, for example, 30-year-old MHs can sell for as much as $150,000, depending on the partk, whether or not you own the land, etc.

A modular home or mobile home placed on acreage can be priced nearly as high as a stick-built home, especially if it's a newer model. If it;s tied down to a permanent foundation, it can be financed just like a regular house would be.

I would not buy one with the expectation of increased value, however. They can be a good temporary solution if you don't have a lot of money. Seller financing is frequently available, and when you're ready to move on, you can hang onto the unit and rent it out for an additional income.
3 votes
Danny Mahelka, Agent, Beverly Hills, CA
Thu Aug 12, 2010
Like cars, mobile homes tend to depreciate in value over time. They are less expensive that a stick-built home, but they are not typically a good investment. If you are looking for a real estate investment, well-built, permanent homes are the way to go.
0 votes
Jane Grant, Agent, Aguanga, CA
Tue Jul 6, 2010
If you want monthly rental income then it could be a good investment. If you are purchasing it thinking it will increase in value so you can sell it later then it is not a good investment. Mobile homes are very hard to get financing for and therefor when you go to sell it you will have trouble finding a buyer. It will decrease buyers who require loans to purchase your mobile home.
0 votes
Brian McMurr…, Agent, Tawas City, MI
Wed Mar 17, 2010
Generally speaking they tend to depreciate like a car or a boat. They can often be a great way to minimize cost for some period of time. On the Buying or Selling side they can be difficult to finance. Often the transactions are handled with cash or a land contract. If you Buy low and Sell high it could be a good investment. Predicting the future is no easy task whether a person is dealing in property, stocks or random chance........
0 votes
Kenneth j Ho…, , Upper Marlboro, MD
Wed Mar 17, 2010
no, they are just cheap rent
0 votes
Monique & Joe…, Agent, Beverly Hills, CA
Tue Mar 16, 2010
Hello Camachoorra,

With a mobile home you don't usually own the land. Mobile homes are not a good investment. If you can't afford a house buy a condo. Stay away from mobile homes.

If you have any other questions, let me know.

Best,

Monique
Monique Carrabba
The Carrabba Group
Keller Williams Hollywood Hills
mcarrabba@kw.com
(323) 899-2900
0 votes
Dan Chase, Home Buyer, Texas City, TX
Tue Mar 16, 2010
Trailers and double wides both go DOWN in value. They are a depreciating asset and after 5 years are a lot harder to finance and after 20 years (maybe a bit less) are almost impossible to get financing for.
0 votes
I think it would be good to hear from a lender here since everyone seems to have an opinion on manufactured financing. Nothing is worse than a pre-1976 manufactured home. Very few lenders offer financing on them. If the model you're considering is post-1976 then you've got a shot at government and conventional financing options such as Freddie Mac, Fannie Mae or FHA. Single-wides may not meet the requirements for most lender's overlays but double-wide and larger will be financeable through traditional lenders. Newer man homes (2000+) are made out of wood and nails rather than aluminum and glue. Therefore they will hold up longer and a good appraiser will record that in the appraisal. Double-wide man homes can appreciate in value if they are in good condition and on a concrete foundation. They are subject to market conditions and will be the first to decline in a downward trending market.

Dan Barry
NMLS#1068299
Heritage Bank
Bellingham, WA
(360) 633-0828
Flag Wed Apr 5, 2017
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