Do Modular homes affect the rental value?

Question

Hey guys,

I just looked at a property and all the numbers look great!

The property is in OK shape. A little fix here or there with decent room.

The only thing is its a modular home and I have never dealt with this before.

Do modular homes affect the rental value?

It was built in 1988 if that makes a difference.

Any insight on this subject would be highly appreciate.

Kevin Sobilo · Answer

@Frank Wong, yes they are constructed off-site, but modular homes meet the same construction standards as a stick built home. They are considered exactly the same as a stick built home for financing or anything else. There would never be any financing issue for a modular because of its method of construction. In fact many times you wouldn't have any way of knowing it was modular construction.

Manufactured are different. They are built to a lesser standard.

Kevin Sobilo · Answer

@Frank Wong

https://www.hud.gov/program_offices/housing/rmra/mhs/faqs

From that link:

What is the difference between manufactured and modular homes?

Manufactured homes are constructed according to a code administered by the U.S. Department of Housing and Urban Development (HUD Code). The HUD Code, unlike conventional building codes, requires manufactured homes to be constructed on a permanent chassis. Modular homes are constructed to the same state, local or regional building codes as site-built homes. Other types of systems-built homes include panelized wall systems, log homes, structural insulated panels, and insulating concrete forms.

Kevin Sobilo · Answer

@Frank Wong, I think you are confusing a modular and a manufactured home.

A modular home is built to the same standards as a stick built home. So, there are no issues with financing.

A manufactured home is not built to that same standard. It is the modern term for a mobile home, even though some may not be mobile and placed on a foundation.

@Mitchell Litam, I would not be concerned about the rental value being different on a modular home, but make sure its a modular not a manufactured home. Sometimes its hard to tell the difference.

Brian Ellis · Answer

There is nothing worst than renovating a modular home. They were built quickly and slapped together. Door jams are different thicknesses, the electrical is hard to feed through walls, uneven floors and ceilings, etc. If it is a cosmetic update then you shouldn't have to worry about the rental value, that wont change. But if you are considering doing a decent size renovation, be prepared.

Good luck!

Frank Wong · Answer

Hi Mitchell,

I am not sure how it will affect the rental amount my guess is if it is the same as a house it will won't be that far off.  The real concern about a modular home is the resale value and financing.  You cannot just go with a traditional lender to finance these.  You will need to go to a lender that specializes in it.   Modular houses are not the same as a regular one. The construction quality is not the same. In the future, you will run into the same issue while trying to sell it to another buyer.

Mitchell Litam · Answer

Account Closed I typed into google what the difference was between the two.

The difference between modular and manufactured homes is often in the permanence. For instancemodular homes are placed on a permanent foundation; whereas trailers, or manufactured homesare built on a steel chassis with wheels attached. This is so the trailer can be moved or towed.

By that definition it def does not have wheels or can be towed.

I believe it is modular.

Account Closed · Answer

Pedro is correct. It comes down to the build code.

Account Closed · Answer

@Mitchell Litam - Is it a modular, manufactured, or mobile home? They are built to very different standards.

Account Closed · Answer

@Mitchell Litam

That's not a good definition. The biggest discernable difference between Modular and manufactured is that Modular buildings are built to International Building Code standards or whatever building code governs in the local jurisdiction having responsibility (often state building codes that are modeled from the IBC) and manufactured homes are built to federal HUD (Housing and Urban Development) code. Whether or not the building can be moved is almost irrelevant

Frank Wong · Answer

Kevin,

Modular homes and manufactured homes are both built off-site and in factories.  They are both assembled on the home site.  They are not the same as a regular house.  Yes, there are some nice modular homes but overall the build quality is not the same. Yes, some lenders will have issues with this.

Do Modular homes affect the rental value?

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