Is modular house a cheaper way to build Single Family House?

Question

Recently a Modular house builder approached me and introduced me the concept of Modular house. They claim that their building method will save 20% of the price and 30% of the building time, a single family house can be build within 6 months. Anyone here familiar with the concept of the modular house?

1. How is the resell price of the modular built house comparing to the traditional house?

2. Is there any government regulation (permit, zoning, code) of this kind of house?

3. Is the construction loan and mortgage different ?

Eric Teran · Answer

@Jinglei Cui this topic has been coming up a lot recently on BP. I built my own modular house and have designed a few. They definitely save time and money depends on a few factors.

The biggest thing to do is to start your design with the modular requirements. The goal is to get the design to work with the least amount of boxes that have to be transported. This will save lots of money.

The next thing is to get as much of it as possible built in the factory. The problem is that the majority of companies have ugly finishes or will not do anything custom.

These two factors are the biggest in saving money and time. I built my house in 4 months and I know I can get it down to two months next time. Everything goes much quicker so you need to have a lot of money up front.

Resale value. I believe it is the same. It depends more on the design and aesthetics of the house. If a buyer sees a beautiful well kept home they do not care if it is modular, built with 2x4 or with masonry. No one can tell if a house is modular unless they are told. Others on BP don’t agree with me and it may depend on the region.

Loans are more complicated because a lot of banks don’t deal with them. You can find them but you will have to do lots of calling. I had to call over 30 banks. The issue is that the loan is normally disbursed after certain milestone throughout 8-12 months of a project. With modular it is basically three withdrawals within 3-4 months. One for site work, one huge withdrawal when the modular units are delivered, and the last one at final completion.

Lastly, if you like modular construction check out Superior Walks for basements. I used them as well for my house and they installed 156’ linear feet of wall in 3 hours.

I believe in modular construction if done correctly and there is a lot to know to make it work to your advantage.

Good luck.

Michael Frank · Answer

Quick answers here:

- modular can be cheaper but it really depends on the builder and the only places I've seen consistent cost advantages in cast are in really high cost areas because you're essentially outsourcing half of the labor (i.e. building the modules) to lower cost areas

- financing is a little more complicated with draws for modular being earlier so only some lenders deal with them, but you should be able to find lenders who do underwrite modular on similar terms to other constructio lenders

- appraisals are typically pretty similar and homes tend to hold value similarly, but it probably depends on the quality of the build

Eric Teran · Answer

@Jinglei Cui I was able to build my place on a vacant lot for $130 SF. However, I was the Architect and acted as the GC. Without that, I would have been around $200 SF. That was all in. Only the modular was around $90 SF. I think modular makes sense in expensive markets. If labor is cheap then the cost savings will not be that much if any. The company I used is in Pennsylvania so you will have to find someone a lot closer. I believe Vancouver has some modular companies as well. You need find a company close to you or you will pay more for traveling. Try to find one less than a day drive away, so probably 6 or 8 hours. Any trip longer than that will result in you paying for hotel rooms for multiple people.

@David Edwards good to have a tag team partner.

Marci Stein · Answer

In upstate Ny modulars are not as costly as stick built. Maybe 25 % less . Not sure the reason , maybe because it’s hard to get bank financing .

also , I have heard from builders that sometimes the underneath structure gets rusty over time,

but that’s not applicable if you’re buying new. i have land and may have one built.

Caleb Christopher · Answer

Just wanted to say thanks for this post. This one was more informative than most modular home posts I've read so far in my searching.

Jinglei Cui · Answer

Thank you for the reply, my current company quote me with price from 200-300. It looks like the price change from company to company. Do you know if your companies do out of the state shipping?

David Edwards · Answer

I don't want to use an absolute but at least in Texas and from what I can tell everywhere else (but maybe there is an outlier) you do not disclose that a home is a modular, same as you don't disclose the build method used in any stick build home or if certain parts are add-ons or anything. Modular is simply a tactical decision.

Eric and I have been incidentally tag teaming these modular posts recently, he has designed and discusses that aspect while I have bought 1 this far (FYI it was not disclosed as a modular, appraised in the same manner as a stick build as there is nothing on the form for any indication, and neither my property manager, nor the bank, nor my agent had any idea). I knew what it was because I noticed the way this older modular (early 2000's) managed the seam. In the newest ones you shouldn't be able to tell at all unless you take the walls apart

Currently I am researching duplex modulars. I have found two builders that have variant quality.

One is at $100 per square foot including build and delivery, the layout and finishings are very nice. The company is "Modular Homes of America".

Another is a company that mostly builds manufactures (mobile) homes but can also build to Modular standards. These guys have a  duplex that goes for $60 per square foot. The finishings are not as nice and the footprint is a little smaller.

Point to keep in mind is this does not include land, land prep, foundation, driveway, utilities, management. All of that can add another $60- $100 per square foot.

My goal is to get really good at the financing, land aquisition, and land prep and have the home built and delivered, and then refinance out.

Jinglei Cui · Answer

Thank you for your answer Eric! I am currently located in California, the price they gave me is between 200-300 per sqft, the traditional building cost is around there too in CA. What about your place? I agree with you about the resale part, most people in CA combine the modular and the traditional, but im not sure how people will react to the modular house yet, do you have to disclose to the buyer that the house is build with modular?

Is modular house a cheaper way to build Single Family House?

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