Modular/prefab Home vs. Custom building options?

Question

Hi All,

My wife and I are planning to subdivide a property in Chittenden County, VT which will result in a 1.5-acre building lot.  Upon some initial research, it seems like a modular home might be the right option for us if we can achieve a high-enough quality and energy-efficiency standard.  Our goal is to build something that is energy-efficient but that we could sell in a few years for a profit.  Are their any recommendations on new construction practices and/or modular/prefab builders that find the balance between energy-efficiency and value?  Specifically, we would want to be able to list the home for sale in 2-3 years and have it appreciate in value so that our basis is less than our sales price (less real estate commission)?  I have heard that it's hard to make a profit on new builds so I'm wondering if anyone has experience in this area and would be willing to share their thoughts.

Thanks in advance.

-LB

Allan Smith · Answer

The exit value is going to depend way more on the neighborhood and location than the building method.

you should be able to find a modular builder that can design it so there's tons of insulation and all that.

I looked into modular once and while their products look fine, they cost as much as site built. In hindsight,  they would have been WAY more consistent with budget and timeline than most builders.

Paul Sofia · Answer

This is my wheelhouse.  I do modular, manufactured and stick built homes.  What is your level of experience?  I can share some advice with you if you wish.

Lowell Bailey · Answer

Thanks Allan,

I'm going to look into panelized construction, with the thought that I could have some control and customization of design, but would benefit from the economies and efficiencies of offsight building.  It would still require a GC and site crew but definitely less time on-site than a classic site-built home.  Thanks for the feedback... super helpful.

Brady Breinholt · Answer

I have read the posts and will add my 2 cents

I am not sure where you are at in the process of building a home, or if you have scrapped the idea all together.

All of the comments here have been right inline with what I have found in my experience as well. I will attempt to bullet point out a couple of things that may help you.

first rule of real estate is Location. And neighborhood. (Don't over build, don't under build)

second, building a home for yourself vs one that you would sell for profit are two very different thought processes.

On your own home, build and make it energy efficient as you like and as your heart desires, after all you will be the one reaping the benefits of it for years to come.

build for profit, make sure you know what is going on in your market and build just above that level...

Make sure you have a view, and take advantage of it when positioning and placing your home.

Natural lighting is HUGE,

Floor coverings are a place to either make or break your budget... After a certain grade and pad... Your not getting a return on the money invested.

Kitchens  are where you can make a lot of money in your homes, or lose your rear...

Landscaping is also key, and helps with curb appeal.

light fixtures don't need to be super expensive and they can eat your profit.

Custom built for profit is a challenging and fun adventure. It can be done successfully and profitably.

If you are looking at modular. Take a look at Champion Skyline homes as they have a good product and their newer lines are very attractive

If you are looking at panelized homes. Let me know, we have a facility that can help you out today. And more coming online to make access to SIP construction easy and affordable.

Paul Sofia · Answer

You can find modular home financing with most real estate lenders

Lowell Bailey · Answer

Thanks for the input Chris! Does that mean you're advocating for a a cheaper or modular build or that you're advocating that building out a lot is never going to be as profitable as buying and selling (and renovating) existing homes.

-LB

Thanks for the input.  Does that mean you're advocating for a a cheaper or modular build or that you're advocating that building out a lot is never going to be as profitable as buying and selling (and renovating) existing homes.

-LB

Christopher Liu · Answer

I'm looking into this myself right now. I agree with @Allan Smith on all his points which I think are spot on. I'm quickly coming to the conclusion that prefab construction may be the way to go primarily for the following :

1. Much better visibility and control on both time and budget.

2. Pre-fab construction quality will be superior given that construction is happening under controlled conditions and not subject to weather. This will directly affect improved energy-efficiency as this is a function of not just the design and spec but the quality of construction.

Paul Sofia · Answer

Sent you a pm with my number, Samuel

Samuel Coronado · Answer

I am looking to do this with two separate 5 acre lots. I would love to talk.

Kristi Kandel · Answer

Prefab also typically requires full payment prior to construction. So rather than getting a construction loan and paying as it's built you'll have higher out of pocket costs and longer carrying of those costs. It's a toss up on what's better with today's technology right now. We've found prefab makes the most sense when you have short build seasons. However, when taking the prefab lead times into consideration, capital, and shipping costs the overall timing is the same or longer soup to nuts for prefab. With AI and technology I see that changing quite a bit in the next 5-10 years. Especially with 3D printing on the jobsite.

Modular/prefab Home vs. Custom building options?

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