Manufactured Home and Mobile Home- One or the other? Or both?

Question

Just out of curiosity, I am trying to see what people's opinions are on Manufactured vs Mobile Homes. NC is a state with a lot of both, and so I am interested in hearing from some investors who have experience with one or both on their takes of it.

I have met investors who love manufactured homes and hate mobile homes, and then I have found those that swear by mobile homes.

Both have their inherent differences that's to be sure, and it's clear that setting up a Mobile Home park has it's advantages and disadvantages as well.

Let me know what you think about them, your experience with them, and would love to know you take on which you prefer and why, or both and why!

Cheers!

Jared Trindade · Answer

@Chase Louderback I was referring to modular homes that was a mistake on my prompting there! Thank you for your input much appreciated!

@Eliott Elias So typically only touching them if you have an end buyers looking for them directly?

@Rachel H. I meant to put modular home vs mobile home, that was a mistake on my end! I appreciate your input however, thank you!

@D Hamblet Thank you for that insight, appreciate your input. I was meaning to mention my question towards how people felt vs those two. Modular vs Mobile, as they are very different, but also quite similar.

Thank you all for your input, hopefully you can shed some more light on your take between Modular and Mobile. Appreciate the comments, and apologize about wording the question the wrong way!

Cheers!

Robert Carpenter · Answer

Technically a manufactured homes is a factory built home built to the HUD code standards.  Factory built homes built after June 15, 1976 were required to be built to HUD code standards.   There are REITs whose business model is buying distressed parks ( parks with vacancy rates of 20% or even 30% or more ) and putting in new homes.  Prior to the 2008 real estate crisis lots with manufactured homes were often sold as a single unit of real estate much like a more traditional tract home financed with 'conforming' Freddie Mac loans.  Post 2008 and because of Dodd Frank, park owners lost the discretion to finance such properties.  Whether the home buyer was eligible for financing was governed by the regulations laid down in the Dodd Frank legislation.   In response the REITs began to move to the home rental model.   This BTW seems to make  more sense than the site built house rental model.   Much better to have say 400 manufactured homes on a single 50 acre parcel with onsite management than to have 400 site built homes  on 400 parcels scattered far and wide.  In my opinion this market is still in its early stages.  Longer term I expect offsite built housing will begin to give the multifamily apartment some serious competition.  And its not unreasonable to expect site built housing will start to give ground to the all manufactured subdivision, and subdivisions where homes are mostly rented rather than sold.

D Hamblet · Answer

Technically, a home built after 1978 is a manufactured home not a mobile home, however today people use either name.  A modular home is something entirely different, they are not mobile homes.

D Hamblet · Answer

I think a modular home is considered the same a stick built home for financing. Correction?

Rachel H. · Answer

@Jared Trindade Most times, both words can be used interchangeably depending on who you're talking with. Many people who live in manufactured communities use the words "mobile home," "manufactured home," and even "trailer" to describe their homes.

Honestly, it really depends on the individual.

Personally, I still use the word "mobile home" when I network and talk to people in the business. It has not made a difference with my overall business being in the mobile home industry since 2007.

Hope that helps!

Eliott Elias · Answer

I don't touch them unless I have owner finance buyers for them. They depreciate and will not build you wealth.

Chase Louderback · Answer

I'm assuming that when you say manufactured homes you're referring more to modular homes, since we have always used and heard "manufactured" and "mobile" homes interchangeably.  I have invested in some mobile home deals on individual parcels and sold/rent them, but we much prefer buying a whole park.  We are generally working to sell off all of the rental homes in the community and only rent the lots as we don't want the maintenance headache, but I do know other investors that love the rental home model in the right market.

Be careful of trying to build a new park, it's always been difficult with zoning and startup costs, but with prices and inflation the last few years it will likely be even more difficult.  Make sure to thoroughly check your numbers and have plenty of cushion for labor/materials to unexpectedly increase.