Before people start parroting "manufactured homes lose value, traditional homes appreciate" hear me out.
1.) Modular homes are becoming more and more popular. These are "manufactured" if you will. However as of now they do not "depreciate".
2.) Economies of scale and automation will make construction of modular homes/manufactured homes/housing construction costs less expensive in the future. This has happened in literally every other industry in the entire world. Thus eventually your normal "stick frame built on site house" will lose value in the long run because people will be able to buy the exact same quality structure from a factory for a fraction of the cost.
3.) Really we should be talking about "construction quality" in general rather than caring about whether the house is built in a factory by robots in Mexico, on site by highly paid American tradesmen. All that matters is the final quality and cost. Period.
4.) All buildings should depreciate over time, other than perhaps keeping up with inflation and rising labor costs. If I buy a modular home for 200k and install it on a piece of land. There is no way that in 10 years the house will be worth 200k + appreciation of 7% a year when I can go out and buy the exact same modular home for 200k myself in 10 years. The land appreciates but the structures should not. Right now in 2020 we live in a bizarro world where the structure DOES appreciate up until the point that someone says "this needs to be demolished", in which case the structure is worth negative dollars.
5.) Traditional homes appreciate because the buyers are always buying with crazy leverage using the bank/govts money (0 down FHA etc). When someone has to pay cash for something (a car, manufactured house, boat, etc.) the value goes down with usage aside from antiques and collectibles.
Now with that out of the way my question is this:
"Manufactured homes" can be built to pretty high standards. Given that they tend to depreciate when the buyer has to pay cash, while they appreciate when the buyer uses a mortgage, can I basically arbitrage this opportunity by:
1.) Buy a vacant piece of property, build a foundation on it.
2.) Buy a manufactured home, but one that is not eligible for traditional mortgage financing because it is on footers or trailer or whatever.
3.) Take the home to my property, place it on the foundation. Sell it as a "normal house" that qualifies for traditional financing to someone who subscribes to philosophy of (sure put 0% down it's a normal house it will only go up in value who cares about the price!).
Thoughts?
