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Have You Considered Living in a Manufactured Home? Pros and Cons

Category: Retirement Real Estate

November 9, 2019 — With so many baby boomers facing retirement with smaller than expected savings, the question of where they can afford to live is a serious question. Recently one of our long-standing Members, Peder, raised the issue of manufactured homes, and in particular, their pitfalls. Somewhat to our amazement we cannot find that we have written about this important topic before, so now seems like a great time to do it.

Some definitions

There can be a lot of confusion around terms like manufactured homes. Code of Federal Regulations, 24 CFR 3280, states that: “Manufactured homes are built as dwelling units of at least 320 square feet in size with a permanent chassis to assure the initial and continued transportability of the home.” They are typically built in a factory and moved as one or more sections to where the homeowner wants it. Their wheel chassis is the key differentiation from other types of homes. They are often referred to less elegantly as “mobile homes” and “trailers“. In the 1950’s ten foot wide models were introduced. Because of this greater width (previous models were 8′ wide), it became harder to transport them and this helped distinguish them from travel trailers and RVs.

They are different than modular homes, also prefabricated and built in factories. Some experts have long predicted that modular construction will eventually replace so called “stick-built” homes because of the efficiencies involved in building homes in a factory setting. It is often difficult to distinguish between a modular home and one built in-situ. Some other variations of modular homes are “pre-cut” or “panelized” homes.

Manufactured homes tend to be located in parks, although if zoning restrictions permit, they can be situated anywhere. Even they have a wheeled chassis, manufactured homes are rarely moved after they are placed in a location. They are often put on a foundation, and moving them is expensive and difficult. In many of these parks, if not the majority, the land underneath the home is rented.

Pros and cons

On the plus side…

Manufactured homes tend to be much less costly than traditional homes. They can be a great solution for people who otherwise could not own a home in retirement. This is particularly true if buying a used home – in many communities you can buy one for $10,000.

Newer manufactured homes are built to a much higher standard than they were a few years ago, so you know what you are getting.

Many options when it comes to finding a place to live. You probably have manufactured home neighborhoods where you live now. These parks and communities are also plentiful in many desirable retirement parts of the country such as Florida, Arizona, and California. Some are active adult or 55+ communities, many others are all ages. Some are often called Manufactured Home/RV Parks, which have lots for both manufactured homes and RVs, often for rent or purchase.

In many communities you can rent or buy. Renting obviously has a lot more flexibility. If you want to move, it’s easy.

On the negative…

Older manufactured homes were not always built well, and suffered heavy damage in hurricanes and tornadoes. They were also not very efficient when it comes to heating and cooling.

Particularly with older models, manufactured homes tend to depreciate fairly quickly, instead of gaining value like most traditional homes.

In many parks and communities the homes are clustered very close together, so you might get to see more of your neighbors than you want.

Perhaps the biggest drawbacks occur when you do not own the land under your unit.

You can always count on some rent increase each year, and if there is a change of ownership, there are usually very large bumps in the rent. Another problem is if the value of the land goes up enough, the developer might sell the whole community, and you will be out of a home.

Lack of mobility. Although theoretically you can always move your home, it is rarely done due to the expense and trouble. So if the rent is jacked up or you don’t like your neighbors, you are either stuck or have to sell your home for a lot less than you pay for it.

Some thoughts

Millions of Americans live in manufactured homes because they are economical and often in the right places. But if you considering living in one of these communities, here are a few things to consider:

  • Who owns the land. You have much more protection from rent increases and being displaced if you own the land under your home. But you will pay more for the privilege.
  • What are the historic rent increases
  • What is the age of the home and to what standard was it built
  • All the considerations you would have when buying into any community also apply (who are your neighbors, what are the HOA rules, etc.)

For further reading:
Manufacture Housing – Wikipedia

Comments? Do you live in a manufactured home, or have you considered it? If so, what are your concerns, and what do you like about it. Please share your thoughts in the Comments section below.

Posted by Admin on November 9th, 2019

10 Comments »

  1. Just an FYI re. mobile homes. I have read many stories of land rents and water bills being arbitrarily jacked up by property owners and investment groups because, hey, what is a 70 year old going to do? Move? Again? I remember seeing a video of a seminar selling investment in trailer park land to that effect, but I can’t seem to find it now.

    Oh, wait, here’s the video. Apologies in advance for the R-rated language. But you are all over 18, no? ?
    https://www.youtube.com/watch?v=jCC8fPQOaxU
    I suppose you could always buy a boatload of Berkshire Hathaway stock and get some of your money back! At least if you’re in a home in a town, you have the leverage of the rest of the town behind you if the county raises property taxes beyond reason.

    Below are a couple of links to articles.
    https://tdn.com/news/local/tenants-accuse-major-regional-mobile-home-park-owner-of-price/article_7ed6b20b-f009-5394-b9db-1b55c3dd4c3e.html

    https://www.thedenverchannel.com/news/contact7/seniors-in-mobile-home-park-get-skyrocketing-water-bills-lawmakers-investigating

    by Peder — November 9, 2019

  2. Regarding manufactured and/or mobile home parks, we found a resident-owned park 7 years ago that has been a blessing. After investigating many different parks in northern CA, we purchased a 1500 square foot manufactured home in an established community, and made some improvements. Purchasing a home here means buying shares in the corporation that owns the park. We have 280 homes and an elected 7 member board of directors that hires a manager and deals with both short and long-term maintenance. Our monthly payment includes water, sewer, garbage, road and park maintenance, land lease payment, and our share of corporate taxes. It has not risen much since we’ve been here and the park corporation’s finances are in excellent shape. We have a clubhouse, activities, pool and tennis court, as well as beautiful walking paths.
    Research paid off — one privately owned park we looked at has seen monthly rates almost double in 7 years.

    by Marianne — November 9, 2019

  3. In the greater Los Angeles metro area the price of manufactured homes and monthly lot rents have skyrocketed. One just has to love the cost of living in the greater Los Angeles area. We do pay dearly for this climate!

    by Bubbajog — November 9, 2019

  4. Marianne,
    What is the name of your resident owned park? and what city is it in?
    Thanks,

    by Cindy — November 10, 2019

  5. Cindy,
    Woodland Estates in Morgan Hill, CA, just south of San Jose. It’s one of two resident-owned parks in Santa Clara County, although there are others in neighboring areas. It’s also an over-55 community. Unfortunately house prices have escalated something fierce since we purchased in 2012, but demand is strong because our monthly outlay is so reasonable, and residents govern the park.

    by Marianne — November 10, 2019

  6. Thanks Marianne,
    That sounds like a nice area. Too bad they don’t have more of that type of resident-owned community although I’m not looking for an over-55. Years ago we lived up in San Carlos; it was beautiful but expensive even then. Now living in Canada and hoping we may be able to afford a move back to US someday…

    by Cindy — November 11, 2019

  7. Cindy,
    I’ve often thought parts of Canada would be wonderful; have friends in the Toronto and Halifax areas, LOL. Our family is mostly in CA, so we’re not really looking to leave.

    Here’s the website if anyone wants to check out the history and gallery.
    https://www.woodland-estates.co/

    by Marianne — November 12, 2019

  8. Having lived permanently in both Kansas and Florida, I do not recommend manufactured homes in areas that are occasionally subject to tornadoes or hurricanes. Remaining in one of these homes during such storms can be injurious and often deadly. It’s a big risk.

    by Clyde — November 13, 2019

  9. If you buy a manufactured home and put it on a foundation, it will be taxed as real property through your town. Manufactured homes come with a title, like a car. You register it with the DMV and pay registration fees. If your town taxes motor vehicles, you will pay a tax. Each year, the manufactured home decreases in value, as cars do. You will see you taxes go down each year. In some cases, if you are considering a manufactured home, a used one might be the answer to lower costs.

    As the MH gets older, just like a home it requires repairs. My friend lives in a 32 year old MH. She bought it about 8 years ago. She has had to replace the roof. She had numerous water leaks which insurance covered. However, they sent her a letter saying that the pipes beneath the MH all needed replacement by a certain date or they would not longer insure her. She had that done. She had her ac/heat unit replaced. Just like a home, it is never ending with home improvements.

    by Louise — November 14, 2019

  10. One reason to buy a Manufactured home where you own the land. For example in CA the value of these homes have increased by 50% in the past 5 years. And if you have issues with paying the property taxes the state allows you to defer them too. If you purchase a newer or larger home you dont pay yearly registration or sales tax fees either. Many of these homes are not in a park but still offer many amenities…

    by Mary11 — November 15, 2019

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