"Depreciation" and artificial Homes As an speculation

There is a long standing confidence that all manufactured homes (what many used to call "mobile homes") will "automatically" depreciate once it is purchased. While it is true that manufactured homes have lost value from their first purchase price, this is not historically a given. There are many examples of manufactured homes which have appreciated (gained) value. It should also be noted that site built houses, gain - or lose - value for similar reasons that manufactured homes do - as the new sub prime mortgage meltdown has underscored.

Let's take a brief look at the factors which cause that gain or loss of value.

Modular Home

Many are customary with the old real estate adage, "location, location, location!" The location of the home has a great impact on its value. Let's use an analogy to illustrate this example.

Having lived in the Houston metro area, fantasize a mansion from the River Oaks district being located in Houston's Fifth Ward. What would happen to that mansion's value? It would drop like a rock! Even a gorgeous home, set in an older, blighted area will lose a lot of value. The reverse could happen too. If an older "challenged" home from the Fifth Ward and could magically find its way onto a site in the River Oaks district, it would immediately be worth more - just because of its location.

The chapter is, what is the manufactured home's proposed location? Is the location upgrading, or going down? "The best the location, the more likely the value is protected."

Next is the condition of the home. If you have a conventional site built house that is run down, is it any surprise that it is worth less than a site built house that has been well maintained, where the asset has been landscaped, and where improvements are taking place? The same is true for manufactured homes as well!

If you don't mouth the manufactured home, over time, similar things will happen to it that would happen to a site built house that isn't maintained. Now, if you take a neglected manufactured home (or a site built "fixer upper") and it is purchased "right" and then repaired and upgraded, what you will have is a home that will often sell for more than what it originally sold for when it was new! Why? Because as construction materials cost rise, the value of older housing (manufactured or site built) that is maintained or brought up to standards will go up too! So if you buy a pre-owned manufactured home, and do the same things that a site built home owner would do, you will contact similar results.

Many are surprised to learn that studies done by the largest insurer of manufactured homes, prominent guarnatee Company, recite that Mhs appreciate for the same reasons and at similar rates to site built housing. But there are "caveats." Is the Mh in a good location? Is the home well maintained? someone else factor of course is the local market conditions - a booming economy will plainly heighten values, just as a slumping economy will hurt values. One must also point out that when there is a glut of repossessions on the market. That fact will hurt the Mhs value, just as a glut of foreclosures on the market hurt the value of site built houses.

The "bottom line" is that Mhs can be a very good speculation in and of themselves. But let's step beyond the appreciation/depreciation issue, for just a few moments. Let's look at someone else analogy - one that I'm a tiny hesitant to make, because one shouldn't assess a Mh with a car or other vehicle. But let's do it for just a moment, to make an prominent point.

Millions today lease a car. They know that their car will depreciate, and they want to use as tiny of their money for that car as possible. The rest of their money that would have gone towards a higher car payment, they may spend for a good rate of return, or to have more fun, etc..

So, stop and think of the comparison! What if you spend your housing dollars in a home that costs 1/3 to 1/2 less than a comparable site built house! Why not take the money you save, and spend those funds! Thus, you still have the advantage of living for less, and have the advantage of earning money on the money saved in housing costs! Even if your house lost value, what you may earn on the money you save could very well create an thorough best lifestyle!

Take it a step further - because the manufactured home has a lower purchase price, and lower taxes, if someone pays off or buys a home outright, then the money saved in mortgage payments and on taxes vs. A conventional house could be used for savings, investment, travel, charity - a host of obvious possibilities! These are just some of the advantages of manufactured homes as an "investment."

In short, depreciation in manufactured homes are neither obvious nor is it necessarily a tragedy if it does occur. What's needed are the facts and a good plan. With the right information, you can make a housing decision or speculation that will yield a host of potential benefits, from lifestyle advantages, to financial ones, less stress and beyond.

"Depreciation" and artificial Homes As an speculation