Mobile vs. Modular? Doing the Math

[John Manning]

I found that if you do the math purchasing a modular home is less costly in the long run over a manufactured home, In my case a difference of over $30K in mortgage interest and not even counting appreciation value vs. depreciation of a mobile. You pay sales tax on a manufactured home as well as a higher interest rate 3 or more points over a fixed rate. The modular home interest rate is the same as a stick home and there is no sales tax and the house will appreciate (off frame) and a manufactured home (mobile) will depreciate. I am glad I did the math and saved my self a lot of money and found that I had many more options with selecting a modular.

I also found that there are many other manufacture builders not listed in the books sold here on this site that are of excellent quality. I did find valuable information in these books but they are not all there is to making a decision but a good guide line to start with. My point is that if the manufacture is not in the book it doesn't mean they are not a well built home.

John

[latina]

I think the appreciation/depreciation will depend on other factors(location, demand for housing...just to name a few). Not just because it's a modular. From my understanding it's the land(LOCATION, and how well the area is maintained) that causes any home to appreciate/depreciate(whether it be site built , manufactured or modular). I'm glad you found the information that you are looking for though.

[Kris]

John, please let me know how your figured this out? We are looking to purchase a manufactured home, but tell me how you did the math. Was it based on the square foot of the home, transportation costs, interest rates?

Let me know.

Thanks.

[rmurray]

John..you might be lucky..but your math is all faulty...Appreciation/Depreciation is all location oriented....Locations appreciate..all structures depreciate with time..

Interest rates are almost the same..mortgage rates on manufactured homes are only 1/2% higher across the board....No where near enough to cover the higher cost of the mod..

States treat sales tax differently.....In SC a well insulated manufactured home has only $300 in sales tax on it...but a similarly insulated modular has 5% of the building materials built into the price of the mod...money the manufacturer has to pay when he gets the materials...For most mods this is up wards of $4,000.00

So in some states sales tax is much lower on manufactured homes....BUT almost without fail real estate taxes are far higher for the mods..Mostly because most local tax appraisers have the same out dated attitude of manufactured home value you have...In our area it is not unusual to find real estate taxes over $ 100 /mo higher on the mod version of a home..The interest savings will not cover 1/2 of the higher taxes..

The books here highlight the 25 largest (by volume)home builders in the US... You are right there might well be others not covered that build fine homes..but the authors have covered information about the builders of 95% of all factory built homes..

I am glad you are happy with your home so far...I hope it serves your every need and dream..

[Kris]

Thanks once again Murray!!!

[John Manning]

"all structures depreciate with time"

Only if the structure is not properly maintained, a mobile home will always depreciate as will the taxation provide a depreciated percentage rate for the home on your tax bill. In no way is there any comparison for mobile vs. stick or modular that is off frame. The modular is taxed and appreciates exactly as the stick built and the mobile will never in this or the next life time.

"Interest rates are almost the same..mortgage rates on manufactured homes are only 1/2% higher across the board....

I still disagree with this statement, please name one lending institution that offers rates only 1/2 percent difference from the same conventional loan.

"BUT almost without fail real estate taxes are far higher for the mods..Mostly because most local tax appraisers have the same out dated attitude of manufactured home value you have...In our area it is not unusual to find real estate taxes over $ 100 /mo higher on the mod version of a home.."

I agree partially because it's a fact that the modular is appreciating and the mobile is depreciating and what matters is that you can sell the modular for a a lot more then you can the mobile because no matter what the attitude I or anyone else has the bank is the deciding factor for anyone financing their purchase.

Why only cover 95% of the builders? Why not 100%, volume certainly does not guarantee quality.

If everything you stated were fact everyone would be putting up manufactured (mobile) homes because there is no added value in building a stick or module home, why spend the extra money?

John

[rmurray]

All things man made depreciate with time John....All structures will increase in value ONLY because replacement costs rise in time..Example...If you went to a 20 year old subdivision and looked at well kept home...If the builder still had some lots and offered a brand new home exactly the same floor plan and size on the lot next door..Would you offer more for the 20 year old house just because it was older...I doubt it....Of course this is not a realistic example because the builder no way will offer the same home today at the price he did 20 years ago..It is true building costs are ever rising and used home value increase only because of the higher costs of new homes....

John..if you had ever looked at a professional appraisal of a stick built..you would see the appraiser determines the replacement costs and then DEPRECIATES the home for its age...

Manufactured homes DO depreciate when they are separated from their location...or to be moved from the land they are on...Your stick built or mod would lose well over 75% if marketed this way...but because the loses are soooo high no one would even think to sell a stick home with no land,,,,,Mods will have the same bad luck...

At least the manufactured home owner has the option to sell without the land...

Your basic supposition would mean the best buys are all old homes that will ever increase in value...NOT in my area....Most 100 year old well cared for homes are hardly worth the removal costs...In our area we have many homes and buildings from the Revolutionary War Era...After the government buys them..spends millions renovating them they might be worth about 1/2 of the renovation cats...

You said ""Interest rates are almost the same..mortgage rates on manufactured homes are only 1/2% higher across the board...." "I still disagree with this statement, please name one lending institution that offers rates only 1/2 percent difference from the same conventional loan"


All lenders my customers have closed manufacture home loans with in the last few months...All no more than 1/2% higher than the lowest rates on the mortgage market...Most in the under 6% range for fixed rate 30 year notes..

Bank Source Mortgage
Wells Fargo Mortgage
Irwin Mortgage

There are many others listed here in the mortgage section...

There are many more plans available for stick built and mods...A- credit, B credit,C credit ( none of which can finance home only) no income verification, no asset verification and others..

You are right that manufactured home loans with NO land (NO PMI and NO Closing Costs) are currently about 2 1/2% higher than full doc conventional mortgages (which have PMI equaling over 1/2% and closing cost of 5 to 7 %)...But these are NOT the same type of instruments and cannot be compared...Many of my customers have kept their real estate free and clear and financed only the home...Try that with your mod or stick built...tell them you want NO lien on your dirt...They will escort you to the door soon..Home only manufactured loans demand good clean credit....And verified cash downs..

[Kris]

I'm sorry, manufactured homes definitely appreciate. I think it does depend on the area. I live in "stick built" home. And I am in a rural area. There are homes on 1/2 acre that were manufactured in the 80's that are going in the high $200k!!! The new manufacture homes on the half acre are selling in teh $300k!! And these are on less than an acre in a rural area in California!!!

Now I am not a math person, but I do know that when I researched the particular home that is being sold the price is less than $300k even with a land home package. And in my area they are not having a problem selling the homes. These homes are being sold by some company called The Manufactured Specialists. They are definitely making a killing.

The land thing that Murray speaks of is true because everytime and I do mean everytime we go to a dealer, each and every dealer has asked if we had our own land to put the home on. So that is something the consumer is fully aware of . But in the long run, any house that is not taken care of, will go down the tubes.

[Mac]

I'm with Murray on this one - exactly right. Our mortgage (5.875%) was 1/2 point higher. We pay no sales tax. All houses do indeed depreciate - the land appreciates.

The combination of land and home might not appreciate in dollar terms as fast - but I believe that's because there's less invested in it to start with.

I sit on five acres in northwest Oregon and looked at everything from timber-frame, to log, to cedar, to custom, to cookie-cutter site-built - and chose a three-section manufactured home to place on it. In our area - semi-rural - new homes are likely 30-50% manufactured, and they hold their value.

So frankly I don't think there is much difference between the two.

[Judy Jones]

John or whoever else reads this.

We are trying to find a mortgage for a modular home in a 55+ community in Delaware. We will be leasing the land, so if you lease the land on a modular home you have to pay a high rate of interest on your mortgage. The best we got is 9 1/2 percent since we will not own the land. We will be putting $30,000 down on a $110,000 home, and no mortgage company really wants to lend you the money since you don't own the land. It is "what they call" not Fanny Mae approved. If any one has had this problem, or knows of a mortgage company that does give cheaper loans let me know. Thanks we are trying to downsize from PA since the taxes are so high here ---- Judy Jones