Manufactured homes are updated mobile homes with upgrades big enough to warrant the new term. Manufactured homes are built off-site and placed on a chassis to be wheeled onto a homesite. Once there, the homes are placed on jacks, and the wheels are removed and replaced with steel or cement piers. They now have a permanent foundation.
Manufactured homes are also tied down every few feet to anchor them, which is important to protect the homes from inclement weather such as tornadoes and heavy storms.
To make manufactured homes look more like site built homes, skirting made from different materials, such as brick, can be put around the base, or they can be set into the ground.
What type of real estate do they fall under?
Manufactured homes fall into a gray area regarding real estate. Are they considered personal property (e.g., a car) or real property (i.e., real estate)? The answer depends on the setup.
If a manufactured home meets the requirements of real property -- which vary by state -- it would be considered real estate; otherwise, it would remain under the personal property category.
For example, for a manufactured house to be classified as real estate, some states require a deed, some states require the home be permanently affixed to land owned by the homeowner, and some states require the home to be permanently affixed to the land -- but the land could be leased.
Tax implications of a manufactured home
Ownership of the land comes into play here. If you own the land and the manufactured home, property taxes are generally handled the same way as they are in homes built on-site. But if you lease the land and own the home, things can get a bit tricky regarding who pays the property taxes.
If your manufactured home will be on a lot in a manufactured home community or on other land you're renting, who pays the property taxes depends on your locale. It could be the responsibility of the landowner or the homeowner.
Another consideration is how the property tax is assessed: It's based on the land and the home. If the landowner and homeowner are different people and each gets a separate tax bill, paying the taxes is straightforward -- but that doesn't always happen.
Another potential scenario in a leased-land situation would be that the landowner pays the taxes, maybe passing them on to the homeowner in rent. But if the landowner doesn't pay the taxes, the home could be auctioned off by the state. In this situation, owners of manufactured homes would be wise to check whether property taxes are being paid.
The price point
As of August 2020, the average cost of a manufactured home was $88,200 (not including land). But size matters. The average cost of a single-wide home is $57,700, and a double-wide is $109,300. Any add-ons -- like a porch, upgraded kitchen cabinets, or a garage -- could add to the cost. Still, manufactured homes can be considered affordable housing.
If you need to buy the land the home will sit on, you'll need to factor that into the cost. If you'll put the home on rented land, like in a community, you'll need to add in the monthly rent for the land and possibly for extra amenities such as a community pool and clubhouse.
Mobile vs. manufactured homes
Mobile homes refer to homes that remain on the chassis and have wheels. They're typically small single-wide homes, usually between 500 and 1,200 square feet.
'Mobile home' was the only term used for this type of home until 1976. After that year, mobile homes became subject to government regulations under the Department of Housing and Urban Development (HUD), and the new product was called a manufactured home.
An attitude change?
Mobile homes and their owners have been the butt of many jokes for years. For instance, what do a tornado and a divorce have in common in West Virginia? Either way, you lose the mobile home. Or this one: What's the definition of a mobile home? Your house moves, but your 12 cars don't. But those stereotypes are changing.
With all the advancements made to modern manufactured homes, people's perceptions of them are improving. The homes can be big, with custom add-ons like fireplaces, an open kitchen layout, stainless steel appliances, large windows, and high ceilings.
Some of the communities have seen great improvements to the landscapes as well. For instance, a manufactured home park can have walking trails, exercise rooms, pool tables, and swimming pools.
The Millionacres bottom line
Like any other property, manufactured homes come with pros and cons. They're typically more affordable than site built homes, meet the HUD standard, can be built faster than on-site homes (generally by two to three months), and can be moved if need be.
But unless you own land already, it can be difficult to find a place for the home, there could be complications regarding who's responsible for paying the property taxes, and these homes tend not to appreciate as well as homes built on-site do.
With that said, today's manufactured homes and manufactured home communities appeal to many real estate investors. They're worth looking into.