Are Modular Homes A Good Investment

All investments come with a degree of risk. However, investing in a modular home has several advantages over other residential properties. Investing in a modular home might be the right choice. Modular homes benefit from more affordable materials to quicker construction times. investing in a modular home might be the right choice for you.

We will look at why modular homes are a good investment and a few points to consider before you invest. But first what is a modular home and how does it differ from other types of prefabricated homes?

What Is The Difference Between Prefab And Modular Homes?

are modular homes a good investment
Image courtesy of: model O2M by Ilum House

A modular home is a type of prefab home. Modular home manufacturers create separate modules for each part of a home. Manufacturers create these modules off-site in factory-built environments. These self-sustaining modules are then transported to your site and assembled. Ready to live in.

Other types of prefabricated homes include tiny houses, log houses and panel-built houses. Manufacturers build all prefabricated homes off-site and transport them to their final destination. Here they assemble the homes. A prefabricated home’s style and manufacturing processes are what make them different.

For this article, we will answer a few questions and focus on why modular homes are a good investment for you.

How Modular Homes Construction Saves You Money:

Based on the size and style, modular homes are generally less expensive to build than traditional homes. This can mean lower initial investment and risk to you. So, what makes modular homes so affordable?

More Affordable Materials:

Construction materials for modular homes are often easier to source and buy. Modular home manufacturers have a shorter supply chain than conventional home builders. They can buy in bulk, have better storage and only use the materials that they need. When you choose the modular home you want, often the materials are ready to go.

Many manufacturers are aiming for greener standards. This is through the reusing of materials and recycled goods during construction. Easier access to materials at a more affordable rate ensures savings get passed on.

The Assembly Line Process:

The factory-built environment also improves construction efficiency and removes delays. Modular home sections are manufactured concurrently or consecutively with one another. This eliminates many delays. Each process is completed at a scheduled time.

Also, offsite factory construction doesn’t suffer from weather delays. Most traditional construction project issues are eliminated during modular home construction. This time saving reduces labour costs, transport fees and onsite building waste. More savings are again passed on the buyer.

Modular homes are better alternative to on-site homes:

Prefab homes are usually more affordable than a traditional on-site built home. This means your choice will affect your investment risk and your potential. The final price depends on a variety of factors and choices you make.

All prefab homes from modular houses, and cabins to container houses will cost you to manufacture. Just like a traditional home. The size, manufacturer, style and design of your modular home all impact the final cost.

Prefab homes are often more affordable though, in many ways. This is due to material procurement and better manufacturing timelines. When you factor in the issues that modular manufacturing eliminates, they become a better choice.

With every investment, it’s important to do research, ask questions and have as much information as possible. For example, it is possible to purchase modular homes for under €50,000. This would be a lot more difficult within a standard building process.

As more manufacturers enter the market and building quality improves, now is the time to invest in prefab homes.

 

container home - good investment
Image courtesy of: model Living Container by Inboxlifestyle

Why Do Modular Homes Depreciate?

A misconception about modular homes is that they depreciate rapidly. This is not the case. Modular homes when assembled and placed on site are tied to the value of the surrounding land. Just like any other home.

The quality, design and energy rating of modular homes make them more desirable. Traditional homes of a similar age may not hold up quality-wise.

The Pros And Cons Of Buying A Modular Home:

It’s important to view the pros and cons from an investment perspective. As investment properties, modular homes provide more stability in a number of areas. This includes the construction timing, material costs and energy efficiency. But there are always areas that must be considered.

Energy Efficiency:

New builds benefit from improved energy standards. Modular homes are built to energy standards that exceed older traditional homes. When you invest in a modular home you will receive improved energy efficiency. This will save you and your tenants on energy bills.

Better insulation and airtightness reduce and eliminate draughts. This creates a more comfortable home to live in.
In the long term, you will save on gas and electricity prices and these savings can be passed on to tenants.

If your aim is off-grid, Net Zero or passive there are prefab companies which specialise in modular homes which help you on this path.

Improvements in construction and design get passed on when you decide to build a modular home. Traditional construction companies may not be as open to change as modular manufacturers.

The savings you make on energy can be passed on to tenants making your property more appealing.

Speedy Setup:

One of the main advantages of investing in modular homes is the quicker construction time. Initial planning to complete construction can be reduced to a matter of months. This of course depends on site preparedness and your home choice.

Your home’s foundations can be prepared at the same time as your home. This means the installation time may only be a few weeks. As an investor, you can start earning income on rent or through property valuation much sooner than standard buildings.

Quality Control:

Modular homes allow you to ascertain the quality better than most traditional homes. A single manufacturer’s quality is easier to assess than numerous tradesmen. You can check the quality of former builds, ask customers and view the construction process all in one area.

The modern building standards and energy rating requirements across the EU and UK mean manufacturers have to meet minimum standards. New builds often come with guarantees which are ideal for an investor.

Cons Of Investing In A Modular Home:

Mixed Perception:

While modular homes and other prefab home styles are continuing to grow in popularity, there are still misconceptions related to modular homes and prefabricated homes in general.

Lingering memories of older modular home failures mean more modern modular homes face the brunt of this stigma. This number continues to decline. With continued improvements in the construction process, government backing and more affordable housing, this is not a major issue for investors.

For example, the EU prefab housing market is set to grow by 4% between 2018 and 2027, a positive sign for any investor. [1]

Finding Land for Your Modular Home:

If you choose to invest in a large modular home, you might find it difficult to source a large enough space that is suitable for your new property. Finding somewhere for your modular home is both a personal choice and dependent on the amenities and utilities that you need nearby.

You will need flat land, with good orientation and soil conditions to support your new home. While finding land for your new home may be difficult it is certainly not impossible. Have a look at this guide to finding and buying land for your modular home. You will see it is not so difficult.

Urban areas are more difficult than rural locations, so it’s important to have an area purchased or in mind before you decide to invest. Check local regulations and laws regarding property development in the area before looking for a new home.

How To Choose A Modular Home?

When choosing a modular home you must think about your budget, the size of your home and your location. If you know the answer to these questions, choosing a modular home will be easier.

Find a manufacturer who can transport your modular homes properly. When you have found the right manufacturer, then you can begin searching for the right home.

Your budget will influence the size of your home and the risk factor that you can sustain. It’s possible to find modular homes for under €50,000 but you can also find homes for under €200,000 during your search.

Choose a home that you can afford to invest in and one which will make the right returns for you.

Are Modular Homes Suitable Rental Properties?

Modular homes are a good investment choice, whether you choose to rent or use as a second home. Investors have access to increased market competition and improved building standards. More than ever before. As modular homes grow in popularity their investment potential will grow also.

With co-working and remote working becoming ever more popular, the market for renting economical and stylish homes is continuing to grow. Modular homes are perfect for solo travellers and families on vacation. If you choose to rent, there will often be no shortage of tenants.

It’s important to remember every investment comes with some risk. But, modular home investing is a safer option. With reduced costs, improved construction and greater availability look to invest now.

You can begin making returns much sooner than a traditional home if you decide to build. If you opt to buy a modular home,you benefit from improved energy efficiency and cost savings. The built environment of a modular home also makes them ideal for remodelling and renovating. Areas that will improve your returns as an investor.

References:
[1]Mordor Intelligence: European Prefab Buildings Industry Study

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