Thinking about buying a mobile home? How about a piece of land to put it on? Chances are, you may have come across mobile home and land packages. To anyone who loves package deals sales, this sounds like a fantastic idea and already piques your interest. However, just like any type of transaction, land and mobile home packages have their pros and cons.
In this article, we will spell them out so that you can form a good idea of whether this method of purchasing a manufactured home makes sense considering your goals, needs, and financial situation. For all the cons, we will try to give you a way to minimize the negative impact, if any are available.
As a sizable investment in your, and your family’s future, it’s worth taking the time to explore the pros and cons fully to make sure you aren’t in for any nasty surprises.
The pros
You have more (and better) financing options for land and mobile home packages
One of the complaints commonly leveled against purchasing a mobile home is that you are more restricted when it comes to financing options and that the financing you do get is on less favorable terms. If you own the home as well as the land it’s on, you can go a long way to rectify that.
If you own the land, you can permanently affix your home to it. Converting a mobile home to real estate is quite common, and you can easily find services to do this for you. Then, you can register your mobile home as real estate with the local authorities.
Once you’ve done this, you are then able to get the same type of mortgages that you would be able to get for any other type of real estate. You might still have slightly higher interest rates, but it will be negligible.
It’s also worth mentioning that you can get separate mortgages for the home and land, however, there aren’t really any benefits to this. Chattel mortgages on mobile homes alone are also the least favorable when it comes to interest rates and terms. The FHA and VA will also back loans that include the home and the property as long as it also meets their other requirements.
It’s essential that you pay attention to this last statement. If your home does not meet HUD requirements, there will be little to no use factoring better financing options into your buying decision. Whether your home is HUD code compliant is a make or break factor in whether it will receive financing. It may also be the case that most lenders put an age restriction on financing mobile home, which is usually 15 years.
As a whole, the value may appreciate with time
Yet another common source of fear when purchasing a manufactured home is the threat of depreciation. It’s hard to pinpoint whether mobile homes actually do depreciate or appreciate in value. The statistics are very contradictory. It may very well come down to the age of the home, where it is located, and its condition instead of only its age.
Whatever the case may be, it’s fair to say that mobile homes do not appreciate in value as much as real estate. Once again, owning the land and converting your manufactured home to real estate will already change the odds in your favor.
As a finite resource, the land is always increasing in value. Just take a look at this awesome graphic by How Much that shows the trend over the years. Depending on a variety of factors, a piece of land should appreciate by around 10% each year. The worst performance you can expect from a manufactured home is around 3% depreciation.
That means that you can get a better return on your investment on land and mobile home package than if you were planning on buying a manufactured home alone.
You are not beholden to anyone
No matter what kind of home you put on a piece of land, no one can deny that the feeling of freedom and ownership that comes with owning your own home and parcel. You won’t have to pay lot rent, and you are in complete control of your property.
The only other costs that you might have to continue paying would be property tax to your local tax authorities and levy fees if you bought a lot and home in a park with extra services/amenities.
There is a bit of a grey area here though when it comes to living in something like a planned community or community run by an HOA. Although you own the home and the property, you might still have to follow certain community guidelines or rules. If you own the home and the land, you do usually have a greater amount of control when it comes to things like making additions, maintaining the home, updating its look, landscaping the yard, etc.
However, most communities will still have certain style guides or standards in place that you will need to keep in mind. These are usually enforced with the best interests of the community as a whole in mind and aren’t unreasonable. In fact, they are usually aimed at maintaining a high standard of living and a desirable neighborhood.
You can skip a lot of hassle
Chances are, if you want to buy your own piece of land outside of a mobile home park, you will need to install the utilities yourself and prepare the lot for a mobile home. That operation could cost a few thousand dollars and delay you moving into your new home for some time.
In contrast, most package mobile home and property deals come with a lot that has already been prepared for a mobile home. However, this land is usually located within some kind of mobile home park or community.
These packages have become so popular that even some mobile home manufacturers offer these deals. You can then find a piece of land that you want in your desired location and choose which model home you want to be placed on the land. Fleetwood Homes is one of the most well-known mobile home manufacturers that offer these kinds of packages.
It’s usually also part of this deal that the home will be delivered and set up on the property. This is a troublesome and expensive task to arrange by yourself. Convenience is definitely one of the star considerations when it comes to buying a mobile home and land package.
The land is a bulletproof investment
Although the jury might still be out on whether manufactured homes themselves are a good investment, there is no such trepidation when it comes to land. It might seem like a cliche, but you simply can’t go wrong buying land. One of the most obvious reasons for this is the fact that land is a finite resource.
As long as we keep building, our population keeps increasing, and people keep acquiring land, the amount of available land becomes less and less. This invokes the simple economic laws of supply and demand and is the main reason why land’s cost has been steadily marching upwards at a considerable pace. Except for one or two market crashes.
The cons
It will be considerably more expensive
Land in the U.S. is in most cases extremely expensive. It can vary wildly from state to state with enough land to build a house on still averaging only a few ten thousand dollars in some states (Iowa, Kansas, etc.) and hundreds of thousands of dollars in others (California, New York, Oregon, etc.).
If you compare that to the paltry average $70,000-$80,000 price tag of a brand new double-wide manufactured home, it seems enormous. We are mentioning it as a con because most people look to mobile homes to offer a more affordable way of living. Looking for a home attached to a piece of land could double or even triple your bottom line.
As you can see from the How Much graphic, it could also drastically narrow the locations where you can afford to look for a home.
You may hold back your land’s appreciation
As you might’ve guessed, the flip side to the land helping prop up the value of your manufactured home might also be the mobile home holding back the value of your land. As we mentioned, the actual data on this is unreliable at best and misleading at worst. However, we can confidently say that you should carefully think about your investment.
Does it sound like it makes sense to put a $40,000 single-wide on a $200,000 piece of open land?
Nope.
At the very least, you should be willing to put down enough money to buy a brand new mid-range double-wide or high-end single-wide. Something in this class should hold its value well enough and might even increase. We especially don’t recommend buying a mobile home and land package where the home is an older secondhand model or looks worse for wear.
The mobile home could become a long-term liability
Purchasing a home and a piece of property is a long-term investment for sure. You might, therefore, be rightly concerned with the fact that mobile homes don’t last as long as stick-built homes. After all, you want the home on your property to last as long as possible.
Because they are relatively new, we don’t have any real-world examples to look to accurately gauge how long modern mobile homes can last. However, most manufacturers guarantee their homes for 25-50 years, and a well-cared-for home may be liveable long beyond that. Even some 30-40-year-old mobile homes are still standing in decent condition. Homes of that time were built with much more lax standards to conform to.
That being said, a piece of land should last for generations at the very least. Even an immaculately cared for and maintained mobile home will become dilapidated at some point. The internet is filled with horror stories of how challenging and expensive it is to get rid of one of these homes.
Chances are slim that future buyers will be willing to take the piece of land if they have to get rid of the homes themselves. Moreover, it will be an uncomfortable expense for you to take on. You can expect to pay a thousand or so dollars for professional removal services. If you scrap the home for cash, you can expect to make about $700-$1,000 for a few days of very hard labor.
Also, mobile homes aren’t all that mobile. Even a local move could cost a few thousand dollars, with cross-state hauls going up to $20,000. Combined with the fact that it becomes progressively harder to finance a home after a move, it means that by far, most mobile homes stay put throughout their life.
So, does a land and mobile home package make sense for you?
That was quite a lot of information to take in. Hopefully, your mental gears are turning and making sense of it. As you can expect from a significant move such as this, there is quite a lot to consider. It’s also important to realize that it might be a fantastic move for some, but a bad one for others. Therefore, it’s crucial that you apply your own circumstances to our advice and don’t just take our word for it.
The pros of buying land and mobile home packages could be summed up in these two statements:
- Acquiring land itself is a fantastic investment to make.
- You will have access to better and a wider variety of financing options.
Likewise, we could sum up the cons as:
- You will need to put down a lot more money than just purchasing a manufactured home.
- A manufactured home is not as permanent as land and might become a liability in the long-term.
Process it all carefully and move forward
If you’re sold on the idea of buying land and a mobile home, we have a guide to help you through the process. If you’re thinking of skipping the land part and going straight for the home, you might want to read our articles The Complete Guide To Buying A Used Mobile Home In A Park and 3 Things To Know When Buying A Mobile Home On Someone Else’s Land.
Good luck with this important step in your future!
About Dan Paton
