Why You Should Invest In Modular Homes

by Erin Bates, Senior Tax Lien Adviser

Tax lien certificates that contain vacant land are often frightening to most investors. Our clients often ask what to do if they acquire a property with vacant land. As a tax lien investor, you have the option of unloading the property quickly by wholesaling, listing it with a real estate agent or hiring a developer to build on it. But another lucrative investing strategy is investing in putting a modular home on the property. A modular home can add instant value to the land and can even turn into a potential rental property.

The Misconceptions of Modular Homes

Many people believe that modular homes are the same as mobile homes. While the names might be similar, they are actually very different. Mobile homes or manufactured homes are built on steel chassis with wheels attached and are removable. On the other hand, modular homes are permanently affixed to a foundation and are treated like any other home.

How Modular Homes Are Built

The biggest difference between a modular home and a traditionally built home is that modular homes are built inside a factory – not from the ground up on a construction site. Unlike mobile, or “manufactured” homes, modular homes are designed, built, and inspected in accordance with the Florida Building Code. This means that the modular home must be installed on a permanent foundation by a licensed contractor.

While both manufactured and modular homes are built in environmentally protected building centers, they differ in that the construction of manufactured homes is regulated to be built to local state construction codes. Some states, however, have adopted one of the uniform construction codes such as UBC or IRC.

A modular home can be built as an “on-frame” or “off-frame” modular. On-frame means that it will be built on a steel frame or chassis. That steel frame is left in place when the home is installed on the site. In comparison, the off-frame modular will be built with the plan to remove the chassis frame when it’s delivered to the site. Off-frame modular homes typically require cranes to assist with the placement.

Advantages to  Investing in Modular Homes

A modular home will likely be much more affordable than a comparable house that is built on-site. Because it is predominantly built inside a factory where there are no weather delays and the builder can take advantage of economies of scale, a modular house simply costs less to build. Quality, factory-based engineering, coupled with rigorous inspection, results in a home that is just like a site-built structure, if not better.

Since modular homes are not required to be built on a permanent chassis, there are more design options. You can range from base unit options to upgraded units depending on your budget.

Investing in vacant land may not be for everyone, but if you acquire a property that contains vacant land, you’re not out of options. Many tax lien investors purchase liens with vacant land with the idea in mind that they will build commercial or residential property on it. Modular homes are a great compromise for those looking to invest in a rental property but are limited in funds. Whatever your budget, investing in a modular home is a great investing strategy to consider.