As home prices across California continue to rise some potential buyers might consider a manufactured home as a less expensive option.  For others, it could be a viable alternative that gets overlooked due to misunderstandings about quality, financing, and overall investment value.  And why not a condo or a townhome instead?  Well, for many, that is the first option and often the best based on their personal preference.  Here we hope to lend some clarity to what it means to consider a manufactured home.

First, some basic information.

The terms “mobile home” and “manufactured home” are sometimes used synonymously, and you may think that they mean the same thing. But that’s not quite the case.

Back in the 1960’s many sought the mobile home lifestyle as the less expensive alternative to conventional homes. Buying a “mobile home” and moving it to a piece of property or a mobile “park” was just that.  But as with anything that “catches on”, more manufacturers entered the market. Eventually, concerns about the quality and safety started to surface and buyer demand began to shift back toward the same kinds of quality and amenities found in traditional homes.

As part of this change, laws went into effect in 1974 (National Mobile Home Construction and Safety Act) and 1976 (HUD Manufactured Home Construction and Safety Standards) to outline the requirements for manufactured homes.

These standards related to overall design and construction, thermal protection, requirements for plumbing and electricity, fire safety, energy efficiency, and body/frame requirements for manufactured homes. Basically, legislators were attempting to stop cut-rate manufacturers from making cheap mobile homes – and encouraging “manufactured homes” that were similar in quality to homes built using traditional techniques. In the Housing Act of 1980, the term “manufactured home” was mandated to be used instead of “mobile” home in all federal laws and regulations referencing homes built after 1976, and this is the term that’s preferred today. Today’s manufactured homes are much different from mobile homes built in the ‘60s and ‘70s, due to that legislation. 

So, in our world as realtors, “mobile home” usually refers to manufactured homes built before 1976 to distinguish them from more recently built homes.

Manufactured Home Financing

These dates matter when it comes to financing as well.  Manufactured home financing is different from traditional home financing and mobile home financing from traditional lenders is essentially non-existent.  This is in direct relationship to the mandated quality that followed the laws enacted in 1976.

Financing a manufactured home falls into one of two basic categories.  Due to zoning restrictions, in most cases, it will be in a mobile home park and either fixed to the owner’s land making it “Real Property”, or in leased space owned by the park.  In that case, it becomes personal property or “Chattel”. 

Anyone looking for financing similar to any other home must own the property it is attached to as well.  The terms and interest rates may be slightly different, but it should qualify.  Additionally, because it is “Real Property” the taxes will be assessed the same as traditional homes. This does not mean the home loses value. Remember, this is real estate and location amenities, and the condition of the home means value. 

On the other hand, manufactured homes on leased land in a park are Chattel and though financing is available, it is different.  Usually, interest rates are quite a bit higher (right now around 7%), there is normally about a 25% down payment, and the maximum length of the loan will not likely exceed 20 years. There is also going to be space rent to the park but one place where you can make up your cost here is in property taxes.  Manufactured homes are taxed more like your car and on a depreciating basis making them significantly less. 

We do know some trusted local lenders that specialize in manufactured homes and would be happy to share them with you. 

Some Things to Consider

The value of a manufactured home is largely based on its location.  For instance, the same home located at Oxnard Shores Mobile Home Park would be worth significantly more than its identical twin at a park a few miles off the beach.  The more desirable the location, the more likely you will need to purchase an existing home even if you intend to replace it. 

Be aware of the rules and restrictions of the park.  Whether its owner-owned land or park-owned land there will be rules and regulations  (pets, parking, guests, etc.). Rules on leased spaces will be according to the owner of the park.  Owner owned spaces will be managed by the HOA, not unlike a condominium. 

Many mobile parks are age-restricted, meaning you must be over 55 to live there.  In this case, there are often age restrictions for each individual in the home, and park rules tend to be non-flexible with them.

Most parks will limit the number of people in the home based on the number of bedrooms. 

Know what is covered in your land lease or your HOA.

Be aware of rental restrictions, most parks require that the owner of the home is also an occupant. 

In a park with leased space be sure to check out the rent-control.  Typically, 4% per year is the maximum but, in most cases, it will not increase that much. 

In the end, living in a manufactured home is a lifestyle choice, not unlike a decision to live in a condominium rather than a single-family home.  Most of the rules are in place to protect the quality of life and the value of the home for the owners so it’s good not to be put off by this aspect.  Some parks offer more space than others, some are run better than others, some are better located, and some are better funded.  If you would like to know more about this home purchase option, we can be a valuable resource for you.