Tips on Modular, Manufactured, & Mobile Homes
- Adam Garrett
- May 9, 2023
- 9 min read
Updated: Jun 9
What are the Main Differences Between Modular, Manufactured, & Mobile Homes?
"The main difference between manufactured and modular homes is that manufactured homes are built to the national HUD code, while modular homes are built to all applicable state and local building codes."
Modular homes are more often pieced together on site and the median size is inherently bigger than manufactured homes because of it, with an appearance more similar to traditional construction.
"Mobile homes and manufactured homes were distinguished from one (another) in 1974 with the National Mobile Home Construction and Safety Act. This act was followed in 1976 by the HUD Manufactured Home Construction and Safety Standards — usually called the HUD code — which set federal construction standards for manufactured homes."
The 3 compared with each other:
Modular Homes:
A. Most allowed locations
B. Most traditional mortgage lenders with options for financing
C. The resale value/appreciation is best
D. Look most like traditional construction more often
E. Highest standards, including needing to be built on a permanent foundation
F. Highest prices
G. Highest median size
H. Highest lifespan
I. Strongest on average in the face of weather
J. May or may not be on a permanent chassis (if it is, it's not allowed to be purchased by Fannie Mae)
Manufactured Homes:
Manufactured homes are worse than modular but better than mobile for A-D.
E-H are lower than modular homes but higher than mobile homes. Manufactured homes don't need to be on a permanent foundation, and are built on a permanent chassis for mobility (DHCD). According to HUD, "Manufactured homes have an expected life of 30 to 55 years."
Mobile Homes:
Mobile homes are worse than modular & manufactured for A-D.
E-I are lowest for mobile homes.
Mobile homes often are not on a permanent foundation.
Built on a permanent chassis
According to Dave Ramsey, "Mobile homes are a terrible investment because they drop in value super fast." I've seen a firsthand report from a loan officer in 2023 where a single-wide built in 1998 had a new roof metal roof (approximately 2023), a "perfect" report from a home inspector, and an appraiser noted a remaining economic life of 15 years. The appraiser stated, "EREL is based on M&S Residential HB for SW Fair quality mfg homes typical building life is 20 years 5/20=25% dep with a RELOC of 15 years. Actual RELOC may be more or less."
Typical Homes vs. Modular, Manufactured & Mobile Homes
The differences between typical homes and modular, manufactured, and mobile homes follow the same pattern as modular, manufactured, & mobile homes listed above. As shared above, that means that typical construction will have the following compared to the other 3:
"A. Most allowed locations
B. Most traditional mortgage lenders with options for financing (with traditional homes having substantively more than even a modular if the modular is "on frame" with a "permanent steel undercarriage/frame/chassis that provides the structural support after the home is installed on site.")
C. The resale value/appreciation is best
D. Look most like traditional construction
E. Highest minimum standards (though many identical standards w modulars, & some modular homes may be built in better quality than low-quality stick-built homes), including needing to be built on a permanent foundation
F. Highest prices
G. Highest median size
H. Highest lifespan (disputed online regarding traditional constructions vs modular, & dependent on material quality used, but 1 of the ways modular can cut costs is to use lower quality materials in many cases. Also, even a modular manufacturer "boasts", "most modular homes can last upwards of 50 years, and some even longer.")
I. Strongest on average in the elements (though highly dependent on construction, i.e. some modulars have a brick exterior, while it's more rare for modulars to have cementitoious walls than it is for traditional homes to have it).
Identifying Existing Modular/Manufactured/Mobile Homes
The first place to look to identify the type of construction is in the listing itself. In REIN MLS (the main direct source of homes in Hampton Roads, VA), you'd look under the "style" section for "Manufactured", "Mobile Home", or "Modular". You can also weed these out from a search or look exclusively for them if desired. That said, sometimes homes aren't labeled properly, whether for better or worse. The home style is featured prominently in the overview section of Zillow.
On-property identification can be difficult at times but is based on factors like:
1st look for & check the data plate on the home. Modular homes built after 71 should have them, often under the kitchen sink. "The Data Plate can be found in a kitchen cabinet, an electrical panel, or a bedroom closet." Manufactured homes' HUD tags may be on the rear of the unit or each of the units.
Is there a permanent foundation? If not, it's a manufactured or mobile home.
Is there a permanent chassis underneath? If so, it's most likely a manufactured or mobile home.
What age is it? If it's built before June 15, 1976, it's more likely a mobile home if it has other characteristics of mobile/manufactured homes but some modular homes were built before then too.
Drywall is more common in modular homes than in manufactured or mobile homes.
Check the roof style within the attic & the roof pitch to identify manufactured & mobile homes. While manufactured homes can have 5x12 roof pitches, you'll find that a lot more often on modular homes. More roof pitch, all other factors the same, extends the life of the roof.
Mortgage Loan Differences
As mentioned above, among modular, manufactured, and mobile homes, modulars offer the most traditional mortgage lenders with options for financing, manufactured homes provide less options, and mobile homes provide substantially less options. In some cases, down payment requirements will be higher and interest rates will be higher for these forms of construction, in the same order of being most likely with mobile homes and more likely with manufactured than with modular homes.
There is an affiliate lender who, last I checked, can do resale manufactured homes built June 15, 1976 or newer w/ typical down payment requirements and conventional, FHA, or VA loans. He can also do USDA loans on those properties built on January 1st 2006 or later with no money down. If you're working with me, just ask for their name & contact info.
No Real Estate Agent Buyer Representation with Mobile/Manufactured Homes Not on a Permanent Foundation
According to the Virginia Realtors Association, in a document directed to real estate agents, in question 20, the question is "Can we sell mobile homes if we are selling the land beneath them?"
They respond, "If the mobile home is no longer mobile, that is, it’s no longer a motor vehicle but is affixed to the real estate and being taxed as real estate (not personal property), you can sell it with your license. However, if it’s still a vehicle (not affixed and not taxed as real estate), you must have a license from the Manufactured Housing Board to sell it, whether you’re selling the land it sits on or not. So the land doesn’t matter, although most of the time if it’s affixed and taxed as real estate, you are also selling the land. But selling the land is not enough to make legal the sale of a vehicle sitting on it."
Eligible Locations to Build
There are many zoning restrictions on manufactured & mobile homes (& also some on modular, but not nearly as many), but the level of restrictions depends on state law as well as the city/county ordinances and any association restrictions or other deed restrictions that might be in place.
For instance, in the city of Hampton, only 1 out of the 11 different 1 or 2-family zoning districts has manufactured homes permitted. Manufactured/mobile home parks and subdivisions are not permitted in any of the 11 (7/13/22 chart; source)
To Look up the zoning code, go here for a link to the spreadsheet of the cheat sheet I've created for SE VA, then click on the tab for "law" including sections for travel trailers, manufactured homes, modular homes, setback restrictions, minimum lot area, etc.. If you're working with me to help you purchase and you'd like me to fill in some blanks, just let me know. If looking elsewhere, or if a link is broken or appears not up to date (which happens regularly in these government cases), Google something like "city of (insert city/county name here) permitted use table zoning" or "county" instead of "city" if not in a city.
Manufactured & Modular Home Builders (SE VA Focused)
Here is a spreadsheet of some examples of modular and manufactured home builders in the SE VA area & in some cases in more distant locations. Keep in mind that the options with higher reviews will typically have higher costs for the same type of construction and that I don't endorse any of these options, nor have I used any myself to build.
Trailer/Manufactured Home/Mobile Home Parks vs Your Own Land
If you want to go the manufactured/mobile home route, I generally recommend purchasing in a situation where you have your own land rather than paying lot rent at a trailer park (i.e. $650/mo in the Warwick Community of Newport News).
To find lot rent on a place like Zillow, go to the HOA fee section, and if it isn't there, go to the details section, i.e.
If you don't, and your lot rent is substantial, your fixed interest mortgage will tend to go up a lot faster than it would otherwise since lot rents tend to go up in cost just like other rents tend to go up in cost, and lot rent is generally a larger % of your mortgage than taxes would be, if any real estate taxes would be owed at all for a new home. Also even when purchasing in a trailer park, you'll still typically be taxed, but sometimes at a much higher rate than you would if you purchased real estate, depending on the city/county & state in some cases. In some cases manufactured home parks are taxed just like other real estate; in other cases, they're taxed more similarly to cars (which can be >triple the rate) or somewhere in between. When purchasing land for a trailer or land with an existing trailer, be sure to check things like wetlands, flood zones, hurricane evacuation zones, & laws regarding your home type.
Related:
Tax Relief & Deferral in SE VA (i.e. for disabled, elderly, low income, etc.)
Live-Aboarding: Low-Cost Alternative to Trailer Park Mobile Homes
If looking to live at the lowest costs, while looking to avoid hefty lot rent fees, there are alternatives available, especially for those who take substantive safety precautions & who would consider unconventional approaches. One such option is "liveaboarding" on a boat. In some cases, used boats can be acquired cheaply or even free, fixed up, and eventually sold (especially if accompanied by better marketing than at time of purchase) for a profit when factoring in material/labor costs. Tylers Beach in Carrollton, for instance, is an example where you can currently (as of September 2023) acquire a slip for $250/yr. While you couldn't stay there at the dock overnight, you could hypothetically put out in Burwell Bay (adjacent to the James River) at night and then dock there during the day and go to work from there. Keep in mind that there is no surveillance at this location, & that it would be highly recommended that if you wanted to pursue an option like that, it would be best to get surveillance that is monitored digitally with alerts/security/alarms/etc., & only come in during daylight hours. Hypothetically, you could do similar at a number of free boat ramp locations at no cost and use a dingy to come in, as long as there aren't rules against overnight parking at the location of the free dock.
For more details, see:
For more unconventional options for homes (i.e. low or no cost camping), see the non-traditional housing section of my homeless page.
Insulation, Sound, & Maintenance Problems
Keep in mind that mobile homes and manufactured homes typically have lower insulation & soundproofing standards than typical construction and that the replacement cost of items like roofs may be more than typical construction. In a hurricane or tornado, mobile homes are the most likely to incur serious damage.
Higher Sales Tax Rates if No Permanent Foundation
While it depends on the state & locality, it's not uncommon for there to be substantially higher sales tax rates for manufactured & mobile homes not on a permanent foundation vs those that are on a permanent foundation. In some cases, this amount can exceed 4% of the sales price alone, which is much higher than the sales tax on identically valued real estate that has a permanent foundation. Go here for the VA law on the subject.
Are Manufactured & Mobile Homes w/ No Permanent Foundation Inherently Excluded the Capital Gains Exclusion? No - They May be Eligible
While there are definitely cases where taxes will be very different for a home with vs without a permanent foundation, thankfully, the IRS rule applies even if there's not a permanent foundation if you meet the other qualifications. It even applies for a houseboat.
Per the IRS website publication 523 as of 6/26/24:
"The tax code recognizes the importance of home ownership by allowing you to exclude gain when you sell your main home. To qualify for the maximum exclusion of gain ($250,000 or $500,000 if married filing jointly), you must meet the Eligibility Test...
Finally, the exclusion can apply to many different types of housing facilities. A single-family home, a condominium, a cooperative apartment, a mobile home, and a houseboat each may be a main home and therefore qualify for the exclusion."
Related:
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