Are park model homes a good investment?

In this article, we will answer the following question: Are park model homes a good investment? We will discuss the depreciation rate of park model homes, why they are a good investment and how to choose the best park model home. 

Are park model homes a good investment?

In terms of value and depreciation rate, park model homes are a good investment. These prefabricated homes can last up to 50 years with the bare minimum maintenance.

There are still many people who do not decide on a park model home since they doubt its durability over time and its qualities, however technically the requirements are the same as for a traditional home. There’s no difference.

What is the depreciation rate of a park model home?

The depreciation rate for a  park model home is as follows:

  • 30% the first year.
  • 15% the second year.
  • 10% in the third year.
  • 7% for each additional year.

Park model trailer depreciation rate per year

YearBeginning valueAnnual depreciation (in %)Residual value (in %)
11003070
2701560
3601054
454750
550746
646743
743740
840737
937735
1035732

Note: Other parameters must be taken into consideration to refine this first assessment:

  • The plot (location, size), if the second-hand park model trailer is sold on a pitch.
  • The equipment in the second-hand park model trailer can make a real difference.
  • The general condition of the second-hand park model trailer.

Why are park model homes so popular?

Park model homes have been around the world for decades. The main reason why they are so popular is that park model homes are generally cheaper than traditional houses. All of this leads people who are thinking about building for the first time, expanding or constructing additional homes, to wonder if park model homes are really a good investment.

Within the investment sector in residential housing, there is a growing segment known as park model homes and it can be a good business to start. Manufactured housing communities are a solution to the affordable housing issue. Additionally, age-restricted communities, such as those targeting residents 55 and older, could be ideal assets to help shore up an investment portfolio.

Also called prefabricated housing or system-built housing, a park model is defined as homes that are built off-site and then assembled into a rectangular chassis. This is in contrast to frame-built or site-built homes, which are built from scratch on a permanent foundation. Most of the time, once a prefab home is assembled on a site, it stays there for an extended period.

Another term, manufactured home, is often substituted for a park model home. For example, in the United States, according to the Manufactured Housing Institute, approximately 22 million people live in park model homes.

Several reasons why park model homes are popular in the US

Investing in a manufactured home community is not much different from investing in a luxury apartment complex. Both types of assets attract financially stable residents who are unlikely to be evicted for failure to pay rents. However, manufactured home communities can generate a higher return for investors.

  1. Minimal turnover – Residents living in manufactured home communities are owners, rather than renters. Manufactured home community residents are less likely to move out when their leases expire.
  1. Reputable Residents: Manufactured housing communities attract higher-income residents or retired residents with strong pensions. This means less likelihood of defaults or evictions.
  1. Low supply and high demand: While the demand for park model homes is growing, the supply has not been sustained. High-end manufactured home communities consist of quality homes and residents. However, given negative perceptions and strict zoning regulations, developing a manufactured home community can be difficult.
  1. Resistance to recession: Manufactured housing is considered a counter-cyclical asset class. In other words, the demand for this type of housing tends to increase during economic recessions, as people lose a permanent stream of income or want to downsize to something more affordable.

How do I know if a park model home is a good investment for me?

To determine if a park model home is a good investment we have to analyze the specific case at hand. It must be taken into account that certain prefab systems, mainly tile, do not have a resale value as high as a concrete block or solid concrete system could have. 

Also, new prefab systems, which are just appearing on the market, can suffer from low resale values, because homeowners are not used to seeing these systems and see it as risky to buy a homemade with them. Anyone who is going to make an investment as large as a home will be sceptical if they come across a construction system that is not standard in the market.

We cannot forget about the “curb appeal” of the homes. A home can be prefab, and if the finishes have been done well, and the design is harmonious and well planned, our prefab home will have a good resale value. In many cases, a good design and good finishes compensate for the prefabricated structure and the scepticism of the buyers.

Properly executed park model homes are durable and of good quality. If we ensure that the condition of the floors is appropriate, if we set up the system as recommended by the manufacturer (without taking shortcuts or “leaving things out”), and we give it adequate maintenance, our prefabricated house will last us a long time.

What should I look for when buying a park model?

When buying a park model you have to take into account some key points that will help you decide on the best-manufactured home:

  1. The structure, dimensions and materials of a park model may vary from model to model. To find the ideal size for your park model, you need to assess your  needs in terms of space (a couple, several children, etc.);
  1. Take into account that, in most cases, park model homes do not have the same personality and identity as traditional houses. However, today, more and more manufacturers are allowing great customization.
  1. Where are you going to install the park model home? Park model homes are built to be placed on levelled soil. However, in most cases, the terrain is not perfect and the foundation will have to be adapted to your requirements. It doesn’t have to be a problem, you just have to take it into account.
  1. Take into account the climatic factors. This is an important aspect if you want your park model home to be energy efficient. The house must be placed or oriented in a certain way (usually where there is plenty of sun in winter and shade in summer). 
  1. New or second-hand park model? Most of the park models have maintenance every certain year, which is important to carry out to preserve the quality of the house, such as, for example, checking for leaks in the modules. Before acquiring your park model home, pay extra attention to how well it was maintained!

Conclusions

Buying a park model home has multiple advantages. But before deciding whether to choose a park model, it is important to consider a number of issues and follow certain tips. Park models are like traditional homes. The only difference is that they are built by combining and joining various modules made by industrialized and standardized systems.

Do you have any questions or comments on the content? Let us know!

FAQ on Are park model homes a good investment?

What should I take into account when buying a park model?

The possession of suitable land, the budget availability, the architectural planning and the design of the spaces, are some of the aspects that you should take into account when buying a park model. The plot is the main thing to do in any construction!

How to improve a park model?

To improve a park model you need to add a touch of your personality! Park models can look flawless with these decorating tips:

  1. Paint your walls;
  2. Refurbish or buy new furniture;
  3. Use awnings, blinds and curtains. 
  4. Combine textures and materials. 
  5. Use the storage space smartly and don’t clutter your park model.

What is a park model trailer?

A park model trailer is designed for recreational purposes. A park trailer is not used for residential purposes but can be attached temporarily in the same way as a recreational / RV trailer with or without its axles and ties.

What is the best brand of park model trailers?

When it comes to the best brand of park model trailers, the big winner remains the Jayco Jay Flight, which has been at the top of recreational vehicle sales for many years. A brand appreciated by many customers.

What is my park model trailer worth?

It is not exactly obvious to assess the worth of a second-hand park model trailer. The easiest and most common way is to estimate the price of a second-hand park model trailer according to its date of purchase and its original price.

References