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Why Are Mobile Homes a Bad Investment?

John and Debbie Miller are living in a $500,000 paid-off home in Albany, New York. It’s a great home, but John and Debbie are empty nesters now. They don’t need a big four-bedroom, three-bathroom house with a huge backyard, but they do need that $500,000 to put toward their retirement dreams.

The Millers have decided they’re going to downsize. They want to stay in Albany to be close to the grandkids, and they’re looking either to buy a modest two-bedroom home for $180,000 or buy a brand-new two-bedroom mobile home for roughly $80,000.

The Millers say they would be perfectly happy with either option, so they’re leaning toward buying the mobile home. After all, it would be smart to save the $100,000, right?

Wrong!

Mobile homes are a terrible investment because they drop in value super fast. Sure, $80,000 seems like a great deal now, but when it’s time for John and Debbie to move on, they’re going to see just how much money they threw away by “saving” on that mobile home.

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We want to be clear that we’re talking specifically about mobile or trailer homes here, not manufactured homes. Technically, the government lumps any mobile home that was built after 1976 into the manufactured home category, but that term can cover a whole lot of different housing options.1 For the sake of this article, we’re talking about the mobile homes that look like they came in on a truck.

We’re also not saying that mobile homes aren’t nice. There are some really nice-looking trailer homes out there! But that doesn’t make them a good investment. Mobile homes go down in value as soon as you move in, the same way your car loses value the second you drive it off the lot. Investing in a mobile home is not investing in real estate. The land the mobile home sits on is real estate, but the home is considered personal property.

How Much Do Mobile Homes Cost? 

According to the U.S. Census Bureau, the average price of a new manufactured home was $87,300 in September of 2020.2 Of course, the price varies with the size and look of the home:

Type

Avg Cost

Avg Living Space

Bedrooms

Bathrooms

Single-Wide

$58,300

500–1,200 sq. ft.

1–2

1–2

Double-Wide

$107,800

1,000–2,200 sq. ft.

2–3

2

 

Buyers should keep in mind that costs and size regulations vary by state because these homes will need to be transported. The price will also depend on personal customizations (like granite counter tops) and add-ons (like a front porch).

If you buy a trailer home, you’ll also need to either buy or rent land for it to sit on. The nationwide average cost of a mobile home lot is $380 a month, but those prices will reflect the real estate costs of your state and city. For example, the average lot rent in Indiana is $140, but in California it’s $707.3 For our friends John and Debbie Miller, they’re looking at roughly $400 a month in upstate New York.

The lot price also depends on amenities you may have access to, including things like electricity, trash pickup or even an on-site pool.

How Long Do Mobile Homes Last? 

According to the Department of Housing and Urban Development (HUD), manufactured homes built today have a life expectancy of 30 to 55 years. That estimate is for manufactured homes that were built with HUD’s current building codes and construction standards that go for all manufactured homes since 1976.4

Of course, just like a car, a mobile home will hold up as well as it’s maintained. If you keep up general maintenance, choose your plot location wisely, and have it inspected every so often, you could outlast that 55-year mark.

Like standard stick-built homes, mobile homes are made out of wood and metal. But unlike standard homes, they’re not built on a permanent foundation with framing that’s built to last. People who live in mobile homes are most vulnerable to natural disasters, including hurricanes, tornadoes, flooding and fires. A recent study found that a tornado-related fatality is 15 to 20 times greater in a mobile home than in traditional housing.5

Needless to say, a mobile home isn’t something you’re going to pass down to your family for generations.

Should I Invest in a Mobile Home? 

If you’re smart, you’re not going to look at a trailer home as an investment. From a financial standpoint, buying a mobile home is like buying a very large car that you sleep in. And we all know what happens to cars over time—they lose value.

Some like to argue that buying a mobile home is better than paying rent on an apartment or home. We would disagree. When you pay, say, $1,200 a month in rent, that’s all you’re losing. But when you buy a mobile home, you’re losing money every day on the ownership of that thing because it depreciates so quickly. It may look good from a tax perspective, but it’s bad news for your resale value.

Good Investing Alternatives to a Mobile Home 

If you’re looking at investing in real estate, there are much better opportunities out there than mobile homes, and that’s because of one magical word: appreciation.

Despite the ups and downs of the real estate market, most properties increase in value over time. In fact, home values have been rising pretty much nonstop for nearly a decade now.6 Meanwhile, trailer homes are treated just like your car—losing value every year.

Another big key of real estate? Location! Buy a home in a part of town that’s on its way up. That way you buy at a lower price and can ride out any downturns in the market while your property value goes up.

If we were advising John and Debbie Miller, we would tell them to go for the $180,000 home over the $80,000 trailer home. After selling their $500,000 home, they could pay for the smaller home in cash and have $320,000 left over to play with. When they die, they can bless their kids or grandkids—either with a paid-for home, rental property or a property to sell. At that point, the home would likely be worth more than the $180,000 they paid for it!

Real estate is one of the biggest investments you’ll ever make. It can be a big money maker, but it’s really confusing (and risky) to navigate if you don’t have all the tools in your toolbox.

That’s why we recommend working with a real estate professional who’s the best in their field. Reach out to one of our trusted Endorsed Local Providers (ELPs) who can help you find what you’re looking for. Through our ELP program, you’ll get instant access to the right real estate professional for your family.

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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