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Modular Homes - 3 Advantages For Real Estate Investors / Contractors

Apr 23, 2008
Modular homes have many advantages and in some cases can be a much better choice than site built or "stick built" homes. Before moving forward, it is important to identify that there is big difference between modular homes and manufactured homes. The two terms are not interchangeable.

Modular vs. Manufactured

Both are built in the factory, which is why the two types are often confused. Manufactured homes, sometimes called Mobile homes, are built only to the federal building code (HUD) and do not have to meet the code requirements of the specific destination where the home will be erected. Under HUD requirements, it is also not mandatory that inspectors approve the structure. The building requirements under HUD code are often more lax. For example, manufactured homes are only required to use 2" x 2" studs in the walls, whereas modular homes in New Orleans must use 2" x 4" studs.

Modular homes are, like manufactured homes in that they are built in the factory, but have to pass a much stricter set of guidelines. Modular homes are held to the same IRC code requirements as site built homes, and must adhere to state and local codes of the final destination of the home. These homes often have the same longevity of site built homes and therefore will appreciate as investments.

When is it better to go Modular?

Going modular is almost always the best way to go for real estate investors and builders who are taking on very large projects. Modular offers some real advantages:

1. Faster to Develop - Developers who are under time constraints will benefit greatly from going modular. For example, a 10-unit subdivision could take 6 months to complete using stick built methods, and this same 10-unit subdivision may only take 10 weeks by going modular.

2. Less Labor Worries - Modular homes are a great choice for real estate developers building in areas of tight labor markets. The quick assembly process reduces local labor needs. In areas where the quality of labor is a factor, it is much harder to perform quality control for site built homes.

3. Quality Control - As modular homes are constructed in the factory, they are engineered better and are tested stringently for quality control.

With so many architectural styles to choose from and build on options, Modular homes are very similar to site built homes. It is important to note that each situation is different and each project should be carefully considered. For example, modular homes can become expensive depending on the final location of the home. As these homes must be transported in sections, greater distance to the end site increases the cost to the real estate investor.

When distance isn't an issue and the project is large, modular is certainly an option that should be considered. Investors and contractors will benefit from the reduction in labor needs, quicker builds, and quality control standards of modular homes. These types of homes last just as long a site built homes and are very different from the manufactured homes that we also know as mobile homes.
About the Author
Larry Haines is the president of the New Orleans REIA and the Managing Partner of Road Home Builders, LLC. For more information on real estate investing, please email larry@roadhomebuilders.com or visit New Orleans real estate investment company or see successful real estate deals first hand
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