"Depreciation" and man-made Homes As an venture

There is a long standing belief that all artificial homes (what many used to call "mobile homes") will "automatically" depreciate once it is purchased. While it is true that artificial homes have lost value from their initial buy price, this is not historically a given. There are many examples of artificial homes which have appreciated (gained) value. It should also be noted that site built houses, gain - or lose - value for similar reasons that artificial homes do - as the recent sub prime mortgage meltdown has underscored.

Let's take a brief look at the factors which cause that gain or loss of value.

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Many are familiar with the old real estate adage, "location, location, location!" The location of the home has a gigantic impact on its value. Let's use an analogy to elucidate this example.

Having lived in the Houston metro area, fantasize a mansion from the River Oaks district being placed in Houston's Fifth Ward. What would happen to that mansion's value? It would drop like a rock! Even a beautiful home, set in an older, blighted area will lose a lot of value. The reverse could happen too. If an older "challenged" home from the Fifth Ward and could magically find its way onto a site in the River Oaks district, it would immediately be worth more - just because of its location.

The part is, what is the artificial home's proposed location? Is the location upgrading, or going down? "The better the location, the more likely the value is protected."

Next is the condition of the home. If you have a approved site built house that is run down, is it any surprise that it is worth less than a site built house that has been well maintained, where the property has been landscaped, and where improvements are taking place? The same is true for artificial homes as well!

If you don't claim the artificial home, over time, similar things will happen to it that would happen to a site built house that isn't maintained. Now, if you take a neglected artificial home (or a site built "fixer upper") and it is purchased "right" and then repaired and upgraded, what you will have is a home that will often sell for more than what it originally sold for when it was new! Why? Because as construction materials cost rise, the value of older housing (manufactured or site built) that is maintained or brought up to standards will go up too! So if you buy a pre-owned artificial home, and do the same things that a site built home owner would do, you will taste similar results.

Many are surprised to learn that studies done by the largest insurer of artificial homes, prominent assurance Company, characterize that Mhs appreciate for the same reasons and at similar rates to site built housing. But there are "caveats." Is the Mh in a good location? Is the home well maintained? an additional one factor of course is the local market conditions - a booming economy will plainly improve values, just as a slumping economy will hurt values. One must also point out that when there is a glut of repossessions on the market. That fact will hurt the Mhs value, just as a glut of foreclosures on the market hurt the value of site built houses.

The "bottom line" is that Mhs can be a very good speculation in and of themselves. But let's step beyond the appreciation/depreciation issue, for just a few moments. Let's look at an additional one analogy - one that I'm a puny hesitant to make, because one shouldn't correlate a Mh with a car or other vehicle. But let's do it for just a moment, to make an prominent point.

Millions today lease a car. They know that their car will depreciate, and they want to use as puny of their money for that car as possible. The rest of their money that would have gone towards a higher car payment, they may invest for a good rate of return, or to have more fun, etc..

So, stop and think of the comparison! What if you invest your housing dollars in a home that costs 1/3 to 1/2 less than a comparable site built house! Why not take the money you save, and invest those funds! Thus, you still have the benefit of living for less, and have the benefit of earning money on the money saved in housing costs! Even if your house lost value, what you may earn on the money you save could very well generate an broad better lifestyle!

Take it a step added - because the artificial home has a lower buy price, and lower taxes, if someone pays off or buys a home outright, then the money saved in mortgage payments and on taxes vs. A approved house could be used for savings, investment, travel, charity - a host of distinct possibilities! These are just some of the advantages of artificial homes as an "investment."

In short, depreciation in artificial homes are neither distinct nor is it necessarily a tragedy if it does occur. What's needed are the facts and a good plan. With the right information, you can make a housing decision or speculation that will yield a host of possible benefits, from lifestyle advantages, to financial ones, less stress and beyond.

"Depreciation" and man-made Homes As an venture