Michael Emilio

What are manufactured homes?

Also known as prefab housing, manufactured housing is a housing unit that is premade and assembled in factories and then shipped to their final locations. When people refer to mobile homes, they refer to homes built prior to a 1976 HUD (US Department of Housing and Urban Development) federal code. Modular homes are sometimes considered to be manufactured housing but it’s a little different from manufactured homes, mainly in the way they are transported and constructed.

How is the current state of the manufactured housing real estate market?

Those that know their real estate history know about the manufactured real estate market mess in the 1980s. Today there’s a little bit of a mess too. Some speculate this may be a good time for you to invest in the market.

Wouldn’t you consider Warren Buffett one of the top investors in the world? Well, Mr. Buffett and Berkshire Hathaway Inc. purchased Clayton Homes Inc., a Tennessee company that focus on the manufactured-housing sector for $1.7 billion. Not only that, Mr. Buffett had unsuccessfully tried to purchase manufactured-housing past due loans from Conseco Inc.

It makes you wonder why Mr. Buffett is so enamored with this manufactured-housing area. Brokerage firm Natexis Bleichroeder has a projection of 185,000 mobile home shipments this year, which would be up 9.8% from 2002. Lenders that wouldn’t touch this real estate sector are now coming back. Defaults on mortgages for this sector are on the way down.

But isn’t this market in trouble? I mean, most people would much rather have a traditional home than a mobile home right?

Of course people generally prefer traditional single family homes. But those that are looking for real estate bargains may look to the manufactured home market for some good priced homes and investments.

How can I purchase manufactured homes as an investment?

You can be direct about it. You can contact banks in your local area and purchase their distressed loans on mobile homes. If the homeowners won’t pay, you may do an eviction. Keep in mind that these homes will likely be in bad shape, because if a homeowner knows they will get evicted, they won’t care about maintaining the home. Of course if you can get a great discount from the bank, this just might be a great way for you to pull a nice sized chunk of investment profits.