What is Mobile Home Depreciation?

If you’re looking to buy a mobile home, the word “depreciation” could send shivers down your spine. Whether you’re buying a home to rent out or to live in for the next ten years, depreciation matters. But there are many myths surrounding this topic, and it’s important to understand what depreciation is and how it can affect you.

What Is Depreciation?

Depreciation is a term that refers to the loss of value. When you buy something, it has the potential to lose or gain value over time. People often think of real estate as appreciating assets, and cars as depreciating assets. Typically, cars don’t handle the wear and tear well. When you buy a car, you almost never expect it to go up in value over the years. You know you’ll end up selling it for a loss.

If real estate tends to increase in value but cars tend to decrease, what do mobile homes do? Here’s where it gets confusing. There are many myths that mobile homes are depreciating assets. And while it is true that a manufactured home can depreciate, it’s more similar to real estate than vehicles. In reality, mobile homes can go up in value over time.

Do Mobile Homes Always Depreciate?

You might be wondering how this is possible. To understand, consider how real estate appreciates. Over the years, a traditional home experiences plenty of wear and tear. The roof nears the end of its life and the HVAC system may fail. But homes often increase in value, even with no improvements. The location becomes more desirable as supply and demand take over.

If you buy a fixer-upper home, you can also drastically increase the value of the property. Mobile homes are very similar. Whether you buy a home in a park that’s becoming popular, or you invest in a fixer-upper, you can avoid depreciation. The home still experiences wear and tear, but the circumstances allow the home to still be worth more than you paid for it.

When Do Mobile Homes Depreciate?

Mobile home depreciation happens only in a few certain scenarios. For one, it can occur if you buy a home in a location that’s becoming less desirable. For instance, you might purchase a home in a park with poor management. As the community becomes less appealing, your home’s value goes down. Location plays a huge role in both appreciation and depreciation.

It’s also worth noting that a home’s age affects its value. If you have a 1970s home, it will sell for less than a 2000s home. Unless you renovate the property, you could find it difficult to sell your home for what you purchased it for. This isn’t a problem when you only live in your home for a few years, but can affect you if you’ve lived in your home for a decade or more.

Finally, there’s the issue of inflation. If you buy your home when prices are naturally high, there’s a chance prices will go back to normal in the near future. When you’re ready to sell, the economy plays a role in your home’s price.

Tips for Avoiding the Depreciation of Your Mobile Home

No one likes to lose money. So, if you want to avoid the frustration of depreciation, here are a few tips:

Location Matters

If you’re buying a mobile home in a park, be mindful of where it is. What’s the current state of the community? Does the park manager seem to care about the community, or does it seem to be declining? For some added insight, pay attention to crime in the area.

You should always try to buy a home in a community that’s improving rather than worsening. New constriction is a good sign, as is a manager who seems passionate about where they live.

Focus on Value-Add Improvements

If you plan on renovating your home, make the right renovations. For instance, improving curb appeal doesn’t cost much money but can increase the value of your home. If you have the budget for new siding, it might be worth the cost.

Making the home more energy efficient is also a value-add. By adding new, energy-efficient windows and doors, you can help the home sell for more.

Don’t Let Maintenance Fall to the Wayside

You could be the reason your home is depreciating. If you fall to perform routine maintenance on your home, it’s likely to decrease in value. Once a year, you should consider leveling your home. Depending on your roof type, have it sealed once every two years.

Anytime you notice a leak in your home, fix it immediately. Perform routine HVAC maintenance and take care of your appliances. By neglecting regular maintenance, you risk damaging your home.

Should Depreciation Stop You From Buying a Mobile Home?

It’s true that depreciation can affect your mobile home’s value. However, this isn’t always the case. When you’re buying a mobile home, use the same due diligence you would when buying a stick-built home. If you buy smartly, you could make a nice profit when you’re ready to sell. If you’re ready to take the next step, call us about financing a mobile home today!