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Is A Prefab Home A Good Investment?

Although there are different types and styles of houses to choose from, it is important to consider which ones make a good investment and how much you will spend on upfront costs. A prefab or modular home is becoming popular with the increased demand for residential housing in the real estate market. There are many misconceptions about prefab homes that majorly arise due to a lack of information about what they are and what they are not. This article gives information about the nature of prefab homes, their pros and cons, and whether you should invest in this type of residential housing.

Understanding What Makes a Prefab Home

Prefab homes are also known as manufactured or modular homes. Unlike stick-built houses, they are constructed under controlled environmental conditions in a large factory or building. It can be completed in a matter of weeks rather than months. There are no delays caused by bad weather and all building materials are easily accessible as they are all in one place. Once the separate parts of your prefab home are completed, they are manually transported to the designated location where they will be assembled on a regular foundation like a stick-built home.

A stick-built home is built in an old-fashioned way and can be slowed down by extreme weather conditions. You will also have a crew of workers on the ground, working on site for months fitting your house with electricity and plumbing. They are both considered residential dwellings in the real estate market since they are built on the same foundation and are both appreciating assets.


  • Fast Construction

It takes a shorter time to build a prefab home because it arrives in your home compound when it is partially constructed. Since it is built in a controlled environment, it is less vulnerable to weather delays and lengthy periods of delivering building materials from suppliers. Obtaining permits and site preparation can also take up some time before the actual construction is done.

  • Energy Efficiency

Prefab homes are highly energy efficient because of their perfectly sealed window gaps, and tight seams. They help reduce your energy bills by keeping your home cool during summer and warm during winter. The tight construction of prefab homes also makes them resistant to natural disasters because the assembled parts are all connected to the main framework.

  • Affordable

It is less expensive to build a prefab home compared to old-fashioned stick-built homes. It takes fewer laborers to make a prefab home move-in ready over fewer days thus increasing your labor savings. Its high-energy efficiency rating saves you a lot in terms of heating and cooling costs. The various levels of customization and fittings can also help you lower the amount of money you are willing to spend on your home construction.

  • Appreciates in Value

Not many people would be willing to spend on a prefab home if it kept depreciating as years go by. Unlike mobile homes built on wheels or trailers, prefab homes are built on the same foundation as a stick-built home. This boosts its integrity and reliability as a permanent residential dwelling in the real estate market.


  • You Need Land and Permits

Before you start building a prefab home, it is important to own the land underneath it. You also need to get all the required permits that allow you to connect your home with electricity, water, and sewerage. A few companies that manufacture prefab homes can help you secure all these permits on your behalf before rolling their expenses into the overall cost of purchasing your modular home.

  • More Up-Front Payments

Using financing and construction loan options, you can make a down payment of at least 20% and pay off the rest as a mortgage. Your contract with the construction company includes a payment schedule for making installments when your home is built. You may be required to finish paying for your home’s construction before moving in.

Should I Invest In A Prefab Home?

A prefab home is a good investment and one of the best alternatives to stick-built homes. Not only is it energy efficient and less costly, but also appreciates and has a similar foundation to regular old-fashioned homes. Although you need to spend more on upfront costs, you get sturdy residential housing that will serve you for many years to come.

It is important to sit down with your financial advisor to help you navigate through the financial complexities of buying a home. Since you are investing in one of the largest purchases in your lifetime, you need to crosscheck your facts to ensure you are making the right decision during investment.

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