If you know what mobile homes are, you might also have heard about the depreciation in the value of a mobile home. Well, it is not that it’s a rumor but before jumping to any conclusion, let’s get to the details regarding the What, How, and Why this happens.
Before we begin, let’s know what depreciation is.
What is Value Depreciation?
The decrease in the monetary value of tangible and fixed assets such as buildings, machinery, vehicles, etc., over time and due to various reasons. This decrease in the value is known as depreciation.
Land is the only asset whose value increases or appreciates over time.
Do Mobile Homes hold Value?
The answer to this question will depend on whom you’re asking this question to? In general, just like any property or asset, mobile homes do have their value. Even though the value of mobile homes depreciates with time due to various factors, which we shall discuss further.
Mobile home appreciation
Like any other assets, the value of mobile homes, except land, depreciates with time and due to various factors. But with proper, timely maintenance and care, there might be less depreciation in the value of a mobile home. Also, the value might appreciate due to this.
Coming up, we will discuss the factors responsible for Appreciation or Depreciation in the value of a mobile home.
Factors that are important for the Appreciation or Depreciation
One of the most important factors that decide the appreciation or depreciation of the value of a mobile home is its location. The area where the mobile homes are installed and the accessibility to amenities decide the value, and mobile homes have them would depreciate at a slower rate.
Also, if your mobile home is located in a trailer park, the price might depreciate. On the other hand, if you own land and have a mobile home built there, the cost would be more appreciated.
The condition of the mobile home also plays a vital role in estimating the rate of depreciation and appreciation. A mobile home that is properly maintained and is in good condition would have a slower depreciation rate. Even though you won’t get the total amount you’ve spent on the property, it would give you a higher resale value than if your property isn’t in good condition.
The economic value is the cost of purchase or manufacture and the other expenses made for the property to be usable and available for sale. These expenses might include installation charges and maintenance costs.
The higher the manufacturing and other expenses, the higher the value you can set for sale.
Age of mobile home
Well, depreciation is directly related to the age of a mobile home. The older the mobile home is the more the depreciation and vice-versa. As the mobile homes get older, most of their parts, such as the infrastructure, furniture, paint, etc., tend to turn old, weak, or faint; their economic value depreciates. In short, with passing the time and more age, the higher the depreciation rate.
Every owner has sentimental value attached to their home. If you’re the owner, you might, due to sentiments, end up putting a high price on your home. It might lead to your home being ‘unsold’ on the list for a long time. And with passing time, its value would depreciate, and nobody would buy an old mobile home at such a price.
Reasons for the Depreciation of mobile home value
Wear & tear of the mobile home
Wear and tear happens with almost every piece of machinery or equipment used, and mobile homes are not significantly different. Regular use of mobile homes causes wear and sometimes tears even if they are correctly maintained.
Like any other asset, mobile homes also have a specific time limit until they can be pretty used, which is called lifespan. After a specific time, which is generally around 30-55 years, the mobile home becomes obsolete and cannot be used as well. It is known as perishability.
After this, the economic value of a mobile home is significantly less and starts to depreciate even at a higher rate.
Usage right expiration
Like automobiles, mobile homes have a usage right, the date till can use it. After this date is expired, it becomes almost impossible to use it further as the usage right is expired. Some have restrictions regarding how long you can live in a mobile home.
After this, the value starts to depreciate.
Natural Resource usage
Within the world of natural resource
Why should I know about mobile home value?
Before investing in an asset, you tend to know every minute detail regarding them; the same goes for mobile homes. And the value of mobile homes is an essential factor to know about.
It’d help you decide if you invested in a mobile home. And you can be prepared accordingly for the consequences regarding the depreciation of its value.
Ready to invest in Mobile homes?
We hope that now, most probably, you have a clear view of whether you’re willing to invest or purchase a mobile home.
Even if the value of mobile homes depreciates with time, some measures can be taken to avoid them. Such as proper and timely maintenance would reduce the depreciation rate of mobile homes. Also, the location of mobile homes decides the depreciation rate. For example, if your mobile home is on a piece of land that is yours, appreciation of the value of the mobile home is also possible.