The Pros and Cons of Prefab Homes

10 Jun.,2024

 

The Pros and Cons of Prefab Homes

If you can&#;t find a house you want to buy you may be tempted to build your home yourself. In that case, you&#;ll need to choose between a stick-built house and a prefab home. Stick-built means your home is built the old-fashioned way, with a crew of workers on site for months raising the home and fitting it with plumbing and electricity. A prefab home, on the other hand, comes in pre-built parts.

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Do you have questions about how a home purchase fits into your overall financial plan? Speak with a financial advisor today.

What Is a Prefab Home?

The term &#;prefab&#; is the abbreviation for prefabricated, which is all you need to know about prefab homes. These houses are manufactured in a factory setting and transferred immediately as full build. As you might expect, this type of home is extremely easy to make and move in comparison to a traditional home.

Prefab homes come in three main iterations: manufactured, kit and modular. Here&#;s a brief breakdown of each:

  • Manufactured homes: A home in this category is built in sections and pieced together by professionals and heavy machinery at its final site. These must follow HUD requirements, though.
  • Kit homes:  These homes are much simpler than a manufactured home, though they follow a similar style of building. In fact, most homebuyers can build a kit home themselves.
  • Modular homes: These homes feature much more personalization, companies will often let you customize the floor plan of your purchase. However, unlike manufactured and kit homes, modular homes have an immovable foundation.

The Pros of Prefab Homes

Exceptional Energy Efficiency

One of the benefits of prefab homes is that they tend to be highly energy efficient. Their tight seams and state-of-the-art windows keep heat in and reduce your energy bills in the process. As a bonus, modular homes&#; tight construction gives them a reputation for being able to withstand natural disasters. If you ask many people &#;What is a prefab house?&#; they&#;ll assume it&#;s the same as a mobile home. Not true. Prefabricated (aka modular) homes go into a foundation like any other home. They can be high-quality, modern and elegant houses perfect for those who want a lower carbon footprint than the typical American suburban home has.

Fast Construction

Fast construction is one of the big advantages of prefab homes. Because the parts of a prefab home come ready, all you have to do is assemble them and hook up the home to utilities. Hence the name &#;modular.&#; The prefab goes up much faster because it arrives partially constructed. That means fewer days with laborers on site and less vulnerability to weather delays and illnesses that can extend the construction process by days and weeks. Still, there&#;s more to consider than just the construction time. Site preparation, including obtaining permits, can be a lengthy process.

Affordability

Building a prefab home is generally less expensive than building a comparable stick-built home. Nice, right? Part of the savings has to do with labor. It takes fewer laborers working over the course of fewer days to make a prefab move-in ready. That saves you money. Plus, as we mention, heating and cooling tend to be more affordable with prefab homes than with regular ones. If you&#;re open to buying an existing home, compare the costs of what&#;s available on the market with the cost of building a prefab. And remember that various levels of fittings and customization can raise or lower the cost of your prefab. Talk to the manufacturer about cost-cutting strategies available to you.

The Cons of Prefab Homes

Land Costs

If you want to put up a prefab home you&#;ll need to own the land underneath it. If you don&#;t already own land you&#;ll need to buy it. You&#;ll also need to make sure that you&#;re able to put up a prefab home on that land, and that you can hook it up to electricity, water and sewer. And don&#;t forget soil testing on the land you&#;re planning to call home. Securing the land, inspections and permits can add up in terms of cost, time and trouble. Some companies that sell prefab homes will help you with this process, securing permits on your behalf and rolling their expenses into the cost of your modular home.

More Up-Front Payments

If you buy an existing home you can make a down payment of around 20% and pay off the rest of your mortgage over time. While financing and construction loans are available for many prefab homes, you&#;ll need to pay for the home&#;s construction before you move in. Your contract will include a schedule for paying in installments while your home is under construction. This pay-as-you-go feature of prefab homes means you need to be extra sure you can afford the prefab before you commit to buying it and putting it up. On the other hand, paying more up front saves you money in interest.

Utilities Might Be Tough to Find

One of the disadvantages of prefabricated houses is that it can be tough to arrange for utilities and other site details. If your site is uneven you&#;ll need to have it leveled. Then you&#;ll need to lay the foundation and arrange for sewer strikes and electrical connection, not to mention connecting to city water or finding well water. If this all sounds a little too daunting, look for a prefab home that comes with the option to have the prefab home company take care of these details for you.

Bottom Line

The cost of a prefab home will vary depending on how much you&#;re willing to do yourself and how much you outsource to others. Some ambitious home purchasers prefer to buy a prefab home as a kit and assemble it themselves, with the help of a few friends. Others are happy to spend the money to have the details of construction and permitting taken out of their hands. Wherever you fall on the spectrum, make sure you understand what you&#;re getting into before you go the prefab route.

Tips for Buying a Home

  • Buying a home is a major financial undertaking. So much so that after it&#;s completed, you&#;ll want to work it into your long-term financial plan, which a financial advisor can help with. Finding a qualified financial advisor doesn&#;t have to be hard. SmartAsset&#;s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you&#;re ready to find an advisor who can help you achieve your financial goals, get started now.
  • At closing time, there&#;ll be many fees you&#;ll likely incur. Use SmartAsset&#;s closing costs calculator to learn more.

Photo credit: © iStock/Dragoncello, © iStock/thegoodphoto, © iStock/adventtr

9 Things to Know About Prefabs Before You Buy

Despite prefab homes becoming an increasingly popular option for many people, there is still a surprising amount of misinformation about what they are, how they are built and the many benefits they can provide.

We&#;ve decided to set the record straight by listing 9 things you need to know about prefabs.


1. What is prefab construction?

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Prefab (or prefabricated to give it the formal name) construction is essentially the building of a home (or building) using materials that have been manufactured in panels or sections. Think of these as Lego-style building blocks that can be assembled in a much shorter space of time. Sometimes the entire prefab is built at the factory before being transported ready to be positioned into place at the find destination.

This is far from a new idea, as prefab homes have existed since the early part of the 20th century. In some cases (not always) they can be a very cost effective option that reduces labor overheads, while also increasing safety parameters along with the time taken to build a new home.  


2. On-site versus off-site construction?

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There is no right or wrong answer to this question as it will come down to personal needs, which are typically dictated by the time line you are working to and available budget.

Firstly, we&#;ll explain the difference between the two options. On-site construction is the more traditional type most people are familiar with. This is where the various components are manufactured and delivered to the end destination where the prefab will be built and secured into place. The parts arrive flat-packed and ready for construction either by yourself or with a qualified builder. However, rather than using traditional stick framing construction methods, panels are used instead.

Off-site construction refers to the pre-assembly of the house in a self-contained environment, usually a factory. This can offer advantages such as higher standards of engineering and less impact from weather conditions, with the overall project likely to have fewer setbacks and as a result the outcome becomes more predictable.

If the factory does not have license certification to complete the full build, not all of the prefab can be completed off-site as city inspectors need to ensure it meets legal requirements. In many cases anywhere between 40-90% of the build can be finished before being delivered.

Having a prefab built off-site will mean it is completed on time, on budget and exactly to spec. The mass production of prefab materials that are constructed in a factory allows the manufacturer to have tighter control in terms of managing costs. This enables them to set fixed prices and deadlines, which is attractive to customers working to a particular budget and time line.  

The same can be achieved on-site, although it will depend on the skills and time available to ensure the various construction targets are met. Of course, not everyone is in a hurry to complete the build, so building on-site gives you more control and could end up being a cheaper option in the long-run.

Link to Hongyu Dinghao


3. When to go with prefab?


The benefits of going with a prefab home may not be immediately clear before you do some research. The most important points to consider are:

  • Shorter build time: In most cases a brand new prefab home can be constructed in a matter of weeks rather than the 6-12 months it takes for a traditional home. This applies to both on and off-site construction, so if you are in a hurry to move in you won&#;t have to wait too long. It also means not having to suffer a year &#; or more - of builders constantly coming and going from the site.
  • Predictability: From the very start of the project you&#;ll know how much it is going to cost and when it will be completed, making it easier to manage and organize everything else around the build. In comparison, traditional builds rarely meet the initial deadline, adding significantly to costs.
  • Less stress: If you choose to build it off-site, many prefab companies provide a service that will do the hard labor for you. This comes at an extra cost but it guarantees a high quality build and much less stress and worry. And if you build off-site there will be no delays caused by adverse weather conditions.
  • Rental income: Building an accessory dwelling unit (ADU) can also be done on your existing land, affording you potential rental opportunities in a short space of time.  


4. What parts are customizable for prefab?

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Many providers will sell packages that are of fixed dimension so you know exactly what you will receive with a templated floorplan, allowing for some modifications in the interior such as flooring and fixtures. While there are others (typically at the luxury end of the market) that will allow you to create a bespoke prefab house from scratch.


5. Is building prefab a good investment?

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In order to understand if a prefab is a good investment for you, there a number of factors to consider.

While they dramatically cut down the construction time and give you a clear idea of how much it will cost to complete, the long-term ROI (return on investment) largely depends on the conditions involved with the sale.

For example, at minimum, the amount of money spent on building the prefab need to be recouped when it is sold. Of course, while there is no way of knowing exactly how much the property will sell for in the future, researching the local property market will give you a strong indication. This is especially true if you plan on living in the prefab for a few years before putting it on the market.  

Similar to traditionally built properties, prefab homes appreciate in value the longer you remain the owner. Understanding the local property market over the past 5-10 years will tell you whether prices are increasing and how much potential there is to make a good profit on a sale.  

The same principle also applies to the rental market. If you are thinking of building a prefab to rent it out for extra income, you can get a good idea of the monthly/yearly yield you can enjoy by comparing against similar-sized rental properties.

Aside from sale and rental values, prefabs are also very environmentally friendly, not just in terms of the lower carbon footprint produced during construction, but also in an ongoing capacity, helping to reduce energy bills for the long-term due to the insulation properties.  


6. Are prefabs modular homes?

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While it may appear that prefab homes are the same as modular homes, there are some distinct differences between the two.

Prefab homes are based on the idea of manufacturing key structural elements before either constructing them at the factory and transporting it to the final location, or delivering the separate parts to the site before it is put together.

Modular homes are always built in a factory setting and never subjected to weather conditions before construction and delivery. There is no option to order the parts and have them delivered separately. This is a more costly option and doesn&#;t provide customers the potentially cheaper option of building the home themselves.


7. Are prefab homes safe?

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There is a perception that prefab homes are not as safe as traditional properties due to the alternative construction methods involved. However, this is certainly not the case for a number of reasons.

Firstly, prefab homes have to be constructed to meet strict building code regulations, supported by regular on-site inspections at every stage. This is more stringent than site-built homes which only require a single inspection. Another reason prefab homes are a safe option is due to the manufacturing process. They are constructed in a controlled environment using equipment specifically designed to reinforce the structure for long-term usage. Traditional contractors do not have access to this sort of equipment when building a home on-site.


8. How long do prefab houses last?

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Just because prefab houses are not made in the same way as traditional homes it doesn&#;t mean they are not as safe to live in. But, of course, any sensible home buyer will want to know they are getting value for money before making a commitment.

As with building any type of property, how long it will last will depend on a number of factors. The quality of materials used play a big role, as this will dictate how well it can withstand general wear and tear and external elements.

How the prefab home is constructed will also play a significant role in how long it will last. The more skilled and experienced the people involved with building it are, the more assurance you will have that it will stand up to the rigors of time.  

Also remember that building a traditional home means the materials are exposed to the elements from the very beginning of the process, while the sections of a prefab house are made within the four walls of a factory affording them better protection.

When it comes to the delivery of a prefab, because they have to be shipped in modules, the material needs to be robust enough to withstand the issues that can arise with lengthy transportation. In order to achieve this, the manufacturing process ensures the material is often a lot more reliable than those used with traditional stick methods.


9. What are prefab houses made of?

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The construction of a prefab home relies on using many of the same materials associated with a traditional home. The most common being wood, steel and concrete. Of course, each manufacturer will rely on a different set of materials to suit the specifications of the build, with cost and efficiency usually being the deciding factors. Most importantly, for anyone thinking of building a prefab home, you can rest assured that the sturdiness of the materials will be comparable to anything used in a traditional home.


Should I buy a prefab home?

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Where once it was thought that buying a prefab home would mean a drop in quality, that is no longer the case. Modern prefab packages offer greater flexibility, fixed costs and deadlines, as well as providing substantial environmental benefits.

They are made from materials that can withstand the natural elements and the ongoing wear and tear that comes with day-to-day living. If you want to build a home that is long-lasting, adaptable and can work within your set budget, then investing in a prefab home should be your next move.  

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If you want to learn more, please visit our website Prefab House Manufacturer.