If the mobile is older and has not been well maintained (for example, a 1998 mobile that has seen minimal updates/maintenance), then the remaining economic and effective life may be the same (in this example, 20 years). When qualifying for a mortgage, it is typically approved on a 25-year amortization (the amount of time to pay off your loan). ECONOMIC LIFE less EFFECTIVE AGE = Remaining Economic Life. EFFECTIVE AGE divided by ECONOMIC LIFE = amount depreciated.
Trailer home full#
After a full inspection of the property, the appraiser determines that even though the home is 13 years old, it compares similarly to a mobile that is only 3 years old (this is the EFFECTIVE AGE). It has been immaculately maintained and has seen some major upgrades. You are looking to purchase a 2005 mobile home. Here's an example of how REL is calculated: The appraiser can account for newer short-lived items by adjusting the effective age, thereby reducing the amount of the depreciation charged against the property. However, this method does not consider individual short-term items like the furnace, hot water tank, etc. It is based on the building’s effective age divided by its economic life. The economic age-life method is a quick and easy method to apply and may be used in form reports to give an estimate of the building’s depreciated value. There are several ways that depreciation of a property can be calculated however, the most commonly found on a standard appraisal form is the Economic Age - Life method. It changes due to market conditions and the building’s overall maintenance.
The REL is the remaining expected economically productive lifespan of the structure. The remaining economic life (REL) is the difference between economic life and effective age. It is the responsibility of the appraiser, based on their inspection of the building, to estimate the effective age of the subject property. Effective age can be lesser than or greater than its actual age at the date of the appraisal. Keep in mind that the majority of mobiles will see an economic life of approx 45 years (much shorter than other types of real estate).Įffective age is based on the property’s present condition and general overall maintenance. Economic life is normally shorter than the physical life. In some parts of Canada, many buildings are hundreds of years old.Įconomic life or useful life is how long the improvements will contribute to the overall property value before they are demolished and the land redeveloped. The physical life of a property can be well over 60 years depending on the type of construction and its overall maintenance. Here are a couple of quick definitions before explaining the basics of depreciation and why it is so utterly important when considering a mobile property: It doesn’t sound super exciting, but, second to property value, I believe it is the thing that is probably MOST paid attention to when a lender is reviewing an appraisal report to approve financing for the purchase of a mobile home.Īnd if THEY care, then there must be a good reason! and fees are typically under $200/month in Fort Mac.Īs great as the above sounds, there are a few crucial things to know and take into consideration: Privately owned mobile home parks that instate a bare-land condo fee usually take care of snow removal, garbage removal, water/sewer, etc. Mobiles are sometimes freehold (without condo fees) and they sometimes have a small bare-land condominium fee. The majority are listed in similar price-points as apartment or townhome properties however, mobile or manufactured homes offer a larger square footage, are a completely detached property, and, most importantly, offer a yard that is exclusively yours. Let's first go over the main reason why buyers tend to gravitate towards mobile/manufactured homes:Ī mobile or manufactured home is an affordable option in the Fort McMurray market. Sellers should also take notes as some of this information can be taken into consideration when preparing your mobile home for sale. It matters because if mistakes are made, they can be very very costly later! If you are thinking about purchasing a mobile home, then I will tell you some of the things to consider. The truth is, the answer isn’t necessarily an easy one.
This is a question I am frequently asked as a buyer’s specialist. What to Consider When Buying a Mobile Home
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