Thursday, 13 May 2021

Would You Buy a Prefab Home From Airbnb?

Would You Buy a Prefab Home From Airbnb?
29 Dec

Models of Backyard homes, from Airbnb’s experimental product development team Samara. Credit: Samara

A popular short-term rental platform is stepping into the homebuilding industry next year.Airbnb recently announced that as soon as fall 2019, the company will start testing prototypes of homes that can be “designed, built and shared,” according to a news release about the new project.

Backyard, an initiative from Airbnb’s experimental product development team Samara, investigates how buildings can incorporate insight from the Airbnb community, plus sophisticated manufacturing techniques and smart-home technology, to adapt to the changing needs of homeowners and occupants.

“We helped people activate underutilized space — from a spare bedroom or treehouse to your apartment while you’re away — and built a community that connected people around the world,” said Airbnb co-founder Joe Gebbia, who leads the Samara team, in a statement. “With Backyard, we’re using the same lens through which Airbnb was envisioned — the potential of space — and applying it more broadly to architecture and construction.”

The basis of the initiative started with the question, “What does a home that is designed and built for sharing actually look and feel like?” and grew from there, according to the news release. The Backyard team has gathered input from the construction industry to find practical solutions, which range anywhere from environmentally-friendly materials to fully prefabricated homes.

What is a prefabricated home?

A prefabricated or “prefab” home is a factory-built dwelling that is composed of separate parts. Those parts are delivered to the property site and assembled into a house on a permanent foundation. Prefab homes — which are also referred to as modular homes — are often treated as “real property,” or land and the structures included on that land, according to the Consumer Financial Protection Bureau.

The construction process of a prefab home is much faster than that of a site-built home. It’s possible for a prefab home to be move-in ready in approximately three months, according to the National Association of Home Builders. Because most of the construction happens inside a factory, building a prefab home isn’t usually slowed down by weather delays and other unpredictable factors.

Prefab vs. manufactured home

A modular or prefab home isn’t the same as a manufactured home. Although they are both factory-built, manufactured homes are constructed on a permanent chassis and must conform to the Manufactured Home Construction and Safety Standards enforced by the U.S. Department of Housing and Urban Development (HUD). (Manufactured homes are also sometimes called mobile homes, despite the fact that they aren’t on wheels.) Prefab homes don’t have to follow HUD’s standards; they must comply with local building codes, however.

While there are a variety of limitations and requirements specific to getting a loan for a manufactured home, modular homes may qualify for conventional financing. Fannie Mae treats prefab homes the same way as site-built homes, and they follow similar guidelines.

Financing a modular home

Modular homes are considered one-unit or single-family properties under standards set by Fannie Mae. For 2019, the conforming loan limit for one-unit properties in most U.S. counties is $484,350, and in higher-cost areas the limit is $726,525.

The government-sponsored enterprise purchases modular home mortgages from lenders for properties that meet certain requirements:

  • They must be built of the same quality and with the same materials as a site-built home.
  • They must be legally classified as real property.
  • They must conform to all local building codes.

Rental income you’re anticipating from your modular home — say, if you’re planning to be an Airbnb host — could help you qualify to get financing for that modular home.

Pros and cons to buying property you plan to share

Consider the following pros and cons of buying a modular home built for sharing.


  • You have the ability to customize your property to your liking — beyond the limited choices typically offered by many builders.
  • You create another income stream by providing short-term rental services to guests, which in turn, can help you pay down your mortgage more quickly.


  • You’re “sharing” your home, which means there’s a level of sacrifice that has to take place in terms of your personal space.
  • There may be times throughout the year when rentals are slow, which affects your cash flow.
  • Your insurance premium will likely increase, as you’ll probably need to purchase a business insurance policy in addition to carrying a homeowners policy.

Multiple paths to homeownership

Initiatives like Airbnb’s Backyard underscore the fact that there are several ways to enter into homeownership, whether it’s a site-built single-family home or prefabricated property designed to be shared.

Regardless of which dwelling type has your eye, be sure you’re taking the necessary steps to prepare for the homebuying process. That includes improving your credit history and score, paying down outstanding debt, determining how much house you can afford and saving for a down payment. Additionally, consider asking yourself these five questions before you decide to buy a home.

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Crissinda Ponder


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