Guide to Building Prefab and Modular Homes in Portland, Oregon
For individuals looking to build a prefab or modular home in the Portland, Oregon area, the process can be intimidating and raise questions such as “how much will it cost to build a prefab home in Portland?” or “which builders serve Northern Oregon and Southern Washington State?” Fortunately, our guide to building prefab and modular homes in Portland, Oregon has you covered as we address the questions central to building a prefab home in the Portland, Oregon area. In our guide, we focus both on Portland and surrounding cities such as Hillsboro, Beaverton, and Hood River in Oregon as well as Vancouver and Washougal in Washington. Continue reading to better understand the prefab home building process in Northern Oregon and Southern Washington State or for more project-specific information, speak with one of our Prefab Concierge representatives for free here.
Why Might You Want to Build a Prefab Home in
Quick Build Times - prefab and modular homes are manufactured off-site and assembled at the final build site which allows for multiple steps of the project to be completed simultaneously and more efficiently than a traditional home build. This often results in shorter build times than traditional, site-built homes.
Cost Controlled - using a highly controlled build process (homes are manufactured in climate-controlled production and cutting facilities), unforeseen cost overruns can be better managed leading to reduced overall cost. This is especially necessary for high cost areas of Portland such as Forest Park, Hollywood, and many of the neighborhoods throughout the Northwest part of Portland in addition to surrounding towns such as Hillsboro, Beaverton, Hood River, Lake Oswego and Vancouver.
Sustainable & Modern - many of the prefab and modular home manufacturers that serve Portland and the surrounding areas offer energy efficient, and in some cases, net-zero homes. Many of these manufacturers also offer modern designs, and high-tech elements and appliances.
Durable - manufacturers that serve Portland and the rest of Northern Oregon and Southern Washington State offer products that are manufactured with consideration of the natural hazards of the area such as heavy snowfall
Key Decisions to Make:
Home Location - while the initial cost to build a prefab home may be rather high in Portland and surrounding towns such as Hood River, Vancouver, Lake Oswego, and Beaverton, a newly-built prefab home in these areas can be a sound long-term investment. When considering where exactly to build your home, you should be mindful of a few things that could affect your project:
Slope of lot - steep hills can make it difficult to build most pre-designed prefabs, and may require a custom designed and engineered home
Set back requirements which can limit the buildable area of your property
Floor area ratio or other zoning protocols that may affect the possible size of the home
Whether or not your city requires a design review
Custom vs. Standard - While most builders offer a set of pre-designed floor plans, while some also offer options for partial or total home customization. Other builders may specialize in custom prefab home designs. If you live on a tricky lot (uneven terrain, small-lot size, etc.) you may face a limited offering of standard home designs that are suitable for your home build
Modular vs. Kit Home v.s. Panelized - While all three of these construction techniques qualify as prefab home building techniques, there are nuances that you should know when building your own prefab house. These prefab home styles include:
Modular - homes are made up of multiple box-like modules. These modules are fully manufactured and assembled off-site and consist of floors, walls, ceilings, wiring, plumbing, and internal fixtures. After being assembled in an off-site facility, they are shipped to your desired location and the modules are connected and fastened to the foundation. Modular construction is one of the most affordable and quickest prefab building techniques due to the high degree of work completed off-site.
Kit Home - all materials and components necessary for building a home are pre-measured, cut, and delivered to the build site. In some cases, an owner builder can assemble the kit home themselves as a cost-saving method.
Panelized - the home’s structural components: walls, floor, ceiling, are manufactured separate from one another in off-site location. From there they are shipped and constructed at the final site like a traditional build. While somewhat similar to modular construction, panelized building offers more flexibility in the home build process.
Some builders advertise using Structural Insulated Panels (SIPs) which are a 2-in-1 combination of high-efficiency insulation and structural panels. This allows for the creation of a quick, energy-efficient prefab home.
Architect/manufacturer vs. All-in Company - There are many steps in the prefab home build process. Major steps include land acquisition, home design, manufacturing, and assembly. When selecting a company for your prefab home, you should also pay attention to the services your company offers. In some cases the company you choose may only offer a home design and therefore sub-contract out the manufacturing process, though this is not as common, as homes that offer both home design and manufacturing. This type of company however, still leaves you responsible for acquiring land and later finding a local builder to complete necessary site work and finish your home at the project site. It is worth noting that there are several companies that offer all-in-one services and can assist you in all stages of the home-build process including design, manufacturing, site work, and finishing your home.
Financing your home - unless you are planning to pay for your home in cash, you are likely going to need outside financing for your prefab home. The two most common ways of financing a prefab home build are:
construction loan - a short term loan that you can refinance once construction is complete
temp to perm loan - a construction loan for the duration of construction that converts to a normal mortgage once your house is finished. The advantage of these loans is you only have one mortgage close vs. two with just a construction loan.
These methods usually allow you to finance both the land purchase and the construction of your home however, the underwriting and approval process on these loans can be lengthy (60+ days) as the bank is not only underwriting you as a borrower, but also the viability of your building plans. To get land more quickly, buyers will often pay cash for their building lot and then the lender will credit the land purchase as a down payment percentage on the purchase.
Some of the best lenders for these products only operate regionally. Therefore, if you would like assistance specific to your situation, we can provide recommendations here.
If you’re looking to purchase an ADU (accessory dwelling unit) or tiny home, then you may want to consider a personal loan:
Many personal lenders allow you to borrow up to $100k with no down payment
These loans are typically amortized over a shorter period than mortgages (up to 12 years)
These loans typically don’t underwrite the property and instead underwrite you as a borrower
Many of the best personal lenders are online and serve almost the entire country
The time to get approved for a personal loan is generally pretty fast (as little as a day to up to a couple weeks)
Common Questions
How much will it cost to build a prefab house in Portland or surrounding areas like Hood River, Vancouver, Hillsboro, or Beaverton?
While certain variables such as location, builder, and floor plan will affect the total cost of building your home, it is our experience that the final cost of your prefab will range between $150 - $500+ (as of February, 2020).
Is a prefab home a good investment?
Yes, in areas where the total cost of building your prefab home (land cost + building costs) is less than the average dollar per square foot sales price of homes in your neighborhood i.e. you are able to sell your home for more than it cost to build it. In the Portland area that includes areas where the average price per square foot is $270 per sq ft or higher. This includes many of the neighborhoods in Portland, especially in the northwestern part of the city as well as surrounding towns such as Hillsboro, Beaverton, Vancouver, Washougal, and Hood river. It is important to note that the hardest part of a project in these areas, is finding buildable land or even lots suitable for tear down that will work within the price range and time frame of your project.
Can I finance a prefab home in the Portland Area?
Yes. The most common way to finance a prefab home is a temp to perm loan. This financing method starts out as a loan for the construction of your home and converts to a mortgage once your home is completed. Another financing option is a construction loan which is a short-term loan that you then refinance once the construction process is finished.
What do the economics of an investment in a prefab home look like?
Our spreadsheet (below) is an example of what the costs and potential benefits of a prefab home investment might look like. While there may be high up-front costs, it is likely there will be a sizable return on your investment. In high-demand areas of Portland, one of the most challenging parts of the build process is finding a buildable lot at a reasonable price. In some cases it might be cheaper to buy and tear-down an existing home rather than purchase a vacant, build-ready lot.
| Item | Unit | Forest Park, Portland, Oregon | Hood River, Oregon | Vancouver, Washington | Notes |
|---|---|---|---|---|---|
| Cost To Build | |||||
| Cost of lot including closing costs & buyers agent | $ | 85,000 | 375,000 | 200,000 | |
| Cost of prefab home + construction | $ | 750,000 | 875,000 | 1,000,000 | |
| Loan Rate | 4.50% | 4.50% | 4.50% | ||
| Loan | $ | 45,090 | 67,500 | 64,800 | 4.5% APR (interest only), 18 months project time, 20% down |
| Value of tax deduction | $ | -15,782 | -23,625 | -22,680 | Assumes income to deduct and 35% marginal tax rate |
| Total cost to build | $ | 864,309 | 1,293,875 | 1,242,120 | |
| ARV (after repair value) | This is the term for post-construction value | ||||
| $ per sqft comps for new construction | $ | 325 | 500 | 350 | |
| Size of new home | Sqft | 3,000 | 3,500 | 4,000 | |
| Cost to buy similar home | $ | 975,000 | 1,750,000 | 1,400,000 | |
| Return On A Flip | |||||
| Sale price | $ | 975,000 | 1,750,000 | 1,400,000 | |
| Cost to Build | $ | $864,309 | $1,293,875 | $1,242,120 | |
| Broker Fees | $ | $58,500 | $105,000 | $84,000 | 6% |
| Closing costs | $ | $19,500 | $35,000 | $28,000 | 2% |
| Profit before taxes | $ | 32,691 | 316,125 | 45,880 | |
| PLEASE NOTE: THESE MODELS ARE NOT GUARANTEES AND SHOULD NOT BE CONSIDERED FINANCIAL ADVICE. THEY ARE FOR EDUCATIONAL PURPOSES ONLY AND PURELY ILLUSTRATIVE EXAMPLES OF POTENTIAL BUYING SCENARIOS. BUYERS SHOULD DO THEIR OWN DILIGENCE BEFORE MAKING ANY PURCHASE. | |||||
How long will it take?
The answer to this question depends a lot on your particular location. Your city’s permitting and building process will play a large role in determining the time frame for your build. Total, the build process can take between 1-2 years and maybe longer if there is a design review process.
Planning Departments in and around Portland:
Reputable Companies that Serve Portland and the Surrounding Areas:
A full-service company based in Oregon offering semi-custom barn and home kits
All-in-cost: $150 - $300+ per sqft
A timber-frame kit home manufacturer specializing in barn-home designs
All-in-cost: $200 - $300+ per sqft
Designs and manufactures over 24 models of fully-mobile tiny homes
All-in-cost: $360 - $500+ per sqft
Designs and manufactures a range of modern and sustainable homes in addition to fully-custom projects
All-in-cost: $300 - $400+ per sqft
Specializes in smaller, practical homes featuring unique designs
All-in-cost: $180 - $350 per sqft
Designs and manufactures timber frame home exteriors in a variety of styles and sizes with the option for full customization
All-in-cost: $300 - $400 per sqft
Alternatively, see our list of prefab home builders and modular home builders in Oregon or our list of tiny homes for sale in Oregon. If you are interested in building an ADU, check out our list of the Best Prefab ADU Builders in Portland.
