Quora Answer: Is a Modular Home Considered a Depreciating Asset Similar to a Vehicle?

The following is my answer to a Quora question: “Is a modular home considered a depreciating asset similar to a vehicle?”

A house is a depreciating asset.  A modular home is definitely a depreciating asset, whether you classify it as a house, or a vehicle.  What causes real estate to appreciate is not the building, but the land it is on.  Buildings, vehicles, anything that is used, is subject to wear and tear, and the value depreciates because of this.

Land is not subject to wear and tear since you can always tear the structure down, and build something else.  The value of land fluctuates according to demand, not wear and tear.  The value of land can be enhanced by improvements, and by the demand for it, due to enhancements of neighbouring plots.  Putting a shiny roof on a modular home is not going to bring its value above purchase price, so it is never an investment.