Is Modular Construction Better?

Posted: 20 Feb 2012 04:00 AM PST

With the current state of the economy, everyone is looking for innovative ways to maximize savings wherever they can. Real estate developers, analysts and investors are no different. They see the value in maximizing return on investment without sacrificing quality.

The modular construction boom is coming to the forefront of the Western Canadian real estate investment market. Companies like Rose Country Income Fund have adopted the state-of-the-art methods used in modular construction to improve build quality, produce larger and more profitable developments, and best of all – save time and money.

The history of modular, also known as pre-fabricated homes, dates back to the early 1900's. The concept was simple — pre-construct a home or building in a factory, then ship it to the development site to have it assembled in a shorter period of time. The industry exploded in the late 1940's with the end of World War II. Soldiers returning home to their families were all looking to buy a home. Demand skyrocketed as traditional construction methods could not keep up.

Over the last decade, the modular construction industry has become highly sophisticated and the quality of the product has increased drastically to a level on par with or better than traditional construction methods. Pre-fabricated construction methods are now used for commercial buildings, multi-family residences, hotels, motels, and even luxury homes due to the cost savings, quality control and fully customizable options.

The following is an assessment on the values and benefits of modular construction versus traditional building methods. Let's explore some of the key advantages that help maximize return on investment for our investors:

Shorter Build Times – pre-fabricated buildings can be erected in 50-60% less time than traditional on-site construction, leading to cost and time savings, in addition to earlier returns on investment. For example, a modular built condominium can be ready for occupancy in as little as 45 days from the date the site prep and foundation is complete.
Superior Quality – factory-based quality control standards are the highest in the industry, providing higher quality products versus traditional construction methods. All angles and lengths are exact making finishing less time consuming.
Economies of Scale – repetition or multiple orders of prefabricated units leads to considerable cost savings on multi-family and commercial development projects, thus increasing ROI.
Reduced Site Labour Requirement – the erection and finishing of a modular building requires less time and workers than traditional construction, producing added cost and time savings. This can be a significant benefit when building in a tight labor market where competition for skilled labor is at a premium.
"Green" Construction – highly efficient factory production produces significantly less waste and is better for the environment.
Safer Construction – modular construction sites have proven to be significantly safer than traditional on-site building especially in inclement weather conditions.

All of the benefits add up to one thing – a superior investment opportunity. Every analyst and investor wants to maximize their return on investment, and with modular construction we need not sacrifice quality to produce a significantly higher return.

This guest post is by Time Whitehead from RC Fund Management. For more information, you contact RC Fund Management today.

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