Any thoughts on pros and cons of having home classified as personal property vs. real property? Lender wants the homes attached to the land as real property. Thank you!
That just does not work with a MHP’s business model. If you do that the home becomes legally part of land in the same way an apartment building is. The DMV no longer taxes the home, it is then taxed by the county just as all the other buildings and land are. Once you have the homes classified as real property, you no longer have a mobile park, but a bunch or rental cottages. The option of selling off the POHs will be closed to you.
Try to educate the lender. His idea would be shooting you in your foot. He needs to see that the park’s value is in the lots not the homes. Show him a plan to sell off the park owned homes, which frees up capital to bring in more homes, which makes the park more valuable. Attaching the homes to the land will make the park less attractive to future buyers and thus, lowers the market value of his collateral.
What Randy says…Either the loan officer is clueless or you don’t have a MHP.
I have 3 of them. For years I was a hard money lender. That means I lent my own money out on 12% loans secured by a deed of trust. One of the common hard money deals was a guy buying a MH to put on land he owned. The banks would only make a mortgage on it once it was legally attached to the land. That took some months for paper work to be processed which could only be done once the MH was on the land. So the guy needed a short term, hard money loan, before he was able to get the bank mortgage.
…and the title must be surrendered to DMV prior to getting recorded. It doesn’t take a long time. I have done it many of times when buying land and home from Green Tree Servicing and Vanderbilt.