MH Financing for buyer of Land/Home


#1

I am interested in developing Land/Home deals where I put a new or renovated MH on a lot and sell it . I have the money to make the purchase and development. However, what I am discovering is that financing for my buyers to purchase this land/home is probably too steep.

The local banks will loan buyers (with adequate credit scores): 20% down and 11-12% financing. Wow…I just don’t see how buyers (of that price point-$65-80k) can come up with that kind of money down, and monthly payment.

Is there anyone doing these kinds of flips? I see where people buy parks or sell land/home packages via owner financing or Lonnie deals, but what about this kind of thing? In stick built homes, I did this all day long, but really wanted to do this with mobiles. (I now live in a new, rural area). I am not interested in owner financing these deals and really want to be able to offer them financing from someone else that is affordable for them.

Thanks so much,

Julie


#2

Julie:

The financing will be conventional if they are on permanent foundations, meaning it will be just like stick built 90-100% LTV.


#3

I agree with Don’s statement if you are going to sell the dirt with the home, but in conventional financing you can go up to 95% LTV only on Doublewides and 97% LTV FHA, or 100% LTV VA for Singlewides and/or Doublewides. These have to be real property on permanent foundation with the local L & I Hud Sticker and Title Elimination. Each county is different with requirements so check with your local county or city planning dept.

For those of you that own a MHP and want to sell the home only, known as Chattel Mortgage, there are a few credit unions doing these at 145% above book value with a Data Comp Appraisal. I have financed some recently on a 20 year fixed with 5% down and rates between 8.500% - 10%.

Hope this helps, and best wishes!

Tammy


#4

This is great help thanks.

To clarify:

What exactly is a “permanant” foundation? I’ve MH’s here set on cinder blocks, with tie downs into the dirt. I’ve seen them set on concrete pads with the tie downs set into the concrete.

The bottoms are covered with vinyl skirting (run vertically so you can tell it is on there) or the vinyl siding (horizontal) run down to the bottom so you can’t tell what is behind it. Or fake stone that runs along the bottom.

What constitues permanant and who decides? Is it then appraised by an appraiser vs. using a NADA book?

What is the L&I Hud Sticker and who puts that on? Is it put on the house itself or is it certifying the house/foundation combo?

What is Title Elimination?

In addition to the answers here, I will definitely pay a visit to the planning office. Afterall, I am in Louisiana and we tend to be a different breed. :slight_smile:

Julie


#5

Julie,

Check with your local State Dept of Labor & Industries ( L & I). They have a Manufactured Home Division and your local L & I Inspector will know the permanent foundation requirements for your area. You will need permits from your local city or county building/planning dept as well. Each state has different requirements due to terrain, wind factors, freeze points, flood zones, etc.

When a Manufacured Home is purchased you receive a vehicle title. Once your MH is on permanent foundation, and the home has its HUD Sticker then you can apply for a title elimination to change the classification to “real property”. That is done by a local title office, like First American, Chicago Title, etc. It costs about $150 (+/-) to eliminate the vehicle title.

The two go hand in hand as you cannot eliminate the title without the Dept of L&I Inspection. The L & I Inspector will put the HUD sticker on the home itself in usually 1 or 2 places. If it does not pass, the inspector will give you a detailed letter that tells you exactly what needs to be corrected. Once you’ve corrected what is needed, he or she will come back out and reinspect for clearance and voila, you should have your HUD Sticker.

Once both is all done, then the property will qualify for conventional and/or FHA/VA lending purposes. You could wait to eliminate the title at the time of the sale and the escrow officers will eliminate the title at the time of closing. The main thing is to get your HUD sticker.

Hope this helps! Happy 4th!

Tammy


#6

Thanks so much for your detailed response!

I had been an investor and builder in the New Orleans area and knew my market and knew about stick built homes. I got displaced by Ms. Katrina to a rural area outside N.O. and looked around and there were tons of manufactured housing…very unlike the city. I am happy living here so having this new area to invest in is just great. I’m on the right track now and feel like a world of opportunity has opened up.

Again, thanks to all.

Happy Independence Day!!


#7

Would anyone care to share preferred lenders / banks they have used to finance land/home deals. I’m located in GA but open to banks outside of the area, as well. I would be interested in hard money loans as well to carry for up to 13 months…

Thx