How to do Mobile Home Comps?

Question

I've never done a mobile home deal, but I found a motivated seller.  How do you comp Mobile Homes?  I have checked the park rules on tenants restrictions, and basically I could lease option it to the end buyer.  I'm thinking of getting it on seller financing too.  Thoughts?

Jerry Lucker · Answer

I feel my comments would go against the grain a bit. I've been flipping homes in parks for over a decade - successfully. I sell the homes for cash, not contract. I've always been able to find financing for potential buyers. The biggest advantage of this is accumulating a healthy bank account to invest with and bottom line - make more money than waiting for the payments to come in on contracts.

Finding deals, buying, selling, comps, financing - all of it garners negative comments from naysayers and probably always will. It is a niche of myths and misconceptions.

Like anything else, if you understand how it all works you can make some very nice profits. Once again, I started in 2002 and am still flipping mobile homes in parks.

Jerry Lucker

Marc Faulkner · Answer

We buy them and then flip them to mobile home park owners that will move the homes to the communities they own.  I find it is a lot easier to work with park owners and professional buyers than it is to try and sell them to the public.  Our buyers simply do not have the time to go out and look at all the homes they need to buy, so they buy them off of our representation and pictures or video.  Once I get one locked up, I put together a flyer and email it to our buyers list.  I couldn't keep a home in inventory over a week last year and this year will be more of the same.  If you can find a great deal, you will always be able to flip it for cash assuming you know how to get the word out to the right people AND it was a REAL deal to begin with.

Jerry Lucker · Answer

A couple of thoughts after reading the other comments. First, don't be afraid of Dodd-Frank! Like any other number of challenges in business there are perfectly legitimate methods to do owner financing within the system. Not everyone has done a thorough enough job of finding out how.

Second, I've been getting loans for buyers of mobile homes for over a decade and no lender, private Or bank,  has ever referenced the 'blue book' for value. It simply doesn't apply. Agreeing completely with one comment, mobile homes are strictly 'park specific'. Identical homes in two different parks, even in the same town, could be valued Thousands of dollars apart.

Last, if you BUY a home with the seller carrying the paper I believe you're not at risk. As I understand it the entire burden of Dodd-Frank is on the seller.

Marc Faulkner · Answer

The only comps that will really matter are other sales that happened in the same park you are considering buying in.  The same home could be worth thousands, more or less, in a different park, less than a mile away.

John Lowe · Answer

Doing comps for a MH in a park is really simple.

1) Drive the park and call on every For Sale sign you see

2) Talk to the park owner/manager and ask them what homes sale for (and if they know of any others for sale)

3) If selling on a note, make the payment + lot rent < area apt rentals

If challenged, your Dodd Frank avoidance strategy probably won't hold up in court. But don't worry about it. Do the first few deals under your state exemption, write plain vanilla loans and make sure your homebuyer can afford the payments. If you decide you like the business, just use a LMO going forward. Complying with DF should be very easy for MH investors.

Joshua Houchins · Answer

@Austin Faux Dodd frank will kill you a bit on these types of deals.  Also getting fin on a mobile home not on land you own is a nightmare.  Although mobile homes are great rentals for not a lot cash buy and hold on this kind of deal or buy a small track of land and buy a bunch of cheaper mh and rent them and lots.  Mh parks are cash cows if you set it up right flipping them not so sure about.

Curt Smith · Answer

Hi Austin,  You might search the forums for:  Has Dodd Frank wrecked lonnie deals

and just Dodd Frank

The exemption is:  3 in your personal name every rolling 12 months.  Yes both my wife and I are limited to 3 each.  But you also should use a Licensed Mortgage Loan Originator and qualify to 43% DTI where the borrower will occupy the property.  DF states that within the 3 per 12 months exemption using a LMLO is optional, yet it goes on to say that qualifying Ability To Repay (ATR) and 43% DTI is not waved with the exemption.  So I use a LMLO all the time.   And the property must NOT be a mobile home or you built the home.  Builders and mobile homes where specifically called out in DF as not qualifying for the exemption from being a bank or licensed lender.

This is why I only do double wides on permanent foundations on their own land.

This has been well hashed out from Jan to July or so in 2014 here on BP.  It's there for the searching and reading.

In short move on to something else.  In a year you'll look back and say what was I thinking, trying to build a business that depended on a park manager staying my friend and borrowers with low income dependability paying my loan off...

The quality of borrowers for my double wide rent to own deals is pretty good. Bounce back families wanting to fix their lives.

The lower you go on the economic success scale the more variable and intermittent the borrowers income and thus your expenses putting folks out, refixing the home, and advertising for yet another buyer.

The best deal in MH's is owning the park, not the homes.  The best deal today given DF is owning double wides on their own land.

Austin Faux · Answer

My understanding of Dodd Frank was that you could have up to 4 Seller financed homes, and we were thinking 3 would be under my name and 3 under my wife. We were also thinking of bringing on a broker into our business, give them 1% of transactions and that would open up seller financed homes for us.

Curt Smith · Answer

Hi Austin, What Bill G said is true, Dodd Frank has outlawed investors being middlemen helping out owners in parks.  What the well meaning legislation has done though has forced owners to abandon their property when life's events happen giving park owners a wind fall via the state or county abandonment reclamation of title process to a home for the cost of the legal proceedings.   So the evil investor has been driven out but so has any hope of getting anything for their homes.  I've seen this in a few urban GA parks.  Park managers drive out investors, just waiting for the owners to leave their homes to the park.

Austin my view is to find another business.  Same amount of work to find and do MH deals as bigger deals but much much smaller pay offs than doing stick built or other deal types.

Look into buying double wides on their own land.

Bill Gulley · Answer

If the MH doesn't show up in the Blue Book, (Blue Book like cars, it is personal property) then the chances of any end loan financing will be slim. That said, buying on a SF deal and then selling on an installment sale to an occupant buyer is covered, very clearly and heavily, in the Dodd-Frank Act now in full force and effect. Better search that and become familiar with this federal law covering just what you're thinking of doing. You'll likely change your mind. :)

How to do Mobile Home Comps?

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