Financing

[Brett Hogan]

I've found a couple of MH on lots, one on an acre. Both are early 2000s models in good shape, ready to rent with no rehab. I'm having trouble with finding financing. The owner is not willing to do OF. The other is a foreclosure. Any thoughts? 

Thanks. 

[Ken Rishel]

Originally posted by @Greg H.:

Investor financing for mobile homes is very difficult to obtain.  As mentioned earlier, a line of credit or a small local bank that you have a relationship with.  Additionally, your 401K or locating a private investor.

When purchasing used mobiles, always keep your exit strategy in mind. If the MH has ever been moved(Other than to the original site) it will be ineligible for FHA financing to your potential buyer and you will likely only have seller financing as an option to sell the property

Obtaining financing to finance used HUD Code homes that are going to be either rented or sold and seller finance is very difficult for small operators unless they have an already set up program that protects the investor. Even banks and credit unions are getting more reluctant to extend lines of credit for this purpose as they begin to understand they can be hurt by regulators for what their borrowers do with the money - especially if the purpose is to seller finance without a properly licensed and properly run lending operation. The CFPB has even instituted a special program to address the issue of holding depositories responsible for what borrowing entities do with the money - "Operation Choke Hold".

With all of that said, there are solutions and sources of money available for those who have a properly licensed and properly run related finance company.

While I am not a tax attorney or tax expert, it has always been my understanding that using your own 401K to invest in homes you will profit directly from was a violation of IRS rules.