LLCs & Reserves for Manufactured Home

[Brian George]

Hello, 

     I've got a manufactured home I'm potentially interested in purchasing. The property is a 1,088 sq ft 3br, 2ba new construction with a list price of $58,900. The primary intent of this property would be house hacking, at least initially. After moving out, my intention would be to keep the property for cash flow. Housing demand in the market (Los Alamos, NM) is quite strong, due to the national laboratory in town, so I am not necessarily concerned about finding renters. 

     Utilizing the BiggerPockets Rental Property calculator, it appears it could be a viable property. However, going in roughly the middle for the calculator's recommended figures for reserves (vacancy, cap ex., and maintenance), I would end up with $6,732 after a year. My inclination is that it's probably not the worst thing to have excess reserves. However, seeing as this is a new construction, I am also not sure as to whether it's necessary to be putting that much aside, since the roof, appliances, etc. are all brand new. 

     My other question is to what I should be doing with those reserves. I feel that it would be unwise to simply have the cash sitting in an account depreciating. My first thought was investing it, or at least a decent chunk. However, that would minimize liquidity were there to be an emergency where that cash was needed in a more immediate sense. My next thought is a high-yield savings account. I'm curious to hear your thoughts on this, as well as whether the amount of reserves is disproportionate to the value of the property. 

My last question is whether it would be wise to purchase such a property under an LLC, or as an individual, keeping in mind that I would be living in it for at least a year (assuming an FHA loan). If an LLC is indeed a smart option, would it be better to start off with an LLC, or wait until I am moved out of the property?

[Jason Wray]

FHA is not going to allow you to close in an LLC. You are also going to find it "Very" difficult to close in an LLC as a portfolio loan with a Mobile with a loan amount under $100K. If you do find a portfolio lender who can close it in an LLC that commercial rate would be extremely higher than your standard conforming loan. My advice would be if it is in a rural area use use USDA. If not FHA but your going to have to close in your name. Have you financed a mobile home in the past?

Remember 95% of the banks and lenders will only finance a mobile home if it is a "Double Wide" built after June/1976 must have be on a permanent foundation & some states require hurricane tie/downs.