Possible to get hard money for a mobile home flip or BRRRR?

Question

Hi, I was wondering if buying mobile homes using hard money is possible. What are the limitations and differences when compared with regular home hard money financing? Additionally, can you eventually do a BRRRR refinance with a traditional mortgage? Or perhaps, is it better to simply flip a mobile home when using hard money?

Thanks for your answers!

Shawn P Kontrec · Answer

@Rachel H.

Thanks for your response! That makes sense and I will definitely look into that.

Joe Splitrock · Answer

I don't think you are going to have success with a hard money and BRRRR strategy on mobile homes. Mobile homes are different than traditional homes. Different loans, different lending standards, etc. The age of the property and type of construction make a difference in lending options. If the home is on rented land in a park, it is different than if you own the land. Not owning the land limits loan options even further and pushes rates higher. If you are buying on a rented lot, you are not getting a mortgage, let alone a cash out refinance. A friend of mine with excellent credit just purchased a new construction manufactured home and it was placed on rented land. The loan interest rate was over 6% and he said that was a great rate for that type of property. That was a new manufactured home too, so it meets latest code.

A lot of manufactured homes are financed through the company that sold them or they are sold on a contract for deed basis.

If you are buying mobile homes and fixing them up, your best strategy is either cash or a business line of credit. BRRRR strategy relies on an underlying asset increasing in value. Mobile homes are viewed as a depreciating asset. There could be some exceptions, like if you had a lot lease in a highly in demand are, such as on a lake or in a very expensive market. Still I am not sure how much value a lender is going to put on a lease location, considering a lease is a liability, not an asset.

Brenden Mitchum · Answer

Hey @Shawn P Kontrec, welcome to the BP community!

You can absolutely do this if you find the right lender. Like banks, some will never say yes but if you call enough and present your deal and the numbers effectively, you will eventually find one that does.

The really tough part would be finding a "traditional" lender to refinance after you fix it up. Chattel lending on individual used homes just does not really exist right now. I think 21st Mortgage might have a program so check with them. Your best bet here is to flip it or do some kind of rent credit program.

Please, feel free to reach out anytime if you have other questions or just want to chat!

Shawn P Kontrec · Answer

Thank you, @Brenden Mitchum for that reply. I was thinking that flipping would be the best way to go for mobile homes, but wasn’t sure. I was thinking that flipping one or two mobile homes would provide some cash to put towards reserves for a house hack or something like that. Perhaps I’m missing something in the equation, but I was thinking that a mobile home would be easier to flip in a market like Minneapolis where prices are high and where flipping regular homes is very tough. Thanks again!

Daniel Anshus · Answer

Mobile  home park, yes. A single mobile home, no. A single mobile home is cheap and there is typically not a lot of value in them. Unless it is a double wide on land, then the land is what would make it valuable. Have you thought about buying a mobile home because they are cheaper, or have you looked into mobile home parks?

David Silver · Answer

@Shawn P Kontrec I think this is a great way to get started.  If the home is on it's own plot of land (outside of a MHP) and they've been set on a foundation with the tongue and wheels removed, a potential buyer can get them financed.  Check out the BP podcast, show 851.

Good Luck!

Shawn P Kontrec · Answer

@Daniel Anshus, interesting. I would have thought there was a market and a little would have been possible. Thanks for your input!

Daniel Anshus · Answer

I would say that rehabbing a mobile home is going to be nothing like rehabbing a regular home. The costs and process will completely different. Also, as I previously said there is not a huge market or margin for mobile homes

Shawn P Kontrec · Answer

@Daniel Anshus

I’ve mostly thought about flipping mobile homes as a way to get cash to then finance regular small multifamily. I figured that flipping an 80s or 90s mobile home would be not only quicker and easier to do than a regular property but it would also be great learning for any rehab I would have to do in other properties I eventually hold. My thought about flipping a mobile home is that it removes the uncertainty of finding an appropriate refinance option. Also the fact that it is a depreciating aspect wouldn’t affect me if I plan on flipping and selling it back quickly. Any follow-up thoughts I should be aware of that you can think of?

Possible to get hard money for a mobile home flip or BRRRR?

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