Newbie to Mobile Home investing..can I BRRR?

[Jennifer Freeland]

Hi Everyone,

I’m a new-ish investor, started in 2020 and have 4 flips under my belt and now own 4 rental properties. I recently came across a mobile home deal that seemed too good to pass up. Seller wants $30k, it needs $20k in repairs, and similar homes are selling for $100k. The home is on its own land/permanent foundation, built in 2003, 4br/2ba with 2000 sq ft.

In the SFR rental world, this would be a fantastic BRRR. I will be using my own cash for the deal so I'd like to pull the cash out to use for other investments. My question..is it possible to do a cash out refi on a mobile home or should I just plan to flip it?

[Reid Hanley]

It is definitely possible to BRRR it but it has a few challenges. First you need to find a lender comfortable with lending on mobile homes used as investments properties. Local banks and credit unions may be your best bet. We use a regional bank in our area. They will probably want the home classified as Real Property, not as personal property (like cars are) so it's considered an improvement on the land.

Another challenge is insurance.. Depending on location it can be hard to find at all.  And finding enough coverage that will be in line with the amount of money you borrow against it can be a challenge too. Many insurance underwriters will only look at the actual age of the unit, not the functional age after you make all your improvements. You can expect to have to jump through all the same hurdles hurdles as normal houses and also a few others ( i.e. proper tie down, etc.)

All that said, we have one we did that is working well.  $80K invested. Appraised at $110K.  Cashed out refi $80K and is cash flow positive close to $600 each month.  

You can do it too!