HUD manufactured home flip concern

[John Baskin]

Hi all,

I just got an acceptance from HUD for a stationary manufactured home in Granbury, TX. The inspection came back fine and I got it accepted by HUD for $73K--85% of list price. The area is nice in Granbury, TX and is near Lake Granbury, and comparable slab homes are going for $150s. However, I've read a lot of mixed reviews on manufactured homes having high DOMs, poor resale value and being hard to finance (thus reducing my pool of buyers.) This gravely concerns me as this was going to be my first flip and was going to be done with hard money.

Since this is my first deal and I don't know whether this is just first time jitters, or whether I have a legitimate concern,  can you advise as to whether I should just take my $1000 loss (earnest money) and move on to the next deal, or whether to follow through. Does anyone have any experience with flipping stationary manufactured homes? Thanks

[Greg H.]

@John Baskin

There are quite a few more concerns when you are dealing with a manufactured home vs a stick built home

-The vast majority of your end buyers are going to want to purchase via FHA financing so I would suggest you consider the following

-Does the property still have the HUD tags and an FHA approved permanent foundation? The assumption should be yes as it had an FHA loan previously but if the answer is not yes then it would be ineligible for FHA financing moving forward

  - Be sure of your numbers. Just because a stick built home is close to 150k it doesn't mean a manufactured home in the area will be even close to that

Does HUD have the property as insured or uninsured? If uninsured I wouldn't touch one at that price

To sell the property via FHA financing you will need to hold the property at least 90 days before reselling

All this being said, your $1000 earnest money buys you 45 days to figure it all out if the numbers are there.  Feel free to contact me with any questions