Modular Homes Anyone?

[Helen Lowery]

Hi BP Community,

Recently I sent a mailer to non-owner occupants looking for my next deal.  I got a call from a woman who lives on the other side of the country and wants to sell a rental that she inherited from her late husband.  She has had it for 5 years and has never been to the property or the city where it is located.  It is being managed by a local property management company.  She got me in touch with them, and I visited the property.  The current tenants are on a yearly lease and have plans to move in September.  The home has alot of deferred maintenance, but I have completed two flips, and feel that this project is manageable for me.  So far so good.

The rub: this home is in a community of approximately 35 homes under a condo association. They are all modular construction on foundations. However, the foundation is not the standard crawlspace of stick built homes, and I believe it is two pieces each on an I beam. Two homes have sold in this community in the last 3 years and I have spoken with the listing agents from both sales. They each expressed that financing was tricky (no VA or FHA... conventional only) and that there is something about the condo association docs that lenders don't like (not enough funds in budget or something to that effect).

The numbers on this deal are fantastic in terms of return and cashflow, but I worry about:

1) will it be difficult to sell when the time comes?  

2) are modular homes difficult to re-hab? (non-standard dimensions of materials)?

3)  do modular homes maintain their value like stick built homes? will appraisers compare to other 3 bed 2 bath stick built homes?

Thanks in advance for the help and input.