“PASS… IT'S A MANUFACTURED HOME”

[Alex Ficco]

“PASS… IT'S A MANUFACTURED HOME”

One of my favorite responses from A LOT of Buyers whenever we have a manufactured home to assign.

There are many reasons to pass on a manufactured home deal, but 90% of the time, the reason is BECAUSE it's manufactured and the Buyers just don’t know about them or have never bought one before.

Here in Northern Nevada, we have a TON of manufactured homes in our more rural areas, so why not learn about them and open yourself up to more deals? Luckily, the guys I would sell deals to when I first started wholesaling weren't scared of them, so I got to learn a lot about them before we started flipping - but usually the hard way by realizing I didn’t have a deal because SOMETHING wasn’t right with it.

Yes, they are different than stick builds and they are nuanced, but once you know just a few things about them, they aren’t as scary as you might think.

For the purpose of this post and not getting too far in the weeds, I’ll be using ‘MOBILE home’ in reference to a home that’s in a trailer park (you don't own the land), and ‘MANUFACTURED home’ in reference to a home that comes WITH the land.

MOBILE homes are a whole different deal. They are personal property and have no real estate involved in the transaction. Can you still wholesale, flip, and rent them? YES. But usually, you’re dealing with different licensing for the work, park approvals (for the Buyer / Renters / Age restrictions / Rent eligibility, etc) and they are harder to comp as there is no “Sold Data” database to dig through that’s public - at least in our area.

MANUFACTURED homes are more of what I’m talking about here and some of the key nuances. Most of these details have to do with the lendability of the home, which affects the after repair value. If the home doesn’t check all of these boxes, it doesn’t mean it's not a deal or a 100% pass, it just means the value isn’t going to be as high as one that does.

Ideally, we want the home to be FHA financeable for the highest value and biggest pool of buyers on resale. On average, a lot of the demographic that's buying manufactureds are using FHA loans for a low down payment. There ARE other types of lending for homes that don't meet this criteria, but the terms are worse and usually require a higher down payment. I know plenty of guys that still take the non-financeable ones, but they know the ARV will be less, the hold time will be longer because of the smaller buyer pool, and some of them even offer seller financing to the buyer to get them sold.

The 5 main points I will cover at a super high level are: year built, if it's been moved, converted to real property, double wide vs single wide, and additions.

First, year built matters! If the home was built after June 15, 1976, this is a good thing. If it was built before then, the home doesn't meet HUD building standards and wont go FHA. In Nevada, Manufactured Housing Division's database can be searched online to find this information.

Second, while doing the title search on MHD, you can search the title history. This will show WHERE the home was in what year. Again, if the home was placed at its original location and then moved again, it won’t go FHA.

If we are dealing with a 1980 home and we can see on the title history the first record of the home is in 1980 at the same location, its safe to say it hasn’t been moved.

If we don’t have record of the home at all until 1995, and from 1995 till now its been at the current location, we will need to do further due diligence to figure out where it was between 1980 and 1995. Obviously, if the home shows a different location at any time, it's been moved.

Third, converted to real property. This is when the home has been permanently secured to the real estate and now transfers as such. Remember, these things are personal property until this is done. If it's not done, the land and home transfer separately.

The requirements for this change by the county, but in a nutshell, it needs to be placed on whatever the county deems is a permanent foundation, and then the proper paperwork is filled, making it lendable. Oftentimes, the homes we deal with are on a lendable foundation, but the home is still personal property - usually because the property taxes are much cheaper for just the dirt. If this is the case, just the paperwork is needed and it can be converted in escrow.

Fourth, double wides and single wides! I've heard recently that FHA started lending on single wides, but don't quote me on that because I'm too lazy to look it up. If that is still NOT the case… Double wide good. Single wide bad. At least speaking in terms of your end buyer's lending. And triple wide… that's a big *****.

Last, additions! For whatever reason, people that own manufactured homes in rural Nevada LOVE to add onto them. Because of the materials used in original construction, manufactureds have strict standards on attaching things to them - they need to be self supported. This goes for covered patios too. Again, doesn't mean it's not a deal, just something to be aware of. Either the addition was done right, it needs to be corrected, or it needs to be demo’d just to avoid any potential hang ups on the resale.

Obviously, there’s a ton more on each of these points, but there’s an overview of some things to look out for. I’ve wholesaled and flipped a bunch of these things that check all 5 of those boxes, wholesaled a bunch of them that don't, and wholesaled 3 or 4 of the mobile homes in parks… the Buyer’s list just gets smaller the more boxes you uncheck.

Hopefully that helps for anyone that has these in their area and now you’re able to grab another deal or two that you may have passed on.