Mobile Home Financing/Pay cash?

Question

I am brand new to investing but I'm very excited to get started one day soon!

Before that though I need to secure my primary residence and savings. My spouse and I recently sold our home and profited $118k. We found 6 acres of land with a single-wide for $115k total to purchase from a family friend. We are living with family until we figure out the best allocation of our money. We will eventually build a home on this land and rent out the mobile home. Here are the scenarios we've discussed.

1--We pay outright for the single wide and land but lose our liquid capital and will be left with little savings. In this case though we will not have a mortgage and can save funds quickly for our first investment property.

2--Finance a portion of the property with a mortgage type loan and pay a large down payment and keep a good chunk of liquid funds in the bank to invest with. We are having a tough time finding financing though, so this seems problematic.

3--Finance a portion of the property with a personal type loan and pay a large down payment and keep a good chunk of liquid funds in the bank to invest with.

4--Lastly, we've considered asking the seller who is a family friend and seems reasonable for seller financing. We'd give him a large chunk down then draw up a contract for the remainder of the funds.

Please give me your thoughts and input! Time is of the essence, and we don't want to make a bad decision that could hinder our financial future!

Thank you!

Keri Lamb · Answer

Hi Katie! I am all for exploring options with seller financing, as the banks will always be there as a possibility on your future investment deals, but the opportunity for seller financing may not! In agreement with previous posts, I would see what you can work out with the seller that may be mutually advantageous to both parties!

You did not mention whether you plan to occupy this property right away after you purchase it or not. I am curious to know more about your plans as far as that goes--are you intending to live in the singlewide or elsewhere on the property while you build? This probably won't affect your ability to get seller financing but may change the conversation you have with a traditional bank!

Rachel H. · Answer

@Katie Helms If you're working with the seller already, you may want to look into seller financing to see if you can negotiate a deal with favorable terms that works for both you and the seller. If you can, then that's a viable route to go.

If not, you can look at other options that you mentioned as potential back-up scenarios.

Hope that helps. Best of luck with the deal!

Steve Vaughan · Answer

Hello @Katie Helms

After a rough perusal of your situation, I would try for seller financing.  $15k down, carry $100k with right to have them subordinate to a bank lender after you improve it enough for a bank to lend on it.

Or pay cash, then refi.  Mobiles on land is an under-served marked that seems tough to purchase, but easier to refinance.  May have to season 12 months. This would be less optimal of course since you need your funds to improve.

Have you asked local banks if they could help lend for this?