How Do You Finance A Manufactured Rental Home?

Question

Hi everyone,Does anyone know a good way to finance a manufactured rental home? Fannie Mae no longer finances them unless they are your primary or secondary home. The home I own was built in 2005, has a poured concrete foundation, a 2 car attached garage, sits on .41 acre in a good neighborhood, and has been rented with no vacancies for over 3 years now. The home is currently financed through a private lender on a short term loan and I will need to find a new lender shortly. I cannot move into the home to make it my primary as it is currently leased. I can't possibly be the only person who has had this problem. Any thoughts/ideas would be appreciated!

Joshua D. · Answer

@Adam D. great question! I have several of these as well and love them as rentals because my purchase price was WAY lower than stick built and the rent for close to the same amount. However I have stoped buying them just because of the lack of long great long term financing. I would encourage you to look at many lending options, personally I would not start with what @Rick Pozos suggested, although that may come down to that being you best option. I would start by talking with 5-10 more banks and asking about their "in house" products. They usually run us about 5% interest and are 20 year amt. This way you have something a bit more permanent than renewing private lenders every few years. When hunting for banks think small. Smaller the bank the better usually. Credit unions also can offer good loan products.

Boyd McClean · Answer

Local Credit Unions may finance. The issue you have is age of the home.21 Mortgage and Green Tree Financial usually have a cut off point of 12 years.Go to your local REI groups and ask if there are any members whofinance mobile homes. Expect a higher interest rate than conventional financing.Look to see if you have someone in your area dealing in used mobile homes otherthan a dealership. They usually know of private lenders. Because of your location youmay have to travel a bit but find a Meet Up Group that is focused in IRA's and network.

Adam D. · Answer

Well, after a ton of phone calls and being rejected more times that I like to remember, I believe I've found a small local bank that will portfolio the home. Thanks for the ideas and encouragement everyone. I sincerely appreciate it!

Adam D. · Answer

@Joshua D. I did try a few local banks asking if they had portfolio loans. The one told me they wouldn't want to spend their in house funds on a manufactured home. Another told me that they weren't experts on manufactured homes and to try a couple other banks. Then another portfolio lender told me they were not able to fund manufactured home... But maybe I need to keep trying like you suggested 5-10 banks. There has to be some out there who will finance manufactured rental properties.

Adam D. · Answer

@Rick Pozos You're absolutely right and I'm working on it. That's why I'm here now! Up until this point the folks I'm networked with locally had all the answers I needed; however, no one seems to have a good solution to financing manufactured rentals. So I thought I'd check with the Bigger Pockets community and I was surprised I couldn't find much information on the topic. Thanks for the ideas. I hadn't thought about suggesting a self directed IRA to private lenders.

Rick Pozos · Answer

After looking at your profile, I see the problem. You have been on here for almost 3 years and you only have 2 colleagues. NETWORKING is the key. You should have lots of friends who you meet with regularly who would be able to answer these questions that you have. Everyone helping each other is how you make things work out for everyone. Some people know something that you dont, and you know something that they dont.But to your question now.You found a private lender once. Was it a friend or family member?? Find another one to do the same. Or you could ask this lender if they want to refinance for another year or two. Just make sure that you are amortizing the loan so that you will end the year with a lower balance than when you started. Ask everyone that you know if they have money in a CD that they want to get a better interest rate on. How about asking at the local real estate investor group if there is a hard money lender that will lend on mobiles or "Manufactured Homes".Personally, I have my sister, brother in law and a couple of friends who finance most of my properties. I ask everybody that I know if they know anyone who has a 401k or CD or IRA or any retirement money that they want to get a great return on. Try to get them to move money to a self directed account with Quest IRA or one of the other companies who do this.Good luck!!!