Approaching my first deal?

Question

As I was practicing running numbers through multiple properties in my market, I stumbled upon a deal that I think is a hidden gem. The main approach is to turn this into a rental property. From the looks of it, it is a mobile home that was built this year and ready to go. What important questions should I ask the seller besides what's provided on Zillow? And what is the difference in rental prices for mobile homes compared to standard homes.

The plan is to take out a HELOC for 20,000 to cover 20% of the down. I am willing to go up to 40% if that will increase my chances of securing the property. What I'm factoring into my monthly payments is mortgage, property tax, home insurance and the HELOC payment. Am I missing something? How else can I better my chances to securing this property?

I have cash reserves that will cover potential vacancy for some months. If I secure this property, creating a lease and tenant screening will be my top priority before letting any one in.

Besides the questions I asked, please provide any input that you see beneficial in my situation. Thank you so much BP

Michael Pison · Answer

@Jennifer T. Thank you for sharing your experience! This information is useful as I prepare a DP on my first deal. However FYI, I did not follow up on this deal because I did not know that you have to pay rent for the lot space you take up. Adding that rent into the equation totally threw off my chances to profit.

Jennifer T. · Answer

i'm not in the mobile home niche so, keep that in mind. But I've heard around BP that getting financing for a mobile home can be a lot more difficult.

I've used funds from a HELOC for a DP before with two different lenders. But I'll give you some warnings about that. Banks/lenders don't like it. Some of them require DP funds to have been "seasoned" in a more typical checking/savings for 6 months or longer. But not all. When you are speaking to potential lenders, bring up you want to use your HELOC for the DP in the first few minutes so you can cut the conversation short if they require seasoning that is too long.

Even the two different lenders I used required at least 30 days of seasoning. But in the beginning both loan officers "needed to check on that, because we really prefer to see the funds in a demand deposit account." Right after I was given the "we don't like it, but we'll do it" green light, I took the money needed for my DP out of my HELOC and put it in my savings account to just sit there while I went through the loan process. By the time we got to closing, the money had been in my account for at least 30 days, albeit barely!

Approaching my first deal?

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