Advice for Double Wide Flip

[Joe Pitrolo]

I just purchased a 4 bed 2 bath 2004 Mobile Home on 1 acre with a Septic system and permanent foundation.  It had a 100k mortgage at one time.  I am expecting to have around 25 to 30k in it and probably try to flip or rent to own, aka Lonnie Deal. 

    I am including some pics. I was a winning bidder and was very surprised that the unit was not destroyed inside, but mainly needs new flooring.

    Looks like laminate in the Kitchen.  With a manufactured home, for flip purposes, would you go with laminate or hard wood?  Carpet in the bed rooms?

  It looks like I will need to do some landscaping, gravel driveway, crush and run and some shrubbery.

My realtor said that she thought banks would have tougher lending standards for manufactured homes and FHA may not be available?

 I would also consider selling about 10% under value to get a quicker turnaround.

The Septic system could be a land mine if its inoperable, hopefully not.  Also, I'm not sure about the heating and Cooling system yet.

[Deb Perisian]

I will chime in.  I'm a former lender  (4 states, 30 yrs, lots of different lender hats), and now a realtor licensed in ID and WA.  I can tell you that manufactured housing does not have to be new in order to qualify for financing.  In my lending life and still as an investor and realtor, seems like everyday I use the phrase "money comes with rules attached" for absolutely every type of housing and also every type of buyer.  There are so many loan programs, each for a specific purpose.  It's the fit that matters.

So be careful about generalizations. FHA, VA, USDA and conventional loans are all available for manufactured DW homes, new or used. If you - or your buyer - find this not so, it is the LENDER your dealing with, some lenders just don't. Talk to other lenders. Yes, they must be owner occupied. No institutional money (the FHA, VA, Conv or USDA fixed rate loans everyone seeks) is available for single wide nor for DW homes older than 1978. HUD Engineering standards changed that year, it was also the end of 2x2 framing. The condition of homes newer than 1978 will determine if they still qualify for financing, plus many lenders will have their own 'risk overlays' in addition such as they may require the home be even newer than 1978, some limit them to 15 or 20 years old. Lenders can have overlays on top of the investor (FHA, VA, ETC) guidelines because they carry the risks of loans until they can sell them, plus sometimes they choose to keep them and service them. As a category, historically there ARE higher default rates on manufactured housing, so they have their own loan programs that aren't quite as sweet as 'vanilla' stick built loans, but hey, it's still a big universe.

Be careful of a DW that has been moved more than one time - that time being ONLY from the dealership that sold the NEW home to its original site. Loan files get papered with proof the home was NOT moved more than once. Only VA has exceptions to this and may consider a 'twice moved' DW home.

If the HUD data plate is missing, damaged or painted over, there is a national service available that can cross reference with info from the data sheet and other facts. Any lender dealing in manufactured housing will know this and be able to advise, (it's one of the very first things I'd want to know). This can facilitate permanent financing where it otherwise would be a dead end. Cost of the service was $100-$200 last I knew, the lender will order. Again you'd want to know this before you buy the home, in my book. At the very least try to know the dealership that initially sold it - most keep great records. Oregon even has a state division devoted to keeping track of mobile homes!

Manufactured housing will also require a structural engineers report (lender will order).  If anything has been permanently affixed to, or modifies the original 'skin' of the home, it won't be good news for the bank loan.  So things like decks or porch roofs that have been tied to the framing of the home rather than being self supporting can be a problem - and a financing deal killer unless they can be removed or modified  to be free standing.  Room additions that do the same thing, ditto.  

If typical finance avenues don't pan out, always check with credit unions.  They are far friendlier with both single (yes) and DW homes.  They may or may not use the institutional investors, so be ready for some new criteria.  Single wide homes will ALWAYS be portfolio money, since there is no institutional financing for them.  

The bottom line is there are a LOT of ways your buyer can finance these homes, but there are also pitfalls to know.  As the seller,  if you do more than a few manufactured, it will pay big dividends to buddy up to an ace lender so you can learn what to steer clear of whenever possible BEFORE you buy.   

Don't presume all manufactured housing is built 'cheap'.  That is old news.  2x4 and 2x6 construction is mandatory, and drywall and midrange or better finishes are  most common.  Economy finishes are available too (like those lovely 4x8 sheets of wall board with hundreds of trim strips).   But the structural codes these are built to today are a far cry from the 70's and the 80's.  

And finally, manufactured and modular are two different things.  If it arrived on wheels, it's manufactured, has (or had) a  vehicle title, and is financed under special programs for manufactured homes - because of its default risk.

If it arrived on a flatbed truck, it was rolled onto the foundation and - for financing purposes - it is the SAME as a stick built home.   It was simply pre-built.   It may look an awful lot like manufactured, usually due to roof pitch, but It qualifies for ALL the typical loan programs that DO NOT deal with manufactured housing rules.  In fact  such homes are often of superior quality because they are built in climate controlled indoor plants rather than lots of inclement weather.  In my area we have a very high end modular company that, in addition to some pretty fancy homes, also builds multi-story hotel systems and commercial buildings - for a pretty penny.   You will of course, need to prove its origin in order to prove it is modular.

I hope this sheds some light and helps everyone appreciate the ups and downs  of manufactured housing.  Loan programs do evolve and shift over time, and we all remember how they tighten up in bad times and loosen up in good times,  another good reason to buddy up to your ace lender friends.

Deb Perisian       

Investor, realtor, WA & ID. (Coeur d'Alene)