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Rob, Home Buyer in San Diego, CA

how are mobile homes financed?

Asked by Rob, San Diego, CA Wed Sep 24, 2008

I'm just curious: how are mobile homes financed? Like a traditional SFH with 30 year amortization?
Even on an older unit? I would think the "lifespan" would hardly be 30 years.
Also, i realize there is usually a "space rent" involved. Is any portion of that tax deductable? or just the mortgage interest?

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0 votes Thank Flag Link Sat Feb 26, 2011
New mobile homes often are financed by the manufacturer. Or, in mobile home parks in which the management buys and places homes, often there's financing through the management. That's the case in a few communities near where I live.

On older units, buyers often pay cash. Either that, or they use seller financing. The seller might ask for 10%-20% down, with the rest financed over, let's say, 5 years at maybe 12%-14% interest. Problem is, many sellers (just as with conventional real estate) need all their cash in order to move on, and can't do seller financing. One variation (a so-called "Lonnie Deal") used by investors is to buy a home for cash, mark it up, and then sell it on terms. Example: An investor buys a mobile home for $6,000 all cash. He then sells it for $12,000 with owner financing. The seller got what he/she wanted--a cash sale. The new buyer gets what he/she wants--financing. And the investor gets a nice return on investment.

The land lease or lot rent is not deductible. That's property owned by the park, so they're entitled to whatever tax benefits arise from it. However, depending on the state you're in, you do pay personal property tax on the home, just as you would on an automobile. And--check with an accountant--that tax may be deductible. Finally, though you didn't ask, mobile and manufactured homes qualify for the 10% new homebuyer tax credit.
0 votes Thank Flag Link Mon May 25, 2009
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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Some lenders might still give you financing, but it would be with a large downpayment and a higher interest rate. The best thing to do would be to pay cash for it. And you would want to talk with an accountant about tax deductions.
0 votes Thank Flag Link Fri Feb 6, 2009
You can't get financing on an old mobile home; I've tried, at least not in IN
0 votes Thank Flag Link Fri Feb 6, 2009
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