Agent2Agent in New Hampshire>Question Details

Michael Copp…, Real Estate Pro in Portsmouth, NH

Mobile Home financing?

Asked by Michael Coppola, Portsmouth, NH Fri Mar 14, 2008

I have a listiong and a buyer looking to sell and buy a 1999 single wide mobile on 5 acres in Middleton, NH. We can't seem to find anyone who can finance this. Any suggestions or names?

thanks

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If 5 acres is normal for the area, and the single wide is permanently fixed to a foundation, why not consider FHA financing. Then someone can purchase it with 3% down, or you can offer seller assistance too...to get that sale.
0 votes Thank Flag Link Tue May 20, 2008
Order/buy books by Lonnie Scruggs. They're crudely written, but he knows exactly what he's talking about.

Real short answer to your question: It's usually private financing. Most lenders won't lend on them.

In fact, because of that, Scruggs has developed a strategy that real estate investors call "Lonnie Deals." With an investor in the middle, here's (in a nutshell) how it works: Owner has a mobile home for sale for, let's say, $10,000. But the owner discovers, as you have, that no one's willing to finance them. And the people who want to buy don't have $10,000 in cash sitting around. So the investor makes an all-cash offer, for as low as possible. Let's say the investor pays $7,000 in cash for the property, and spends another $1,000 fixing it up--new skirting, etc.

The investor then advertises the mobile home for sale, without even mentioning the price. Instead, the investor marks the home up to approximately double what he's put into it, which in this case would be $16,000. He calculates payments on an interest rate of around 12.5%. That can vary, but mobile homes, like cars, are personal property and generally are titled by the state. So you find an interest rate that someone might be paying for a used car. On a 5-year note, that'd be $360 a month (plus whatever the ground rent is for the park). The note can be longer or shorter, to accommodate the buyer.

But calculate what the actual return on investment is for the investor. He's getting $360 a month on an $8,000 investment. That's a substantial rate of return. And Lonnie boosts the return further by requiring some downpayment. Let's say a $2,000 downpayment on the home. So now, the investor has $6,000 into the deal. He's collecting $315 a month ($14,000 loan @ 12.5%) for 5 years. Those numbers make it very attractive for the investor.

If your seller doesn't need all of his cash out, he can offer the mobile home on terms. Lots of sellers do. If he does need all of his cash out, maybe you know an investor who'd like that sort of return on his investment. (If you can't find anyone for that sort of deal, feel free to contact me.)
0 votes Thank Flag Link Fri Mar 14, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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