Owner Financing – How to Finance Older Mobile Homes

mobile-home-290Have you have ever tried to finance a mobile home manufactured before 1976? You probably felt like it would be easier to sell snow cones in Antarctica! Fortunately owner financing and private mortgages offer creative alternatives for hard to finance mobile homes.

When purchasing a new mobile home financing is often offered through the dealer or retailers.  Approved Federal Housing Administration (FHA) lenders are an option for mobile homes that meet the guidelines, including the age restriction of built on or after June 1976.

Manufactured homes permanently attached to a foundation also have access to financing as a mobile and land package, provided credit and equity are acceptable.

But the question still remains, “Where can older manufactured homes, singlewide mobiles, and buyers with less than perfect credit look for financing?”

Private Investors
A private investor, independent bank, or credit union may provide alternative financing options.  These are generally local investors or in-house portfolio lenders that are familiar with the area and comfortable with the risk at a lower investment exposure in exchange for a higher rate of return.

Owner Financing
Asking the seller to carry back a note is a common way to finance the purchase of a mobile home.  The owner acts as the bank by accepting payments from the buyer over time.  This avoids meeting the more restrictive bank mortgage requirements.

While interest rates are likely higher with owner financing it can provide a viable solution allowing the buyer to take advantage of the affordable housing mobile homes offer.

Some sellers prefer a lump sum of cash today and are reluctant to collect payments over time with owner financing. If a seller prefers cash now they can consider temporary seller financing and then sell all or part of the payments for cash to a note investor on the secondary market.

Manufactured homes make up an average of 8% of all home sales according to the US Census Bureau.  There are some states, like North and South Carolina, where that percentage nears 18%.  Many of the states with mobile home sales over 10% are also the same states that rank higher for overall owner financing.

This just proves what most note buyers and note brokers have known for years.  When there are properties or buyers that are hard to finance people turn to owner financing.

As Featured On EzineArticles

Author: Tracy Z. Rewey has been making money full time with owner financing for over 20 years.

Article Source: http://ezinearticles.com/

About Tracy Z

Tracy combines her knowledge of cash flow notes with the power of marketing online to help grow your business! She can be reached at Tracy@NoteInvestor.com 1-888-999-7905 or at Exposure One Marketing.

Comments

  1. Diane Fitzgerald Watson says:

    We have an 1976 double wide mobile, financed by wellsfargo, and even refinanced by them. We spent a lot of money to refi and pay off bills, and now they said it was built a month too soon. We put on new roof, Windows, all stainless appliances, both remodeled baths, all new floors, etc., advertising after 9 months of paperwork, we were denied. We’re on an 8 pointfoundation, and have been converted and pay taxes as real property. What can we do
    ..how can we refi to pay bills, or how do we sell. When I purchased this, I had no idea of these regulations, as it was conventionally financed! Any advice appreciated.

    • Hello Diane, How very frustrating. You might try another lender or credit union that has a local presence. A private investor or private lender might also be an option. You can usually find these in your area by searching online for a Real Estate Investor Club in your city or county. Call the local mobile home dealers to see if they know options for financing the older mobiles. If you are selling the property then providing owner financing is also an option (but that doesn’t help right now if your intent is to refinance). Hope that helps!

  2. We have a 2001 Double wide set on an engineered foundation and on 9.9 acres that we have had on the market. We had some recent buyers back out. We obtained all the documentation they had since they had pursed a FHA loan. We appraised at $175k and have it on the market at $135k. I have been considering owner financing it. If I owner finance at 135k at say 8% what would be the likely return on selling the note that an investor.

    • Hello Jake, An offer from an investor will vary based on the down payment, credit of the payer, note terms, condition/value of property, and number of payments made. While the rate is negotiable between you and the buyer an interest rate of 10% would be preferred on a mobile/land transaction. A lower interest rate will result in lower offers. Be sure to get a sizable down payment and make sure the buyer’s credit is good. There are some helpful tips regarding those items here: http://noteinvestor.com/cash-flow-business/what-determines-mortgage-notes-value/

  3. Shirley Traskos says:

    I am looking to finance a mobile home which includes the land but having a difficult time. Do you know any investors that can help me out? I am on ss which is a good amount and looking for a job at the moment. I am looking in the price range of 35,000 to 80,000

    • Hello Shirley,

      The investors that we work with purchase the seller financed notes at a discount (rather then make loans). You might consider asking the seller of the mobile home to provide owner financing to facilitate your purchase.

  4. Hello,
    I’m selling my 1986 double wide manufactured home with owner finance and I’m trying to figure out how much interest I should charge. They are financing about 30,000 and putting $25,000 down. I called the local bank and they would give a 10 year 7.75% interest. I know I should get a better rate than them, but how much?

  5. Tracy,

    I am a mobile home investor. We rehab, then sell as rent-to-own. I want to look at owner finacning my mobile homes. Would you have any resources you could share as to what I need to be able to do this? I know I will need a promissory note, but do you know where I can get one for personal property (MH’s)? I also know that the lien is recorded on the back of the title at the DMV. Are there other ways the lien must be recorded? What about the ins and outs of repossesion?

    • All great questions Steve! Our course is primarily geared towards mobile homes that also include land. Of course many times the mobile home is still titled so you have to go through the process with the DMV (personal property) and the county (real property) to perfect the lien. It can also vary by the state you are in. There are samples of the mobile/land deals in the Finding Cash Flow Notes Training. There are also a couple of good resources out there on investing in mobile homes only. One that comes to mind is by Lonnie Scruggs. Sadly, he is now deceased but to my knowledge his books are still available.

  6. I purchased a 1967 trailer with a large addition on it almost seven years ago. It doesn’t even really look like a trailer when you look at it from the road. It also has a two+ car garage attached to it. I have a buyer lined up for it, but we cannot find finanancing ANYWHERE. Everywhere has ONE stipulation that we can’t meet – either the HUD sticker is missing (since there ISN’T one due to its age, I can’t meet that) or the foundation that it’s on isn’t the kind that they want (it’s on piers.) I’m at my wit’s end – even then lenders that I go through now that carry the mortgage will not finance it. My realtor and myself have exhausted pretty much every local lender that we can think of and then some. Any help would be greatly appreciated!

    • Hello Sara,

      With older mobile homes you may need to consider offering seller financing. You could also look for investors that advertise they buy mobile homes for cash and see if they might buy and then provide the financing. Networking with a local real estate investor club can also help you find a private investor willing to provide the financing or buy a seller financed note after closing. If you decide to offer financing be sure to consult with an attorney and consider the buyer’s credit rating, income/expenses, down payment funds, and other important underwriting factors.

      Hope that helps and thanks for reading and commenting at NoteInvestor.com!

      Tracy

  7. Wesley Taylor says:

    Sir,
    We are senior citizens (in our seventies) wishing to purchase an older mobile home w/land (in a senior park). Problem is, older MH financing is almost non-existent: Our (both) income is derived from SSA, but are needs are small and so we would be able to handle a reasonable monthly payment. What to do?

    Best regards,

    Wes & Bea Taylor

    • Hello Wes & Bea Taylor

      With older mobile homes your best option is to ask the seller to finance the property for you using the installment method. You could also look for investors that advertise they buy mobile homes for cash and see if they might buy and then provide the financing. Networking with a local real estate investor club can also help you find a private investor willing to provide the financing. If you have a package put together that includes your credit rating, income/expenses, down payment funds, and background information it will help convince either the seller or an investor you are a good candidate for seller financing.

      Hope that helps and thanks for reading and commenting at NoteInvestor.com!

      Tracy

  8. My boyfriend and I are house-shopping and recently found a home we absolutely love. It looks nothing like a mobile home, but apparently it started out as one. So half of it is still a mobile home (although it’s been redone completely) and the other half is not mobile home materials. I have two questions for you. 1) Is there any way of getting a home reclassified so that it’s no long considered a mobile home? This home looks nothing like it and the only remnant of mobile home construction is the steel frame that is under half of it. 2) Is it a huge financial risk to purchase a home like this? Our realtor said it was… because if you decide to sell it sometime in the future, it would be that much older and that much harder to finance. Is that true?

    Thanks,
    C

    • Hello Carrie! We have bought quite a few seller financed notes on the kind of property you described. Mobile homes can be an affordable housing option in many areas. However, they come with some caveats. Your real estate agent is being honest in bringing them to your attention. Properties classified as mobile homes have a hard time holding their value and tend to depreciate rather than appreciate. They are also harder to get financing on, which is part of the reason we see so many being owner financed. There are sometimes ways to have a mobile home reclassified as real estate if they are permanently attached to the property and meet certain qualification – However, this differs state by state. I suggest speaking with your real estate agent, a local title company, and/or an attorney in you area for how it works in your state. Whether buying a mobile home makes sense for you is a personal decision but it is good that you are becoming knowledgeable and weighing the risks.

  9. I’m selling my mobile in Prescott valley. I’ve got an offer but I have to carry the note.
    I need to buy a site built or mobile in the Mesa area… OWC
    Can you help me out here??

    joe

  10. judy c murphy says:

    My daughter has a 1985 mobile home with a full, stem to stern, two-bedroom, living room attachement built onto it. She is currently financed with Tower Loan, in West Monroe, Louisiana, paying an almost 28% interest rate, which she’s been paying for eight years! She wants to do some additonal work to her home, but Tower Loan isn’t cooperating. Is there anywhere she can go for refinancing, at a lower rate?

    • Hello Judy,

      It is hard to get financing on older mobile homes, especially if someone is looking for cash out of the refinance. A local private investor might refinance the note depending on the equity and credit. Your local real estate investor club is a good place to locate private investors for this type of deal.

      Thanks for reading and commenting at Note Investor!

Trackbacks

  1. […] Fortunately sellers and buyers can turn to owner financing and private investors when banks say no to mobile home loans. Learn more about these options in the article entitled: Owner Financing – How to Finance Older Manufactured Homes. […]

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