{"id":57153,"date":"2014-05-09T11:00:49","date_gmt":"2014-05-09T17:00:49","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=57153"},"modified":"2024-02-17T15:55:24","modified_gmt":"2024-02-17T22:55:24","slug":"2014-05-09-buying-mobile-home-land-property-personal-residence","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/2014-05-09-buying-mobile-home-land-property-personal-residence","title":{"rendered":"Buying a Mobile Home and Land Property as a Personal Residence"},"content":{"rendered":"<h2>Background<\/h2>\n<p>My wife and I live in the suburbs in a 20+ year old, stick-built starter home in a great area and have lived there for nearly two years.<\/p>\n<p>We&#8217;ve both grown up in the suburbs but have both imagined moving out to a more rural area where we could have more land and fewer neighbors.<\/p>\n<p>With each mobile home and land property that I\u2019ve bought as an investment, I\u2019ve asked my wife if she would consider living there. The answer every time has\u00a0been \u201cno\u201d as either the home or the land\/location\u00a0has always turned out to be\u00a0less than ideal.<\/p>\n<p>Honestly I can\u2019t blame her. \u00a0From a financial standpoint, it would be awesome to eliminate or reduce our mortgage payment, but I\u2019m not sure that we would enjoy living in any of our investments more than our current home.<\/p>\n<p>With the homes that she has searched for I\u2019ve found major issues with each one, things such as to high of an asking price, poor location or too much repair work.<\/p>\n<p>Without being obligated to move it\u2019s been important that we\u2019re both happy with the next home we choose.<\/p>\n<h2>The Deal<\/h2>\n<p>The home we eventually decided on came across my desk in February 2014 as an investment property. \u00a0The seller had filled out one of my seller forms from my website.<\/p>\n<p>Here are the details of the home:<\/p>\n<ul>\n<li>\u201898 doublewide<\/li>\n<li>4 bedrooms and 2 bathrooms<\/li>\n<li>2100+ sq ft<\/li>\n<li>4 acre lot in a rural area but with excellent schools<\/li>\n<li>Asking price: \u00a0$50,000 but would take $45,000 for a cash deal<\/li>\n<\/ul>\n<p>This looked to be a nice home, but it didn&#8217;t fit our business model and I responded to the seller by email that we would pass.<\/p>\n<p>However, the emails kept bouncing back. \u00a0I was going to call her when the thought about this home as a potential personal residence crept into my mind. \u00a0After talking it over with my wife, we decided to check the home out.<\/p>\n<h2><b>Inspection <\/b><\/h2>\n<p>It was going to take a really nice mobile home to convince my wife to move into one, but this one definitely met the criteria. I\u2019d never seen a mobile home this well cared for. \u00a0Even the carpets looked to be in great condition for being 16 years old.<\/p>\n<p><em><strong>Related:<\/strong>\u00a0<a title=\"Which Mobile Homes Are The Best For Investing, Reselling, And Profiting?\" href=\"https:\/\/www.biggerpockets.com\/blog\/2014\/05\/02\/mobile-homes-best-investing\/\" target=\"_blank\">Which Mobile Homes Are The Best For Investing, Reselling, And Profiting?<\/a><\/em><\/p>\n<p>The lot sold me as the home sits at the end of a long private driveway and has a secluded back yard. \u00a0Also, even if we bought the home at their asking price our housing expenses would be cut in half. \u00a0We talked it over for a day or so and then decided to make an offer.<\/p>\n<h2><b>Negotiation<\/b><\/h2>\n<p>I made an offer at $42,000 that included all the appliances, costing costs, and repairing of the driveway. \u00a0(The home had a few driveways but only one was usable due to rain washing away the steep sandy driveways.)<\/p>\n<p>The seller couldn&#8217;t go lower than $45,000. \u00a0We eventually settled at $45,000 that included the appliances and repairing of the driveway as well as splitting closing costs.<\/p>\n<p>I probably could have done better negotiating, but we wanted the home and the property still appeared to be undervalued (around $65,000 according to my comps).<\/p>\n<p><em><strong>Related:<\/strong>\u00a0<a title=\"6 Rules for Negotiating your Next Real Estate Deal like Frank Underwood\" href=\"https:\/\/www.biggerpockets.com\/blog\/2014\/04\/02\/negotiate-like-frank-underwood\/\" target=\"_blank\">6 Rules for Negotiating your Next Real Estate Deal like Frank Underwood<\/a><\/em><\/p>\n<h2><b>Financing<\/b><\/h2>\n<p>The financing of this home blindsided me. \u00a0I figured this would be an easy decision for any bank.<\/p>\n<p>Here\u2019s why:<\/p>\n<ul>\n<li>My yearly W-2 income (not including investment income) exceeded the contract price of this home.<\/li>\n<li>We had more in personal liquid savings than the contract price of this home.<\/li>\n<li>The principal balance left on the mortgage of our current home was more than twice the contract price of this home.<\/li>\n<li>Good credit score (low 700\u2019s)<\/li>\n<\/ul>\n<p>(Before I get into the meat of it, let me tell a quick story. \u00a0The underwriter of the local credit union could not believe that my wife and I would move into a mobile home after living in a site-built home. \u00a0We had to sign a statement that stated why we wanted to move into a mobile home: more land and lower cost-of-living. \u00a0The negative stigma of mobile homes doesn&#8217;t appear to be going away anytime soon.)<\/p>\n<p>Back to the main point, banks are much more restricted now to federal regulations regarding lending decisions than they used to be. \u00a0The red flag that came up to the credit union and national bank I had applied to was my debt-to-income ratio.<\/p>\n<p>With taking out quite a bit personal debt that is used (and paid back) by my investing business, I was showing a considerable amount of debt obligations. \u00a0With the banks heavily discounting our rental income that was obviously used to meet these obligations (as well as provide us a profit), our requests were rejected and I was at a crucial pivot point.<\/p>\n<p>We could walk away or we could get creative.<\/p>\n<p>We chose to get creative by assuming the seller\u2019s mortgage on the land (principal balance around $23,000) and pay cash for the mobile home. \u00a0This strategy allowed us to buy time so that we could eventually refinance the property with a bank once we had paid down my personal debt or found a private lender who could assess our situation like a person instead of a robot. \u00a0As you can see, I\u2019m still holding a grudge on those rejections.<\/p>\n<p>I\u2019ll keep you updated with how we\u2019re enjoying country living in our double wide.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Background My wife and I live in the suburbs in a 20+ year old, stick-built starter home in a great area and have lived there for nearly two years. We&#8217;ve [&hellip;]<\/p>\n","protected":false},"author":1303,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4242],"tags":[],"class_list":["post-57153","post","type-post","status-publish","format-standard","hentry","category-mobile-homes"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/57153","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1303"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=57153"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/57153\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=57153"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=57153"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=57153"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}