Mobile home park 1031 exchange for mobil homes.

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Mobile home park 1031 exchange for mobil homes.

Regina Weitz
Member since 2021 · 1 post · 0 votes

I’m selling my mobil home park in Alabama.  I have another mobil home park in Virginia that I’ve owned for a number of years.  Can I use a 1031 exchange mechanism to buy mobil homes to fully populate my mobile home park in Virginia?  Thank you for your advice. 

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
5y

You’ll need a 1031 exchange expert but my first guess is no. The funds must be used to buy real estate and I don’t believe they are considered real estate. I don’t know if you’d be allowed to build a real home to rent out on property you already own, that would be another question for the QI you choose or at least interview. 

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    5y

    You’ll need a 1031 exchange expert but my first guess is no. The funds must be used to buy real estate and I don’t believe they are considered real estate. I don’t know if you’d be allowed to build a real home to rent out on property you already own, that would be another question for the QI you choose or at least interview. 

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    5y

    @Regina Weitz, You want to think of the mobile homes the same as 2/4s and roof trusses.  By themselves they are lumber not real estate.  When attached to the land they become part of the real estate.

    So the way to include mobile homes in the park would be to do a reverse exchange.  Your QI for the 1031 takes title to the new park and holds it while it is improved (by adding mobile homes on the lots).  Once this is done you complete your 1031 by taking title to the new park which is now worth the cost of acquisition plus the added mobile homes which are not part of the real estate.

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  • Mike ReynoldsPro Member
    construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
    5y
    Originally posted by @Dave Foster:

    @Regina Weitz, You want to think of the mobile homes the same as 2/4s and roof trusses.  By themselves they are lumber not real estate.  When attached to the land they become part of the real estate.

    So the way to include mobile homes in the park would be to do a reverse exchange.  Your QI for the 1031 takes title to the new park and holds it while it is improved (by adding mobile homes on the lots).  Once this is done you complete your 1031 by taking title to the new park which is now worth the cost of acquisition plus the added mobile homes which are not part of the real estate.

    Wow, that's good info. Did not know that. 

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  • Rachel H.
    San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    5y

    @Regina Weitz You may want to discuss this with a 1031 exchange intermediary before doing anything. Get a few different opinions before making your decision. Also, check with your local manufactured housing association for resources and help as well. Best of luck! 

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    5y

    Exactly right @Mike Reynolds.  Unfortunately @Regina Weitz already owns the new property. And you can't exchange into improvements on property you already own without some very risky manuevers. But a reverse into a MHP with improvements, or tiny house campground like we did last year can be great for adding those living units. Same as a SFR and adding an ADU or apartment above a garage etc.

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  • Paul MoorePro Member
    Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
    5y

    @Regina Weitz you got some good advice from @Dave Foster. I recommend you call him and let him explain the options. He has been a great resource for me and many others I’ve sent him too. Good luck!

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