financing on a log home

[Scott Lepore]

I have a lead on a large log home about 45 minutes southeast of Denver. It seems to be a good deal at the price i could get it for but there is a big butt in the way; There are no other log homes for miles. The lots are huge and spread out so its not like it doesn't fit in because you don't even see other neighbors' homes, but my concern is that a lender will need relevant comps when its time to flip it and when I find a buyer they won't be able to get a loan on it. It would have an ARV of around 1.2MM and other homes are in that range but are all traditional construction. I would appreciate any advice on how difficult this may be and if anyone has had experience with this. I plan to call a few banks as well but would appreciate any feedback here as well. Thank you.

[Kevin Luttrell]

The comps do not necessarily need to be log homes, appraiser will just need to make the appropriate adjustments for the different design and appeal. Here is the insert from Fannie Mae concerning this:

Unique Housing Types

In the appraisal and appraisal report review processes, special consideration must be given to properties that represent unique housing for the subject neighborhood. Mortgages secured by unique or nontraditional types of housing, including, but not limited to, earth houses, geodesic domes, and log houses, are eligible for delivery to Fannie Mae provided the appraiser has adequate information to develop a reliable opinion of market value. It is not necessary for one or more of the comparable sales to be of the same design and appeal as the property that is being appraised, although appraisal accuracy is enhanced by using comparable sales that are the most similar to the subject property. On a case-by-case basis, both the appraiser and the underwriter must independently determine whether there is sufficient information available to develop a reliable opinion of market value. This will depend on the extent of the differences between the special or unique property and the more traditional types of houses in the neighborhood and the number of such properties that have already been sold in the neighborhood.

When appraising unique properties,

• if the appraiser cannot locate recent comparable sales of the same design and appeal, but is able to determine sound adjustments for the differences between the comparables that are available and the subject property and demonstrate the marketability of the property based on older comparable sales, comparable sales in competing neighborhoods, the existence of similar properties in the market area, and any other reliable market data, the property is acceptable as security for a mortgage deliverable to Fannie Mae;
• if the appraiser is not able to find any evidence of market acceptance, and the characteristics of the property are so significantly different that he or she cannot establish a reliable opinion of market value, the property is not acceptable as security for a mortgage deliverable to Fannie Mae.
• https://selling-guide.fanniema...

[Dave Skow]

@Kevin Luttrell- good  job idenifying the issue .....if the  future  buyer  will have  cash - great ...if the  future  buyer needs to  rely on a  " jumbo " loan - this  type of property  may or may not  be acceptable ....every  jumbo program / investor  will have  a  list of  acceptable and  non acceptable  type of  properties ...if a  lender  can  lend on log homes - then the issue  becomes  the comparables and  as  noted on the prev  reply - the appraiser  ideally  will need to include a like king sale but  if there are not  any - then the  appraiser  needs to  adjust and  explain  for this  issue .......if the  future  buyer  is able to use a  conventional ( non jumbo ) loan - then the issue is simply getting the  appraisal  issue  addressed....if the  down payment  is large  enough - there is  an  outside  chance that a PIW ( prop info waiver ) or  appraisal   waiver  might  trigger  when  underwritten 

[Steven Goldman]

It has been our experience that log homes are hard to finance. We know a few companies that will entertain them. I am not sure what the appraisal rules are regarding value adjustments on log homes. You might want to find a log home builder and ask them who is writing loans on log home properties. Good luck. 

[Carlton Blair Kutas]

Sorry to add to the problems, but keep in mind log cabins can sometimes be a huge burden to insure as well. Would be worth getting a quote for acquisition to make sure those numbers are worked in.