Mobile home Lots

13 Replies

Need to get some of your wisdom on this situation I'm going through.  I am purchasing a lot that allows mobile homes.  I want to owner finance them in order to make them affordable to buyers for a quick sale.  What type of paper work/documentation do I need in order to make the deal legal?  Do I need to hire a lawyer?  Also if they are making payments do they get the deed when they give me the down payment or do I hold on to it until they pay it off?  And if I keep the deed will they be allowed to purchase a mobile home from a dealer if they do not have the deed in hand? 

Anybody ever tried this strategy before? If so, please respond.

Hi @Michael Swanigan  ,

I do not have any experience with mobile homes on private land. However, I know some people seller finance land lots and traditional building by using Land Trust. I have basic knowledge about land trust. 

If you use land trust, you do not transfer deed on the buyers name until they paid off the loan. 

You are just selling the mobile homes and then renting them the land correct?

Get Lonnie Scruggs book, Deals on Wheels and it will have the paperwork you need in the back of the book and you can just copy it onto your computer. You do not need a lawyer.

If you do lease to own they do not get the title until the mobile home is paid for in full.

So I would hold off just a bit prior to buying a book and copying any finance forms. 

Background- When lonnie deals were done prior to the new lending laws- I had hundreds of them. Back in the day- I just financed homes and did not own any parks. Fast Forward- I have 5 parks and in my parks we use a lease - option to get people into the homes and at eh end of the lease- they can buy them. You need to do a little research in the state your doing this in, as you will probably need to be licensed. I take note your from Texas, and while I am from Colorado I have two parks in Texas and they have some licence requirements, document requirements etc... you have to visit Austin, take some classes, pay the state and the insurance company and only then can you sell a home. They will nick ya if you even advertise a home for sale without being licensed. 

Anyway- no matter what state your in, if you are financing the home, and using it as security you need to jump through the SAFE act stuff- which will probably knock out about all of your tenants from being able to finance the home. 

Do not just get an old lonnie scruggs book, copy the financing papers and do deals. If your selling for cash- you probably must be licensed and you will probably need to follow some state rules and regs regarding the sales.

@Jim Johnson  

Very sound info Jim.  I don't care if a book was written yesterday, I'd still check with a lawyer before using the kind of contracts it takes to do this deal.

That said, did you have any recommended reading on mobile home investing?  The BP podcast a few months back peaked my interest.  I've already ordered Deals on Wheels from La Nae's suggestion.

I'm also curious how you run two parks in Texas.  I owned a few dozen mobile home's out of state before and let's just say it didn't end well.  I found mobile homes to be very management intensive and not being able to stay on top of them made it very tough.  Do you have onsite management that you trust?  Do you just use a local management company?  Do you only invest in certain types of parks like senior living where you don't need so much active management?  

People buy and sell mobiles every day without a license in Texas. Owner finance, lease option, cash, etc.

What kind of license ?

I'm guessing mortgage? I believe you get 5 per entity in Texas. 

Get an attorney though. Not just an attorney, but a good one. Many attorneys don't really know nearly enough-in my opinion. I have found that we often times have to personally train attorneys and CPAs. 

@Darren 

Darren,

I do not really know any good publications on mobile home investing at this time. The aprt of the appeal, the financing is very hard with the safe act in place. Many parks only allow the owners to own the homes and do not want rentals. That makes things tough for the home owners. 

I have Parks in Texas, Nebraska, Colorado and Indiana. I have onsite managers at all of the parks that I have trained and manage. At one point I was presenting / teaching a segment at the bootcamp put on by the mobile home park store. Now I consult with potential buyers and operators of parks, as well as run my own parks. 

As for selling mobile homes in Texas- you can sell or broker 2 homes in a 12 month period in Texas without being licensed. I know the word 'entity' is used in the post. I am just guessing if the same person owns the entity's the spirit of  the law is being broken, and maybe the actual law. But everyone makes their own risk choices. I am pretty risk adverse and choose to comply and not seek loopholes. 

Does anyone have a lease agreement for renting out a lot to a mobile home that I can review?

Michael, did you end up getting the information you were looking for? Would you mind sharing that? Also, would you mind saying or private messaging where in Texas you can buy a lot that allows for mobile, manufactured homes?

We use a loan originator to comply with the Dodd-Frank/SAFE issues of selling more than two houses in the 12 month time frame.  You can sell as many want as long as they go through a finance review by a licensed originator.  Also gives you an unbiased third party to verify their ability to pay the loan.  Our mortgage broker will do the deal for $750-$1000 which gets charged to the buyer.  There are cheaper places but I trust our originator and that is worth some extra cost.

We also close at a title company to make sure everything gets handled correctly.  Once you get the first set of deed/lien paperwork drafted by a lawyer they are pretty much copy/paste from there on out.  The title company has found several things such as easement issues that we did not find on our own so was well worth the cost.  There are a lot of things needed in the lien document such as property insurance requirements, etc. as well as clarification of what happens in case of foreclosure.  Believe me, sell enough of these things you will get a foreclosure some day so better to have that put in up front. 

Holding the deed in your name is not needed as long as the lien is clear.  We also use a loan servicer which collects the escrows and handles the year end statements.  The buyer pays the monthly fee for the servicer.

Put a system in place and you can sell mobile homes on land all day long without too many issues. 

There are also a lot of shady seller-finance people out there so my advice is to keep everything transparent for the buyer and don't take advantage of anyone.  If you do this you will get familiar with the real estate agents that specialize in finding mobile homes for people and you can have these things sold before you even put it on the market.

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