Mobile Home Flipping and Financing and Mobile Home Parks

Mobile Home Park Investing
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Mobile Home Flipping and Financing and Mobile Home Parks

Tammy DiGiamarino
Real Estate Agent · La Verne, CA · Member since 2016 · 6 posts · 0 votes

Hello!

So excited to make this first post on Bigger Pockets. I joined a while back and am ready to make some new types of investments! I hope my questions will help others as well.

I am a California Licensed Real Estate Agent. I have my license for personal use - purchasing and selling SFR rental properties over the last 15 years. I would like to purchase a mobile home park and do not know anything about the mobile home industry - as far as how parks are run and buying and flipping or buying and renting mobile homes inside of parks. Before I purchase a park I would like to flip some mobile homes locally. I live in Southern California - around the san Gabriel-Pomona Valley-Inland Empire area. I am almost finished with the book Mobile Home Wealth by Zalman Velvel written in 2008. Dodd Frank and the Safe act have come into being since the book was written. On another note, I am also considering a mentorship with John Fedro. He seems to be very active here on Bigger Pockets and super responsive.

Here are my questions for California mobile home investors out there:

1. If I get my California Brokers Real License can I carry back the note on a flip and be in compliance with Dodd/Frank and the Safe Act?

FINANCIAL CODE - FIN

DIVISION 20. CALIFORNIA RESIDENTIAL MORTGAGE LENDING ACT [50000 - 50706]

CHAPTER 1. General [50000 - 50006]

(a) No person shall engage in the business of making residential mortgage loans or servicing residential mortgage loans, in this state, without first obtaining a license from the commissioner in accordance with the requirements of Chapter 2 (commencing with Section 50120) or Chapter 3 (commencing with Section 50130), and any rules promulgated by the commissioner under this law, unless a person or transaction is excepted from a definition or exempt from licensure by a provision of this law or a rule of the commissioner.

(9) A real estate broker licensed under California law, when making, arranging, selling, or servicing a residential loan.

https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=FIN&division=20.&title=&part=&chapter=1.&article=

2. Advice or input about talking to mobile home park managers about purchasing mobile homes in their park

3. Any other advice/experiences about doing these deals

4. Feedback from anyone who has paid for the mentoring program with John Fedro

5. Any other input would appreciated!

Thank you in advance!

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Jerry Lucker
Flipper/Rehabber · Seattle, WA · Member since 2015 · 333 posts · 459 votes
9y

Hi Tammy,

I've specialized in flipping mobile homes in parks for well over a decade. I've learned a few things.  I flip the homes for cash. There are several reasons for this. The profit margins compared to real estate are way higher. I can make a lot more money using the cash to immediately do more flips than I ever could by carrying the contracts.

Selling for cash I don't have to worry about getting paid every month. I never have to worry about evicting someone. I don't risk the home getting trashed so I have to put time and money into it again.

Mobile homes have titles just like a car. The buyer is on the title as the registered owner. The lien holder is on the title as the legal owner. If the buyer/registered owner doesn't pay the park rent the legal owner has to. As the lien holder you also have to pay the insurance, maintenance fees, utilities, etc. until the home is rehabbed and resold.

Mobile homes are good bang for the buck but, except for the newer ones, they are not built strong. They deteriorate faster than stick built homes. Mobile homes in parks are considered personal property so like a car they depreciate. This has no effect on a 90 day turn around flip but over time it will show. 

If you know where to look you can get just about any mobile home in a park financed for a buyer so there is no great reason to carry paper. That works great with real estate - I have a nice portfolio myself - but not with mobile homes. 

I've done a lot of deals, a Lot. Hope this insight is helpful!

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  • Jerry Lucker
    Flipper/Rehabber · Seattle, WA · Member since 2015 · 333 posts · 459 votes
    9y

    Hi Tammy,

    I've specialized in flipping mobile homes in parks for well over a decade. I've learned a few things.  I flip the homes for cash. There are several reasons for this. The profit margins compared to real estate are way higher. I can make a lot more money using the cash to immediately do more flips than I ever could by carrying the contracts.

    Selling for cash I don't have to worry about getting paid every month. I never have to worry about evicting someone. I don't risk the home getting trashed so I have to put time and money into it again.

    Mobile homes have titles just like a car. The buyer is on the title as the registered owner. The lien holder is on the title as the legal owner. If the buyer/registered owner doesn't pay the park rent the legal owner has to. As the lien holder you also have to pay the insurance, maintenance fees, utilities, etc. until the home is rehabbed and resold.

    Mobile homes are good bang for the buck but, except for the newer ones, they are not built strong. They deteriorate faster than stick built homes. Mobile homes in parks are considered personal property so like a car they depreciate. This has no effect on a 90 day turn around flip but over time it will show. 

    If you know where to look you can get just about any mobile home in a park financed for a buyer so there is no great reason to carry paper. That works great with real estate - I have a nice portfolio myself - but not with mobile homes. 

    I've done a lot of deals, a Lot. Hope this insight is helpful!

    2Reply
  • Tammy DiGiamarino
    OP
    Real Estate Agent · La Verne, CA · Member since 2016 · 6 posts · 0 votes
    9y

    Thanks Jerry for you wisdom! Are most of the MH you flip in parks or on land or both?  If I am understanding correctly just about any MH can be financed?  Even if it is 40 plus years? Thanks!!

    0Reply
  • Kevin Fontleroy
    Investor · Lee's summit, MO · Member since 2016 · 75 posts · 45 votes
    9y

    hey Tammy, I have nothing to add about mobile homes but this is very interesting. I heard the cash on cash return for mobile home can be very high compared to SFR. I'm in the same area as well maybe one day we could work on a deal together

    1Reply
  • Bill Neves
    Flipper/Rehabber · Vancouver, WA · Member since 2013 · 328 posts · 252 votes
    9y

    @Tammy DiGiamarino

    @Kevin Fontleroy 

    Jerry is right on his points. We're friends - great guy. I too, prefer to sell for cash rather than payments as stated above. In the past 18 months I've been involved with 15 deals. 13 were cash and 2 were financed. 

    Any manufactured home after June 15, 1976 can be financed. So the check from the lender is cash to you.

    In order to do it yourself you would need to be a 'dealer' in CA and a licensed lender. Not hard just a couple of steps.

    You can call your state DMV and ask the proper steps and costs.

    You mentioned John Fedro also. We're also friends - great guy! Just talked to him a few days ago.

    The cash on cash returns are crazy good compared to stick built. I've done a lot of both. I used to live in your area too. West Covina, Whittier, Anaheim Hills. 

    Good luck and have fun!

    0Reply
  • Bill Neves
    Flipper/Rehabber · Vancouver, WA · Member since 2013 · 328 posts · 252 votes
    9y

    @Tammy DiGiamarino

    Missed grabbing your name. Sorry about that.

    0Reply
  • Tammy DiGiamarino
    OP
    Real Estate Agent · La Verne, CA · Member since 2016 · 6 posts · 0 votes
    9y

    Hi Kevin - what kind of investments are you making here locally?  I am finding RE is too high to make sense!  Are flipping?  

    0Reply
  • Tammy DiGiamarino
    OP
    Real Estate Agent · La Verne, CA · Member since 2016 · 6 posts · 0 votes
    9y

    Hi Bill!  Thanks for the response!  I appreciate all of your feedback - and endorsments too!  

    Do you flip pre-1976 MH? If so are they ever financed and if so who finances them?

    You mentioned I would have to be a "dealer" and a licensed lender to finance MH.  Is that a mobile home dealer?  At the beginning of my posted a California law/code. Wondering if I just need to get my brokers license here is CA. AM hoping someone from CA responds to all of this!  

    (a) No person shall engage in the business of making residential mortgage loans or servicing residential mortgage loans, in this state, without first obtaining a license from the commissioner in accordance with the requirements of Chapter 2 (commencing with Section 50120) or Chapter 3 (commencing with Section 50130), and any rules promulgated by the commissioner under this law, unless a person or transaction is excepted from a definition or exempt from licensure by a provision of this law or a rule of the commissioner.

    (9) A real estate broker licensed under California law, when making, arranging, selling, or servicing a residential loan.

    Thanks for responding!  

    0Reply
  • Bill Neves
    Flipper/Rehabber · Vancouver, WA · Member since 2013 · 328 posts · 252 votes
    9y

    RE atty is best for legal advice in your state. Many local REIAs have attorneys as members.

    Most states require some sort of manufactured home dealer license. Realtor, RE Broker and Mortgage licenses are different. Some states allow 4 MH deals in a year before you need a license. Some require a license on the first one.

    Yes we do older than 1976. We just got one. We're starting on it this week. 1973 3/2 1440 sq ft in a very nice park.

    People will differ with my opinion but... We've done a few on land or a city lot. We compete with stick built pricing so lean toward parks. Providing affordable housing.

    My advice is to do newer than 2000 if possible, until you know the biz. I've done a few so am comfortable with them and what to look for.

    Always forward!

    0Reply
  • Steven J.
    Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
    9y

    @Bill Neves has great advice above. He's very well versed in the mobile home business. Both he and John Fedro are great resources to go to even if its just free advice. 

    0Reply
  • Account Closed
    Rental Property Investor · Friendswood, TX · Member since 2010 · 663 posts · 508 votes
    9y

    @Tammy DiGiamarino  You state that you want to purchase a park but your course of action is about flipping homes.  The businesses are related but two different components.  If you want to buy a park, learn about parks ( forums, mobile home university etc).  That will get you on a track to your goal. 

    0Reply
  • Tammy DiGiamarino
    OP
    Real Estate Agent · La Verne, CA · Member since 2016 · 6 posts · 0 votes
    9y

    Thanks for your advice.  I will do that as well!

    0Reply
  • Rich Ferradino
    Investor · San Antonio, TX · Member since 2013 · 206 posts · 71 votes
    9y

    @Bill Neves @Jerry Lucker 

    I'm having issues getting my mobile homes sold for cash. Most people that call me don't have the cash to pay for the full amount. I'm thinking it might be because they aren't in the right park, or they need a better rehab. Thoughts?

    0Reply
  • Rich Ferradino
    Investor · San Antonio, TX · Member since 2013 · 206 posts · 71 votes
    9y

    I'm having to owner finance them and I'd rather want to be able to get the cash out and repeat.

    0Reply
  • Bill Neves
    Flipper/Rehabber · Vancouver, WA · Member since 2013 · 328 posts · 252 votes
    9y

    @Rich Ferradino

    I don't give legal or tax advice.... however...

    Could someone create a note for the loan and sell the note? Get all their money back, same as a cash sale and go do another one? They would have to do it right but can be done. Done every day.

    Have fun!

    0Reply
  • Rich Ferradino
    Investor · San Antonio, TX · Member since 2013 · 206 posts · 71 votes
    9y

    Yes but finding an investor who will buy a note on just a mobile home has been my issue as well. The investors I've met dont want to buy them unless it's on land 

    0Reply
  • Amanda Fishman
    Investor · Tampa, FL · Member since 2016 · 16 posts · 9 votes
    9y

    Sorry, but I am going to dredge this thread back up! :-) So many experts and great advice on one thread! 

    I've recently come across a couple of MHs in nicer parks near Clearwater Beach (one all age, one 55+)- for pennies. A 2/1 for $750 and a 2/1 for $500, lot rents in the normal area price of $450ish. They both seem to have plenty of quick turn around potential- in the ballpark range of about $8k each- given the parks locations, ammenities, size and options of the homes themselves. From the looks of it they need minor repairs (haven't had my contractor really I spectrum yet)- mostly aesthetic. I'd snag them in a heart beat, but I've never approached corporate parks where homes were being sold by in house brokers. I've always just dealt with FSBO or park owner/ management directly. I wonder if anyone has any insight as to how dealing with in house brokers goes for negotiation (I generally ask for 30 days waived lot rent, etc.) I mean, at these price points, and the obvious lack of interest from the park management/owners in fixing/holding...One would assume they'd be investor friendly? And, has anyone ever used the in-house brokerage as a means of selling their flips...How would that go, could it be a beneficial tool or is that asking for trouble? This is new territory for me. Any input is greatly appreciated! Thanks!

    0Reply
  • Rachel H.
    San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    9y

    When approaching park managers and/or owners, you just need to be a person...not an investor. Coming in as an investor and talking too much, really turns off people in this business. Ask more questions as if you were going to live there and let them speak. From there, focus on building the relationship. 

    Honestly, it all comes down to finding people you can work with. People have different personalities. 

    For me, I just got into a corporate park I've been trying to get in for years. Since management changed recently, I was able to establish a working relationship with the current manager. Before then, I was turned down so many times by prior managers. The key is to keep looking for parks that are willing to work with you. 

    Hope that helps. Good luck! 

    1Reply
  • Nathan Waters
    Rental Property Investor · St Joseph, MI · Member since 2015 · 302 posts · 106 votes
    9y

    This thread is really interesting. Can someone explain the difference between a corporate park and any other type of parks? 

    @Rachel H.

    By getting into the park, are you referring to being approved by management to purchase a MH there?

    0Reply
  • Stephen Masek
    Investor · Mission Viejo, CA · Member since 2012 · 627 posts · 204 votes
    9y

    Thank you-all for this interesting thread.  Flipping mobil homes is something I'd never considered, but could clearly do.   I'll second Nathan's questions.

    0Reply
  • Rachel H.
    San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    9y

    @Nathan Waters Yes, that's what I mean by getting into the park. It does take time to build relationships especially with the bigger ones. But it may be worth it in the end as you can be one of the few working in the park if they are picky with who they work with. 

    Regarding corporate parks, these are the ones owned by large companies either public or private. Most times, these companies will own multiple properties including other mobile home parks and/or apartment communities. 

    Hope that helps! 

    1Reply
  • Nathan Waters
    Rental Property Investor · St Joseph, MI · Member since 2015 · 302 posts · 106 votes
    9y

    @Rachel H.

    Or really anyone that can answer...

    I have heard that some parks have restrictions that require owners to offer the MH to the park management first before selling to another individual. Is this correct? I have a few parks near me and would like to start marketing to owners. Should I start by smoozing or networking with the park managers first?

    0Reply
  • Account Closed
    Johnson City, TN · Member since 2014 · 586 posts · 705 votes
    9y

    Stay away from 55+ parks. A trailer might be selling for dirt cheap but first check if there is any back lot rent owed. At $450 a month this can add up fast. How much are 2 br apartments in the area renting for? Lot rent plus payment to you will put the buyer somewhere north of $600 a month. How does this compare to other housing options?

    1Reply
  • Bill Neves
    Flipper/Rehabber · Vancouver, WA · Member since 2013 · 328 posts · 252 votes
    9y

    @Nathan Waters Each park will have different rules and regs. As Rachel mentioned above, just go talk to the manager/owner, tell them you are 'interested in buying in the park' and ask for a copy of the rules. I don't mention that I'm an investor. I've had negative reactions in being an investor until they know you. Connotation of course is coming in to 'make money' off the residents in the park.

    If it comes up in conversation, I say I fix them up nice and sell to a 'park approved buyer'. You are an investor but honoring the park manager. As has been mentioned here a hundred times, they are the gatekeepers and make or break you working in THEIR park. 

    @Rachel H.  mentioned they can block you working in the park. 

    You can also be the manager's friend by asking if they have any 'problems' that you could help them resolve. It ain't about you it's all about them.

    We also have an in with a corporate park group in my area that runs 6 parks. I am in Arizona on a 3 month snowbird trip and one of the managers called after we were here, and offered us a home to work on. We have only seen it in pics and the contractor is doing the work. Nice arrangement?

    -------------------------

    @Account Closed One caution with 2/1 in all age parks... you are better off getting a 3/2 if you can. 2/1s sell in senior parks no sweat. But a bit harder in all age parks.

    2Reply
  • Amanda Fishman
    Investor · Tampa, FL · Member since 2016 · 16 posts · 9 votes
    9y
    @Tim Chapman These would be cash deals. I'm not planning on holding the note, and I always calculate in lot rent in my holding costs in the event I can't neg waived lot rent during rehab. Two bedrooms go for around $1300 a mo in this area all year long (we're a block from the Gulf Beaches)...so even if I were holding the note, the lot rent + note payment would still be considerably lower than any two bedroom one would rent in these parts. @Bill Neves Thank you for the advice, I'll take that into serious consideration. It's just so rare to find anything in the very few all age parks around here...it's quite tempting.
    0Reply
  • Rachel H.
    San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    9y

    @Nathan Waters I'm not sure if that would qualify under a right of first refusal. Guess it depends on how you look at it. Even if it were valid, the homeowner can name any price they want. If they don't want to sell to the park, they can always up their price and then try to negotiate something with you as an investor. Honestly, you shouldn't be dictated on who you sell your home to but it would depend on the rules of the park. From my experience, I've never had this issue. Hope this helps! 

    1Reply
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