Can a Brrr strategy be done on mobile homes ?

Question

Hi Everyone, I live in Orlando I’m just starting learning about real estate investing, and the first thing I want to do is to get rid of this huge amount of rent (1100k/ month) that I’m paying every month. Now I still can’t qualify for a conventional mortgage just yet, so I was thinking to buy a Mobile home, fix it up and refinance it 3 months later.

Do you think that can be done ? Can a Mobil home increase in value after basic repairs so I can get my money back after refinance?

I’d really appreciate your insight and recommendations

Do you think that can be done ? Can a Mobil home increase in value after basic repairs so I can get my money back after refinance?

I’d really appreciate your insight and recommendations

Jim Tassoni · Answer

@Amine Salhi You also may want to look up Chattel lenders and start reaching out them as well in order to determine a viable strategy for your endeavor

Amine Salhi · Answer

@Ken Rishel thank you for your explanation and yes I’m starting to think that it’s not Worley’s pursuing.

I’m gonna focus on getting a loan on a regular single family home.

Ken Rishel · Answer

It is pretty much bad news.

Most chattel lenders have year of manufacture limits which varies somewhat from lender to lender, and all chattel lenders have minimum amounts they will lend because changes in laws, rules, and regulations limit interest rates so that any loan less than 20,000 is pretty much more costly to service that the maximum interest rate they are allowed to charge will yield. As a result, most manufactured housing land-lease communities that finance what they sell have their own related/captive finance company to handle the purchase financing. A very few finance operations will finance lesser homes for community operators on homes less that 20K but will "haircut" the loan proceeds to the community operator in order to recover the costs of originating and servicing the loan.

Community operators that have homes in their community worth less than 20K often run their communities like a slum which means homes will not go up in value. Only certain operators have strategies and plans to actually improve the community while using older homes to do it, and they pretty much want to control the sale and perhaps the financing.

There are some folks offering some really scam opportunities often offering lease to own or lease option programs that are both illegal in many states and in many cases, they have no clear title to what they are selling. Thousands of buyers have been scammed out of their money in the last several years.

All in all, what you are hoping for is a very bad idea.

Amine Salhi · Answer

@Jim Tassoni I will,  thank you for your in put, I appreciate your advise

Amine Salhi · Answer

@Jim Tassoni you’re right I mean it is gonna be difficult to pull off. I should talk to community bankers before I do anything

Jim Tassoni · Answer

@Amine Salhi From what I’ve seen this could be a difficult road to hoe.  Most mobile home park operators I speek with fix up the homes in their parks with pretty much the sole purpose of getting the lot rented.  If you buy a home for a 2-3k and put 5k into it I think you will more than likely find it difficult to A.  Find a lender who wants to finance one off homes like that and B. Seeing the type of appreciation that would allow you to refinance and get your cash out(Getting a lender who wants to lend on a 12k appraisal value with 20-30% down to get your cash out). Remember a mobile home is technically personal property as opposed to real estate and thus tends to be a bit more prone to the characteristics of a depreciating asset.  With that being said I hate to be all negative so I would say if you can find a market with extremely strong mobile home sales you may be able to pull it off.  I would just tread very lightly.  Best of luck!

Can a Brrr strategy be done on mobile homes ?

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