Newbie to Mobile Home investing..can I BRRR?

8 Replies

Hi Everyone,

I’m a new-ish investor, started in 2020 and have 4 flips under my belt and now own 4 rental properties. I recently came across a mobile home deal that seemed too good to pass up. Seller wants $30k, it needs $20k in repairs, and similar homes are selling for $100k. The home is on its own land/permanent foundation, built in 2003, 4br/2ba with 2000 sq ft.

In the SFR rental world, this would be a fantastic BRRR. I will be using my own cash for the deal so I'd like to pull the cash out to use for other investments. My question..is it possible to do a cash out refi on a mobile home or should I just plan to flip it?

It is definitely possible to BRRR it but it has a few challenges. First you need to find a lender comfortable with lending on mobile homes used as investments properties. Local banks and credit unions may be your best bet. We use a regional bank in our area. They will probably want the home classified as Real Property, not as personal property (like cars are) so it's considered an improvement on the land.

Another challenge is insurance.. Depending on location it can be hard to find at all.  And finding enough coverage that will be in line with the amount of money you borrow against it can be a challenge too. Many insurance underwriters will only look at the actual age of the unit, not the functional age after you make all your improvements. You can expect to have to jump through all the same hurdles hurdles as normal houses and also a few others ( i.e. proper tie down, etc.)

All that said, we have one we did that is working well.  $80K invested. Appraised at $110K.  Cashed out refi $80K and is cash flow positive close to $600 each month.  

You can do it too!

@Jennifer Freeland It's possible but can be challenging to do. You may want to talk to a few mobile home dealerships to see if they have any referrals for lenders who may be able to do it. Also, check with local banks and credit unions to see what your options are. Best of luck with the project! 

Originally posted by @Jennifer Freeland :

Hi Everyone,

I’m a new-ish investor, started in 2020 and have 4 flips under my belt and now own 4 rental properties. I recently came across a mobile home deal that seemed too good to pass up. Seller wants $30k, it needs $20k in repairs, and similar homes are selling for $100k. The home is on its own land/permanent foundation, built in 2003, 4br/2ba with 2000 sq ft.

In the SFR rental world, this would be a fantastic BRRR. I will be using my own cash for the deal so I'd like to pull the cash out to use for other investments. My question..is it possible to do a cash out refi on a mobile home or should I just plan to flip it?

Hi Jennifer, I would never invest in a mobile home since mobile homes are pre-1976 construction. :)

Inspect & Troubleshoot Mobile Homes, Double wides, Caravans, Manufactured Homes, & Trailers (inspectapedia.com)

Unfortunately even newer manufactured homes tend to depreciate like vehicles instead of appreciating like stick-built homes. I would purchase one on the basis of the land value, not the value of the improvement. Do not overpay for the home. Treat it as an interim use until the land can be utilized for something "better". I also suggest that you make sure current zoning support MH use. Many cities have restricted where MHs can be installed. 

I know that new MHs tend to be built very well, however I'm not sure the market sees things that way. Insurance and financing can also be a major issue. Have you considered building/modifying a huge code-compliant shed on vacant land instead? 16x32 Shed Plans With Dormer | iCreatables.com

P.S. Is this home a double wide? If so I would try to see what's wrong with it. Is the home on a ground lease or fee simple land? If it's a single wide, I doubt it's 2000 sq ft. 

Good luck!

@Dallas Hayden you are correct; it is actually a manufactured home, built in 2003. I did get a home inspection and no major deficiencies were identified. The land is 1.5 acres and the MH is classified as real property. This is in a tertiary market where many of the homes are manufactured, and sit on their own lots. Even if I can’t do the cash out refi, I’m confident I can resell it in this market. Thanks for the article!

Originally posted by @Jennifer Freeland :

@Dallas Hayden also yes, it’s a double wide. This is an off market deal, seller just wants to get rid of it. It needs a new roof, AC, floors and paint.

Ok that sounds great. Also sounds like you've done the research. I would just verify that you don't need any specialty parts for the home. I've heard that MHs occasionally use specialty doors, fixtures, etc. 

Might be a great deal. Good luck!