Need advice on purchasing a property

[Margarita Bozhenkova]

Hello BiggerPockets Community,

I am a beginner investor and would appreciate your advice. I'm in the process of purchasing my first property which is located in CA. It's 5 acres land with the mobile home that needs a rehab. Title company told me that I have to split the purchase price between mobile home and the land and that basically I can put any amount for the mobile home.

As for now I only see one benefit of putting the price of the mobile home higher - it is that it's depreciable and I can write it off the taxes.

Are there any other reasons in favor of putting it higher or lower?

Thank you!

[Sasha Mohammed]

I would double check with your lender before doing anything. my assumption is this is being done because that mobile home is not considered "real property" -- is it affixed permanently to the land? if no, then you likely would need to have the value of the mobile home as zero: mortgage lenders are not in the business of financing personal property. 

as an example, we see this often with, say, a single-family home being sold furnished. the mortgage underwriters want it clearly spelled out in the purchase contract that there is zero value assigned to the furnishings, and the purchase price is solely for the property (Land and improvements to the land// ie the house). 

Confirm with whoever is loaning you the funds before making any decisions just to make sure you don't shoot yourself in the foot.