HUD manufactured home flip concern

11 Replies

Hi all,

I just got an acceptance from HUD for a stationary manufactured home in Granbury, TX. The inspection came back fine and I got it accepted by HUD for $73K--85% of list price. The area is nice in Granbury, TX and is near Lake Granbury, and comparable slab homes are going for $150s. However, I've read a lot of mixed reviews on manufactured homes having high DOMs, poor resale value and being hard to finance (thus reducing my pool of buyers.) This gravely concerns me as this was going to be my first flip and was going to be done with hard money.

Since this is my first deal and I don't know whether this is just first time jitters, or whether I have a legitimate concern,  can you advise as to whether I should just take my $1000 loss (earnest money) and move on to the next deal, or whether to follow through. Does anyone have any experience with flipping stationary manufactured homes? Thanks

Are there many manufactured homes in the area?  Most in my city might look down on manufactured homes as there are few in the city, and banks might not be so keen.  In the area where my husband is from, these manufactured homes are common and banks don't think twice.  Check with banks in the area the home is in and ask what they look for in these transactions.

Congratulations on finding a deal!

@John Baskin

There are quite a few more concerns when you are dealing with a manufactured home vs a stick built home

-The vast majority of your end buyers are going to want to purchase via FHA financing so I would suggest you consider the following

-Does the property still have the HUD tags and an FHA approved permanent foundation? The assumption should be yes as it had an FHA loan previously but if the answer is not yes then it would be ineligible for FHA financing moving forward

  - Be sure of your numbers. Just because a stick built home is close to 150k it doesn't mean a manufactured home in the area will be even close to that

Does HUD have the property as insured or uninsured? If uninsured I wouldn't touch one at that price

To sell the property via FHA financing you will need to hold the property at least 90 days before reselling

All this being said, your $1000 earnest money buys you 45 days to figure it all out if the numbers are there.  Feel free to contact me with any questions 

Honestly, that price seems high for a mobile home in that area. Is it on a large amount of land? Relatively new, large or in otherwise great condition? I've seen many mobile homes on the outer fringes of DFW for half that price or less.

All great points to consider. I really appreciate it. I'm inclined to see if I can find a buyer by closing and if not, chalk it up to being a newbie. Always easier to make up a small $1000 loss than to sit on a flat or depreciating asset while paying high hard money rates. BTW, do either of you know whether investors are able to request from HUD a 15 day extension to the 30 day closing period, or if that it only available to owner-occupants???

2245 square feet, 4 bed, 2.5 bath, built in 2001. needs about 10K in paint, floors, etc.

it does not sound like a deal unless the amount of land it's on and/or the location is great. Close to the lake is not enough. Like Greg says, you have some time until closing to figure it out. 

I have been researching manufactured home financing for several weeks for a deal I'm trying to put together. So far I am unable to secure financing through any lender for a fixed term. Even though it will be tied to the land in a desirable location. I've got rate offers of 5-7% amortized over 10 - 15 in years then a refi at 5 year intervals. Which is basically a business loan. If I do this deal with cash I will only be able to sell via cash or owner finance it out.
I have heard that Wells Fargo can do these loans but the one guy I was assigned to could not figure it out.
Jane

Also, have you seen our "lake" right now? It is nothing more than a little pond. This rain filled it up and the BRA will have the water sold within a  month. Houses on the lake are worth less and less every day. Its getting bad here.  I just dont want you to think near the lake is a selling point in Granbury right now bc it is not.

http://savelakegranbury.org/

I consider the $40K+ ones to be expensive and barely worth the effort even as buy an holds.  Part of that is probably that we were picking them up for $20k-$25k in 2012.  Anyway any over $50k even with more than an acre of land set on the market for a while I definitely wouldn't want to hold one with Hard Money.   You are paying close to retail price since it is very difficult to get loans on used MHs even on land. 

I just helped my parents with a very nice condition repo they bought down there not far off the lake for $27.5k (just the home including moving and basic setup) that we are putting on an acre of land up here by another place they own.  I am not sure what lots there are worth but here they are $15k-$20k with all utilities in place at the home site. 

I have sold several to FHA buyers, and am scheduled to sell another next week to a tenant/buyer via FHA. The home must have an approved permanent foundation, and you need the right lender. PM me if you want a referral in Texas.

Originally posted by @Brandon Holtzinger :

Also, have you seen our "lake" right now? It is nothing more than a little pond. This rain filled it up and the BRA will have the water sold within a  month. Houses on the lake are worth less and less every day. Its getting bad here.  I just dont want you to think near the lake is a selling point in Granbury right now bc it is not.

http://savelakegranbury.org/

 We need 18 inches of rain in a couple week period.  I am looking at lake property and checking levels every day. 

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