manufactured to real estate, new construction refinance

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manufactured to real estate, new construction refinance

Jacob Thorpe
Lender · Lake Geneva WI, USA · Member since 2023 · 141 posts · 72 votes

I was speaking with a man who has a long history in lending and working for a bank, and he was poking some holes in an investment strategy I was formulating. I would like to share here and get some opinions. 

My plan was to purchase a lot and build a foundation, bring in a doublewide/manufactured house. have it placed on foundation and have a structural engineer reclassify it as fixed real estate. then, I would refinance. 

The process from start to finish would take four months and cost ~200k to build, with comps in the area around 355k

-lender man said, refinancing would take six months as most lenders wont refinance a property unless its been built for six months, affecting the strategy to get paid out from refinancing quicker and closing out on construction loan

-The property would not appraise at comps value, but at the cost it took to build, affecting getting paid out from the refinance. We would be able to close out on the loan and rent at a 30yr mortgage, but no big pay out from refinance. 

-Even if reclassified as real estate, it would still be seen as manufactured or mobile home, and would not appreciate in value. 

I am having a little trouble understanding this, as I thought that if a double wide was built and then brought to a lot as brand new.. not having a used one that has been lot to lot.. and immediatly tied down to foundation (slab). that it would then be seen as real estate, and not manufactured? 

I also do not understand why it would not appraise at the comps value?

What variables should I be looking out for or paying attention to? 

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  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    1y

    Jacob,

    The advice you are getting from this guy who is "in lending" is very vague and is not covering all of the fine lines that manufactured home financing requires. First off remember the phrase "Once a mobile home, always a mobile home". You are not going to buy land and put in a mobile home and the lender in 6 months will consider it a single family home. Upon inspection the appraiser will see the crawl space and see it was a mobile home plus a HUD tag and public record.

    One of the requirements in mobile home financing is the property "Must" be on a concrete permanent foundation(in order to be real property) on top of that it requires concrete pillars, skirting and the "Well and Septic" dug and placed within legal distance from subject property. The mobile home can "Never" be from another site or piece of land only from the manufacturer.

    In order to refinance a home you must have six months title seasoning to use a "New appraisal" but keep in mind only certain lenders and programs allow a cash out refinance at the 6th month mark. If this is going to be a investment home you will have a hard time getting a cash out refinance with most lenders as an invesment mobile home. Primary home is a little easier but for FHA and other programs it requires 12 months title seasoning.

    There is something called delayed financing that if you purchase a piece of land and pay for the home "All Cash" without a mortgage you can get up to 80% LTC. That is 80% of the purchase price and repairs or renovations that you can show receipts and proof right away without having to wait 6 months. Keep in mind not on a mobile home as most lenders or DSCR programs do not allow manufactured homes.

    To help avoid a lot of these issues I would think about buying a "Modular" or use a "Tiny Home" vendor who offer these in many states. You have a very good question though what about comps? An appraiser is not going to use single family homes on the appraisal if they do the bank/lenders Underwriter 100% will ask for more comps that are mobile/manufactured to be compared to subject property. If none the file will be suspended or denied.

    If you have any questions feel free to reach out since mobile/manufactured are very complicated if you do not have all of the facts.

    [email protected]727-637-4289
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  • Jacob Thorpe
    OP
    Lender · Lake Geneva WI, USA · Member since 2023 · 141 posts · 72 votes
    1y
    Quote from @Jason Wray:

    Jacob,

    The advice you are getting from this guy who is "in lending" is very vague and is not covering all of the fine lines that manufactured home financing requires. First off remember the phrase "Once a mobile home, always a mobile home". You are not going to buy land and put in a mobile home and the lender in 6 months will consider it a single family home. Upon inspection the appraiser will see the crawl space and see it was a mobile home plus a HUD tag and public record.

    One of the requirements in mobile home financing is the property "Must" be on a concrete permanent foundation(in order to be real property) on top of that it requires concrete pillars, skirting and the "Well and Septic" dug and placed within legal distance from subject property. The mobile home can "Never" be from another site or piece of land only from the manufacturer.

    In order to refinance a home you must have six months title seasoning to use a "New appraisal" but keep in mind only certain lenders and programs allow a cash out refinance at the 6th month mark. If this is going to be a investment home you will have a hard time getting a cash out refinance with most lenders as an invesment mobile home. Primary home is a little easier but for FHA and other programs it requires 12 months title seasoning.

    There is something called delayed financing that if you purchase a piece of land and pay for the home "All Cash" without a mortgage you can get up to 80% LTC. That is 80% of the purchase price and repairs or renovations that you can show receipts and proof right away without having to wait 6 months. Keep in mind not on a mobile home as most lenders or DSCR programs do not allow manufactured homes.

    To help avoid a lot of these issues I would think about buying a "Modular" or use a "Tiny Home" vendor who offer these in many states. You have a very good question though what about comps? An appraiser is not going to use single family homes on the appraisal if they do the bank/lenders Underwriter 100% will ask for more comps that are mobile/manufactured to be compared to subject property. If none the file will be suspended or denied.

    If you have any questions feel free to reach out since mobile/manufactured are very complicated if you do not have all of the facts.


     THanks for the info.. I will give you a call on Monday

    0Reply
  • Jacob Thorpe
    OP
    Lender · Lake Geneva WI, USA · Member since 2023 · 141 posts · 72 votes
    1y

    bumping it up in here

    0Reply
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