Idea to get started, crazy or not bad?

[Sean Poulos]

Hello! Looking for advice on this idea. I was thinking about finding land, either raw or improved, and putting a manufactured home on it and then rent it out. I would finance by getting money out with a HELOC, around $150k. So I think I could finance with a down payment, on more than just one. This would ideally be in the surrounding Asheville area, outside of city limits to avoid the STR restrictions. STR/AIRBNB preferred, but if that didn't gain good traction, I would try for LTR. Ideally within 15-30min from downtown Asheville, the Biltmore, and/or the Blue Ridge Parkway. The reason for a manufactured home is the cheaper price for a new property to save on CAPEX costs down the road.

[Mitch Davidson]

Hey @Sean Poulos. As a local here, I think you're on the right track regarding location, meaning be as close to Asheville as possible, yet not in city limits. And about 1/3 of Asheville isn't in city limits. I would abandon the idea of manufactured though, meaning a single or double wide, for several reasons. First, there are almost no options for permanent financing on a manufactured home (MH) when it won't be a primary residence. It's disallowed for conventional and for nearly all DSCR options. The one DSCR option we have has a 65% LTV limit, higher rates and fees, etc. Second, MH will fail to appeal to many potential guests. Also, in some cities zoning restrictions will limit you to lots that are surrounded by homes that guests might not be thrilled about. And with STR being slow right now, especially for us (thanks to Helene), I wouldn't recommend launching an STR that's less attractive. Third, MH don't appreciate nearly as well as stick-built, due to the quality of materials but also due to the fact that your pool of future buyers will pay a slightly higher interest rate due to the build type (and of course won't include non-owner-occupants). For these reasons I wouldn't recommend MH whether you apply STR or LTR for strategy. And LTR isn't helped by the fact that our average LTR rent here is amazingly low relative to property value and cost.