Portland, OR - Found My Deal - Please advise...

[Casey Duckworth]

Hello all,

I have the opportunity to purchase a 3 structure property in the heart of Portland. There are 4 total units (single family, duplex, & mobile home). The property is zoned R2. My residential lender has expressed to me that there can only be 1 structure on a residential lot and therefore it will require commercial financing. Is this correct? 

Either way it appears I will need a new lender.

[Robert Bowles]

I don't know what your brokers underwriting guidelines were that did not allow the financing, but I would assume it was around the mobile home.  I assume they were misinformed about the only 1 structure per lot.  They may be able to explain them to you.  

I did a quick look at some underwriting guidelines and here is where I see the issues.

Long drawn out painful too much information version -

The R2 zoning would not be a showstopper, but it is worth taking note and reading the appraisal carefully. As long as it's common for the area, not listed as illegal use, etc.. it would not be a big deal. However, it's critical to be aware that the appraisal will either make it a non-event or be the pre-show to a 3 ring circus event that includes rebuild letters from the City, variance/grandfathering, etc...

Mobile homes are considered personal property and as such are not eligible for a residential mortgage.

When a mobile home becomes a manufactured home, and that manufactured home has it's title from the DMV fully surrendered and fully converted into real property then at that point if:

• It is the ONLY unit on its own lot; and

• its permanently attached to a permanent foundation; and

• It meets all the normal manufactured home eligibility requirements 

Then - at that point, a manufactured home could be financed via one of the following correspondent options.

• Conventional Manufactured 80% LTV/HCLTV/CLTV
• FHA
• VA
• USDA Manufactured.

When a manufactured home has an accessory unit (mother in law, granny unit, guest house, etc...) the accessory unit will disqualify the manufactured home for financing.

When a manufactured home is the accessory unit it will disqualify the property (technically Fannie / Freddie will allow, but investors do not).

Very important -

Accessory units are ONLY allowed/accepted, when the property is officially a "single family" property. When a property is multi-family (2 or more units) accessory units are not allowed.