All Forum Posts by: John Arendsen

First, I would contact @Ken Rishel regarding your financing and  Dodd Frank concerns. Second, if you're going to be purchasing in Rent/lease MHC's best you reach out to the community owner/manager and get their blessings as they can be quite difficult to deal with at times. 

However, if they think you are there to help them improve their communities long term they may be more amenable to your involvement. However, do realize that many if not most MHC owners have strict policies against subletting. 

If you're investing in resident owned MH condo conversions, sub-divisions, Planned Unit Developments (PUDs), or on private lots and/or parcels just make sure the MH is not a PRE HUD MH (built after June 15, 1976), that the site it sits on is the first and only site it's ever been located on.

Most importantly do your homework and due diligence and make sure the area you're investing in is in the PATH of PROGRESS.  This, I cannot stress enough. If it's a blighted area with little to no growth or upward mobility anticipated anytime soon it may not be for you. A cheap deal is not always a good deal. 

If the MHC is blighted, run down, poorly maintained, high vacancy factor, poor quality of residents, etc. I'd keep looking. Good tell tales to look for are really run down and poorly maintained MH's, junk heap cars strewn about or sitting on blocks in driveways, poor of no landscaping, etc.

But the single most important thing I can offer up, having been in this biz for almost 4 decades, is to do a thorough job of inspecting the MH from bottom (starting with the crawl space) to the top and inside and out. 

The Mobile Home in these two photos is a 12x36 (432sf) 1977 single wide (photo above). It is located in a tiny 8 space MHP. We paid 100k for the privilege of garnering a 35 year lease with the right to sub lease it. 

Realizing that it will be taken down to the mainframe (photo below) soon to include the aluminum siding, floor joists, and even some if not most of the wall framing and and rebuilt from the bottom up we still feel we got a bargain given it's only 300 feet from one of the best surf breaks on the California Coast and in one of the most popular surf communities in the USA; Leucadia, CA.

It's situated intimately in a very affluent community with the surrounding site built custom homes and estates selling in the millions of dollars. Bottom line cost is relative compared to location and needs to be evaluated as such.When this project is complete about 75k from now you won't recognize it. It will look like  quaint beach casita. 

But it will bring in an easy $2000-2500/mth or a resale of about $225-250k flip were that the route we were choosing. But our model is building a passive income portfolio in coastal areas where average real estate is way too pricey for the average person.

On most circa '60's & 70's homes you will usually find them in pretty poor condition and inundated with caustic and carcinogenic chemically laden materials i.e. formica counter tops, particle board sub floors, acoustic tile, floor, wall and roof insulation, etc. It wasn't uncommon to utilize lots of formaldehyde and asbestos so don't just start pulling things apart without first having everything inspected. Airborne asbestos can be hazardous to ones health.

Now many may ask why go to all that trouble? Why not just take the old one out and replace it with a brand new one. That's an easy answer. This home is considered a "LEGAL NON CONFORMING INSTALLATION" and as such GRANDFATHERED in until such time it's removed and replaced with a new one at which point it will then have to conform with current building codes and setbacks.

So should we remove this 12x36 (432sf) Mobile Home with a new one it would have to be replaced with a 10x34 (340sf) PARK MODEL RV. Park Models are not only smaller they are much more limited and crowded on the interior that give you a feeling that you are in an RV and not a home. At least for my wife and I.

When this project is completed it will only have two rooms. An open and airy studio apartment suite with a private and enclosed full sized bathroom. Replacing the oversized and bulky furnace and water heater tank with underfloor space heating and a much smaller tankless hot water on demand we've just enhanced the cubic foot space dramatically by as much as 60 to 70 cubic feet.

There's a lot more to this story but I hope it gives you a little insight into some of the challenges and perplexities that exist with old and even new MH's be they PRE HUD trailers and/or mobile homes or HUD Manufactured Homes.

Got it.

@Chad C.. Thanks.

"Where as a bond for deed puts the deed in escrow, and the owner receives all the tax benefits of the property. If the payment is late 45 days, the sheriff can come evict them."

That lexicon I'm not familiar with @Chad C.

@Wayne Brooks is spot on. We've been in the curative title biz for over two decades. For awhile we were Nationwide with the exception of Alaska, Hawaii (not many MH's there) and yep................FLORIDA. I was a MH contractor there for awhile after Hurricane Charley and is 3 buddies ravaged a good part of that state. You really need to know how to navigate that turf before you plunge into a MH acquisition.

One of our biggest and most long standing niches in the MH industry was working with law firms, title and escrow companies and banks Nationwide trying to conjoin land to MH. Literally millions of MH's on private land/parcels were never conveyed with the land and as a result when it came time to get a conventional loan, especially an FHA/VA guaranteed loan, the deal wouldn't comp because the MH was just considered chattel.

What was needed was an engineered certification and/or affidavit of affixture (433a in Cali) which usually meant the need to install an engineered approved foundation under the home. Needless to say this created one huge faster cluck and hundreds of thousands of lawsuits started popping up Nationwide and remains so today albeit we no longer offer our services anywhere but Cali. Things just got too complicated trying to deal with out of state issues. 

Additionally and most importantly if the MH was built before June 15, 1976 it is considered a "PRE HUD" home and is not eligible for many if not most long term conventional loans and are quite difficult to finance overall. Lastly if the MH was ever relocated from its original situs (location) it is equally as difficult to find financing.

Hope this helps.

In Cali it's all done through the California Department of Housing and Community Development (HCD) Title and Registration. I'm not sure who regulated MH's in Texas but that's probably the best place to start before spending $$$ on an attorney.

@Carrie Cavins I'm really not familiar enough with the Texas MH protocol to be of much service on this question. If I'm interpreting your question properly it sounds similar to what we do in Cali. It works like this. We buy a home as a legal owner then sell it to another person as a FSBO/owner carry and make them the registered owner. It's all perfectly legal and gets away from the subletting thing that's inherent to most MH rent/lease communities. Is that sorta what you have in mind?

@Daniel Jarvis @Ken Rishes

Compare the date of manufacture with the date of building permits and installation. Common sense would tell you that if you're dealing with a 1985 MH but it shows that the BP's were dated in 2008 it's a pretty good indication that it's been moved from its original situs.

There are instances, however, when a MH may have been used as a model on a retail dealer's lot. When this happens then you have to refer to the dealer report of sale. It's somewhat nebulous and often hard to prove but the lenders don't like and most often won't fund a loan unless its been proven and the burden of proof is on the buyer.

I would reach out to @Ken Rishel on the BP platform. He has a lot of information on subjects like this.

Absolutely spot on @Ken Rishel. Due diligence is even more critical with MH's than site built due to uncertainties in traditional DD protocol compared to stick.

While I ardently support and respect @Ken Rishel and do agree with him about newer homes over purchasing old PRE HUD or even circa late '70's to early '90' HUD MH's. There are literally thousands of MHC's that are no longer in the path of progress and the incentive to continue feeding new MH's in old MHC's is diminishing more and more by the year. This I know for a fact because it's happening right here in SoCal.

Additionally, the older and more run down the community becomes the worse the management seems to get. As an expert witness and troubleshooter in the MH industry for over two decades I can't count how many cases I've been retained on over management harassment and bullying issues as well as MHC neglect and maintenance or lack there of. In fact I'm involved with a couple right now.

Bottom line. Just do your due diligence before you pull the trigger on an older home; especially Pre HUD (built before June 15, 1976). Also if you intend to seek conventional financing on a MH in a resident owned MHC condo conversion, subdivision or on a private lot or parcel be sure the home has never been moved from its original situs.