A common question I am asked is what steps are need to complete an accurate closing on a mobile home on rented land inside a mobile home park. The answer is surprisingly simple by real estate standards. Mobile homes within parks may offer the single easiest form of real estate acquisition for cash-flow seekers.
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Concerning traditional site built homes a good rule of thumb is 30 days for most closings that require a new mortgage to buy and a week or more if purchasing ‘All cash.’ Unlike most forms of traditional real estate that require the chain of title be meticulously checked for correct ownership prior to closing; free and clear mobile homes within mobile home parks can forgo this cost/time and can close within minutes.
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Most mobile homes bought and sold inside of mobile home parks are done utilizing cash money or owner financing. That is to say when you are planning to purchase a pre-owned mobile home in a park, you are most likely paying cash or arranging owner financing to purchase this home. In addition you will notice that many of the mobile homes you visit inside a park will be free and clear, without a mortgage or lien on the home. It is for these simple reasons that the closing process for mobile homes located within mobile home parks can be completed within minutes.
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1. Clear Title: Does seller have clear title to sell home? If the mobile home is free and clear of any liens or encumbrances the sellers will have the original mobile home title in their possession unless your state uses SOL and a Title is not needed to show ownership. Look closely at the title and confirm the seller is who they say they are.
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If there is a “Lien” section on the title make sure there are no existing liens. If this lien section is blank, the title is ready for signing by both the buyers and sellers. Print and sign clearly.
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2. Bill of Sale: A bill of sale is the simple mans version of a HUD-1 closing statement. A bill of sale describes the terms of the sale? How much was paid today? If there will be any liens for the purchaser? If the home is warranted? Which fixtures/appliances are included in purchase of the home? The Bill of Sale also includes mobile home year, vehicle registration number, and make of home.
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3. Promissory Note: This form is optional and is to specify in detail the payment instructions and seller financed amount and terms. This form is only created if you are purchasing a mobile home via owner financing.
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4. Location: If you are paying ‘All cash’ for your mobile home investment property you may close anywhere which is most convenient for you and your seller. However if you utilizing owner financing to buy I always recommend you close at a title company or law office, even though it is not necessary to do so. There are two main reasons for this title office closing when planning to make payments to the sellers in exchange for their home: 1. You will be able to use the title company’s or attorney’s notary services if needed. 2. A closing inside a title company or closing attorney’s office portrays a professional closing by a professional real estate investing company.
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If you have never looked at mobile homes for investment purposes, look here. The opportunity and need for affordable housing and ease of use has never been greater.
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Happy investing,
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- John Fedro
Leave A Reply (8 comments So Far)
Nate in Tx
543 days ago
Hi John, Do I need titles in Tx? If the seller doesn’t have one what should someone do to still purchase the home? – Nate
John
543 days ago
Hey Nate, Nope. Since 03 titles have been replaced with SOLs. A physical title is no longer needed in hand. Depending on how you will be transferring ownership you may need to apply for different forms. Easy as pie! here’s a link to see more about Tx’s SOL procedures. — John
http://bit.ly/hYbFSF
Joy c. Krejcarek
219 days ago
I was very aprehensive when the seller took out a piece of notebook paper to write up the contract. (used to purchase of houses)but I guess it’s ok? I will ask to see the title.
Thanks.
John Fedro
218 days ago
Great job Joy!!! If you walked away with the Title then you’re the winner!
Zac Coplan
213 days ago
Its tough to get a loan on a manufactured home, unfortunately banks did give loans on them during the boom, so there are many units in our parks that is really hard to sell. Do you see this same situation?
John Fedro
212 days ago
Hey Zac,
I assume you say, “unfortunately banks did give out loans during the boom.” because now the sellers are stuck with mobile homes inside parks that have loans/mortgages attached for $30,000 to $120,000. There is very few cash buyers (and fewer lenders financing used homes in parks) and therefore many of these sellers are really having trouble finding buyers.
And once they fall behind with monthly payments to the park… their time is very limited!
I have been finding that in the nicer parks with newer homes this is the case for many of the sellers.
Fortunately these over valued homes are not the majority.
Have you have had any success working with the lenders to try and discount the note?
- John
Bob Thomas
12 days ago
I am selling my manufacture home in a community 55+. I am doing this by myself. I have no idea what to do in closing. I have a mortgage that will have to be paid off. If the buyer pays cash, what must I do with transfer title and paper work for Polk County and the State of Foroida? HELP
THANKS and Have A Nice Day!
John Fedro
12 days ago
Hi Bob,
Before I give you an answer I would like to mention to you and others that when it comes to investing mobile homes for cash-flow purposes in parks, I teach to stay away from sellers selling MHs with existing mortgages. Also, below I will make the follow assumptions about the deal – 1.) the lender is holding the physical title until you pay off the existing note/mortgage and 2.) you are using the sellers money to satisfy the existing loan. With that said please see the advice below for a fast and easy sale:
If you don’t mind spending the money (under $200 at many title agencies in Polk county) I recommend and advise you to use a title agent as a 3rd party to close the deal if possible, due to the fact there is an underlying mortgage that needs to be paid in full before the lender releases the lien to you.
If you choose to close without a title company you will have to understand that most sellers do not want to give their money to you with you handing them a title. It is for this reason you will have to call your lien holder and obtain money wiring instructions (for you to pay off the bank) and order an express turn around time for your titles to be delivered to you. Without a title agency or closing attorney the buyer will have to take your word and a “bill of sale” as proof he has paid for the home and is now waiting for the title from you. Once you receive the titles in the mail you may then sign and hand over the titles to your buyers where he will transfer them into his name at the local DMV. (Alternate method: Tell your lien holder about your situation and ask them for another solution. Few lien holders will transfer the ownership from them to you before mailing the titles with written permission from you and the buyer.)
I hope this has helped you understand the process is the easy part, if the buyers trusts that you won’t just payoff the home and keep the home for yourself.
John