Our area has a number of manufactured homes that may be a great deal depending on what your goals are in real estate. Often they are a good deal if you're looking for affordable land and a good place to live. If you plan on tearing down the home in the future and building a new frame home it becomes a great deal. However many potential problems exist when buying these properties and I thought it would be good to share some of them with you.
The thing I see most often in listings for these homes is the financial remarks indicating that the seller will accept cash, conventional and VA financing. Cash of course can buy you most things in this world. Conventional and VA financing is another story. Most programs will not offer lending for manufactured homes. Often the only way to obtain financing is through FHA (Federal Housing Administration www.fha.org) or IFHA (Idaho Housing & Finance Association http://www.ifha.org/).
It's best to consult a financial lender when discussing the available programs. I do know that there are a number of qualifications that must be met to obtain financing. For instance usually manufactured homes must be on permanent foundation and meet the standards set by these programs, determined in part by an inspection and appraisal. These homes typically must be from the 1990's and more recent but lenders will advise you on this qualification too. It's not impossible to obtain a manufactured home, but it's not as easy as some agents may have you believe. Again it's about setting expectations and not making promises that can't be kept.
Equity and the resale value are two other concerns to consider when purchasing these homes. The equity value will more than likely come from the land and not the home. As the home ages it may become more difficult to refinance the home or take a second mortgage often in the form of an equity line or loan against the property. In terms of resale since these homes are harder to qualify for there won't be as many buyers available to purchase.
Remember there are benefits in terms of affordability, land, privacy, and usually in terms of not having CC&R's (Covenants, Conditions & Restrictions), which often forbid an owner from having horses, chickens, pigs and other animals, as well as storing RV's and cars on the property. Also, if you do plan to rebuild on the land, make sure you check the zoning regulations before you purchase to confirm that you can build a new home on the property.
The next time you see a listing for a manufactured home remember to keep in mind the benefits and the potential problems. Contact us to put you in touch with our lenders that will advise you on the programs available to purchase these homes.
Disclaimer: This blog entry reflects my opinions only. A lender will advise you on the programs available to purchase properties.
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