My partner and I are just getting started. Our strategy is to buy newer, doublewide land/home deals in the $35,000 to $40,000 range, then resell/rent them using lease/purchase. Between us, we have app. $90,000+ in home equity lines. My partner has great income, assets, and credit(750). My thinking is to use the equity lines to pay cash for the purchase and then find a lender with short seasoning to refinance and pay back the equity line to use on another purchase. I am hoping to get some advice if there is a smarter way to use financing. Any input will be greatly appreciated.
If by doublewide you mean manufactured home then you may need to rethink your plan. Most lenders will only loan 65% on a manufactured home cash-out. 65% of 40K is 26K which is a very small loan amount that even fewer lenders will consider. Hope this helps.
Hi Christopher…The appraisals on these should come in from $65,000 to $70,000. I have found a local bank that will do cash out refi’s up to 80%.
You may want to think harder about the manufactured home strategy. While you may have found a local bank that will go to 80%, the style of home is going to limit your buyer pool, as well as making financing the new buyer more of a challenge. The simple fact is that manufactured(mobile) homes are more difficult to finance. There are less lenders that finance them, resulting in a limited array of choices to finance your new buyers. Since your exit strategy is to resell the homes, (either right away or down the road on a lease purchase) you are adversely effecting your chance of a potential buyer finding financing. While there are a myriad of lenders that will lend 100% of the purchase price with a 580 credit score on a stick built home, you will more commonly need over a 620 or 640 to get 100% on mobile homes. This simply means you may end up holding the property longer if your buyer can’t get financed.
One thing to keep in mind, you are not going to run into the same issues even with modular homes, since most lenders consider them identical to stick built.
Just make sure you think things all the way through before jumping in.
You need to visit these sites as well. Very active with investors who are doing what you want to do.
Nate-WI
http://www.mobilehomeuniversity.com/index.html
http://www.real-estate-online.com/mobilehomes/wwwboard4/index.html
Broker Dave.... I figure with a lease/purchase I might not get cashed out, but that is ok. I didn't make it known that I didn't mind holding. I will have a nice chunk of cash up front ($3000-$5000) and also be a little higher than average rent. If I can get them financed that will be a bonus.
Nate....that's great. Thanks for the info. I will check the sites out. Thanks for taking your time to reply, guys.