selling home vs putting on land

[Tanya]

We have a 95 Champion Infinity in a mobile home park in Las Vegas. We still owe 30,000 at 9.9%. We would love to live in a nicer larger home. We're trying to decide if it's better to try and sell this home as is in the mobile home park, or get a good deal on a few acres of land, move the home to land, convert it to real estate and resell. Possibly retaining part of that land to put a nicer, newer home on. Does this sound like a feasible strategy, or are the expenses of moving home and installing it outrageous?
Also, if one buys land with the intention of moving a home to it, does this qualify for a mortgage-type loan?

[Tom]

You may already be aware of some of things I write here and if so please excuse my mentioning them. Mobile Homes in MH parks, generally, do not appreciate in value. They depreciate. How much depends on the age of the home, condition of the park, the home manufacturer, etc.

If you bought the home new in 95 for $30,000 at 9.9% interest, you can estimate that the home has depreciated in value at about $1200 per year (just an average) so your home is now valued at about $19,200.(30000 minus 9 years times 1200) Unless you made a large down payement when you bought it, you probably will owe more than this so selling the home is probably not an option.

The cost of moving a mobile home is also variable depending on condition of home, mileage to be moved, set up costs, etc. Even if the moving cost is not a problem for you, you will still have the 9.9% loan to make payments on and will have to find a lender who will wrap your existing loan, and the new acreage you bought, into a land/home package.

Your overall idea of moving the home, reselling, and keeping a portion of the land for your use is a good one. The biggest problem you have is the loan on your existing home and whether you owe more than it is worth today.

It is possible that Las Vegas area MH"s and parks do not depreciate as much, since Las Vegas/Henderson Nevada area is one of the fastest growing in the country. You need to determine the loan payoff you are facing, what other homes in your MH park are selling for, and then figure out if you can make this work.

Hope this helps;

Tom

[Tanya]

Thank you Tom,
No, we did not buy this home new, we actually bought it in '95 for 34,000, and still owe 30,000 at this point. It was a reposession. I don't know what it cost when it was brand new. It's a double wide, 24'x52. According to your depreciation formula, it would now be worth 28,000? If so, that's not terrible.
Since posting my question, I spoke to a local mortgage broker. She said a double-wide home can not be moved twice and still get wrapped into a regular home loan (Once from factory to MH park, then to land). It would end up still being a mobile home loan at high interest rate. I guess there's too much risk of the structural integrity being compromised. So I guess that option isn't going to work.
Now, when we bought this home from Oakwood 5 years ago, we were very naive about this whole process. But they said, as a selling point, that it was very much like renting a home, because if we decided we didn't want it anymore, we could "give it back". What did that mean? I imagine it's not that easy!

[rmurray]

You are probably lucky to be in Las Vegas...the area is growing so fast market prices are probably strong...Think about selling it in the park...Moving will cost thousands..

Another matter though..your mortgage broker is not correct...She/he is referring to FHA finance which will only finance never moved (past the original installation) manufactured homes...but there are many other finance plans out there..

[Tanya]

Oh really? Well, she was actually talking about putting us in an 80/20 loan. Please, tell me more about other financing options. And you're right about the Las Vegas market. At least at the moment, from the little bit of investigating we've done, it looks like used MH's are selling reasonably well!

[rmurray]

Most mortgage lenders offer financing that is later funded by Fannie Mae or Freddie Mac..wholesale mortgage companies...The rules of both are slightly different...but both allow used or new homes on "permanent" foundations and titled as real estate..Both require at least 5% down..not 20%..With 20% there would be no required PMI (private mortgage insurance)..Current rates are about 5 3/4%,,,Closing is usually around 5%...

If your credit is good...about 640 FICO scores or better...you do not need to deal with a broker and pay higher fees...you can deal with a lender employed originator and get the best deals...There are many listed here on this site...Some that come to mind are Wells Fargo Mortgage, Chase Mortgage, GMAC Mortgage, Nova Star Bank, Bank Source Mortgage and many others...

The trick to comfortable lending in the manufactured home business is to find an originator who understands the product...Check with a few local dealers for referrals to those that are good in manufactured homes..