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.
Unlike most forms of traditional real estate that require the chain of title be meticulously checked for correct ownership prior to closing, a free-and-clear mobile home within a mobile home park can forgo this cost/time and can close within minutes.
Most mobile homes bought and sold inside of mobile home parks are done utilizing cash or owner financing. That is to say when you are planning to purchase a used owned mobile home in a park you are most likely paying cash, arranging conventional, and/or arranging owner financing to purchase your new 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 mobile home.
Mobile Home Investors will need the following.
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(s) [except for VT, NH, and TX]. Look closely at the Title(s) and the seller’s identification to confirm the seller is the true owner and has the right to sell the home.
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 the sellers. Print and sign clearly.
2. Bill of Sale
A Bill of Sale is the mobile home in a park’s 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 or appliances are included in purchase of the home
The Bill of Sale also includes the mobile home year, vehicle registration number, serial numbers, address, dimensions, make and model of manufactured home.
3. Unsecured Promissory Note
This form is optional and is to specify in detail the payment instructions, seller financed amount, and payback terms. This form is only created if you are purchasing a mobile home via owner financing. When selling a mobile home with payments it is vitally important to follow the instruction we have for you in the Mobile Home Formula to ensure you do not violate the SAFE Act, Dodd Frank Act, and other Truth in Lending rules, or use a licensed licensed residential mortgage loan originator in your state.
4. Personal Property Trust
If you are an investor make sure you are purchasing every mobile home in a different mobile home Personal Property Trust. For the same reasons we almost always use Land Trusts to purchase traditional investment homes – we use Personal Property Trusts when investing in mobile homes inside rented parks.
5. A Closing Location
This can be performed at the subject mobile home. Be aware it may be wise to have a Notary available or drive to a bank for their free Notary services.
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.