Manufactured Home Buyer's Guide: From Purchase to Closing
Updated: Oct 5
In recent years, mobile homes have gained popularity as a cost-effective, flexible, and environmentally friendly housing option for a wide range of people. These homes, also known as manufactured homes or trailers, offer an affordable alternative to traditional houses and apartments. In this comprehensive guide, we'll delve into the world of mobile home ownership, exploring what they are, who should consider them, how to go about purchasing one, financing options, inspecting the property, and finally, the process of closing on a mobile home in a mobile home park.
What is a Mobile Home?
Before diving into the details of mobile home ownership, it's essential to understand what exactly a mobile home is. A mobile home is a prefabricated dwelling built in a factory in sections, transported to its final location, and then assembled on site. These homes come in various sizes, layouts, and styles, ranging from single-wide units to larger double-wide or triple-wide homes and even 2-story models. These homes are built on a steel chassis, which makes them mobile so they can be transported from the factory to the home site. Once at the home site, the homes are assembled and placed on more permanent foundations. In this blog, we will focus on homes placed in a Mobile Home Park, but they can be and often are placed on private land as well.
Who Should Consider Mobile Home Ownership?
Mobile homes can be an excellent housing option for various individuals and families. Here's a look at who should consider mobile home ownership:
1. Budget-Conscious Buyers: Mobile homes are generally more affordable than traditional houses, making them an attractive option for those on a tight budget. Even with space rent plus a mortgage payment, mobile homes can cost far less than a similar-sized stick-built traditional home. We hear from many clients that they are turning to mobile homes because they just can't afford the high cost of a traditional home with land.
2. Retirees: Many retirees choose mobile home living as it offers a cost-effective and low-maintenance lifestyle, often in dedicated 55+ communities. For a fraction of the cost of a traditional home or condo, retirees can enjoy amenities like pools, jacuzzis, community centers with activities, and a host of other benefits. Downsizing to a manufactured home is most common in areas of high home cost, like Los Angeles and Orange Counties.
3. First-Time Home Buyers: Mobile homes can be a great entry point into homeownership due to their affordability, especially in areas of Los Angeles and Orange Counties.
4. Investors: Mobile Homes offer opportunities for investors to jump into the home renovation market because of their affordable prices and potential for appreciation. But beware that holding costs such as space rent can be prohibitive, and be sure to check if the park allows subleasing if you want to keep and rent out the home. Most Parks do not allow it.
5. Minimalists: Mobile homes encourage a simplified way of life, appealing to those who want to reduce their environmental footprint.
How to Purchase a Mobile Home
Purchasing a mobile home involves several steps, from finding the right property to negotiating the deal and securing financing. Here's a step-by-step guide:
Step 1: Financing Your Mobile Home
Securing financing for a mobile home is an important part of the purchasing process. In fact, getting your purchase funds in order is paramount to getting the home you want. Here are some financing options to consider:
1. Personal Savings: If you have enough savings, you can pay for the mobile with cash, eliminating the need for financing. Whether you are downsizing and will have cash from the sale of your home or you just have the cash saved up, this is a great way to keep your overall living expenses to a minimum.
2. Manufactured Home Loans: Mobile or Manufactured Homes on leased land are considered Chattel or Personal Property. Because of this, you will need to rely on specialized banks and lenders who choose to make Chattel Loans. We work with several excellent lenders and brokers who specialize in this type of loan.
3. FHA Loans: Unfortunately, as of this writing, the Federal Housing Administration does not offer mobile home loans for mobile homes on leased land.
4. Private Lenders: Some private lenders, often called hard-money lenders offer financing options for mobile homes. This can be a great option for buyers who otherwise are not able to qualify for a standard mobile home loan. Bear in mind that these hard money lenders often want much larger down payments and will charge higher interest on your loan.
Step 2: Budget
Determine your budget for the purchase. Consider not only the cost of the mobile home itself but also additional expenses like the Space Rent, utilities, taxes, and insurance. Your budget should guide you to the home that offers the most in terms of features and benefits at a price that you can manage.
Step 3: Research
Start by researching mobile home options in your desired location. You can explore listings online, contact local mobile home dealerships, or visit mobile home parks to get a sense of available properties. Take notes as each park is different and will offer different advantages.
Step 4: Choose a Location
After checking out multiple homes online, drive several mobile home parks to get a feel for the communities. Consider options such as Senior vs. All-Ages, Gated vs. Open, Rent Control vs. Market Rent, and the various available community features and amenities. Look for the one that best suits your lifestyle, budget, and preferences.
A note about Rent Control: Rent control or Rent Stabilization occurs when a city, county, or state government imposes a limit on the amount that the rent can increase each year. This can be a great advantage to homeowners already living in a mobile home park as it tends to keep their space rents low and increase their home values. With home values quite a bit higher than in Non-Rent Controlled areas, many would-be mobile home buyers are priced out of the market in these areas too.
Step 5: Decide on New Vs. Pre-Owned
Decide whether you want to purchase a new vs. used mobile home. New mobile homes have obvious benefits, including the latest amenities, appliances, and higher-end finishes. Conversely, used homes, if cared for, can provide like-new features without the high cost of a new home and the high initial rate of depreciation. Used homes are often the better bang for your buck when it comes to purchasing a mobile home.
Step 6: Make an Offer
Once you've found the right mobile home, you and your agent will want to make an offer. Grab your proof of financing or cash and make sure the seller is aware that you can close the deal when needed. Be prepared to make a fair offer based on market value, the condition of the home, and the prevailing market trends.
Step 7: Home/Termite Inspections
Once your offer has been accepted, the real work starts. Inspect the mobile home thoroughly. Pay attention to the structure, plumbing, electrical systems, and overall condition. Consider hiring a professional home inspector and Termite Inspector as they have years of experience knowing what to look for and how to explain what they find. If you find significant problems or code violations, it is acceptable to work with the seller to help you correct those before closing. You can also negotiate the price after the inspections if needed.
Things your inspector will check:
1. Structural Integrity: Check for any signs of damage, such as cracks in the walls or ceilings, and ensure that the home is level.
2. Roof and Exterior: Inspect the roof for leaks or damage and check the siding and skirting for signs of wear or rot.
3. Plumbing and Electrical Systems: Test faucets, toilets, and electrical outlets to ensure they are in working order.
4. Heating and Cooling: If the mobile home has HVAC systems, make sure they function properly.
5. Appliances: Test all appliances, including the stove, refrigerator, washer, and dryer.
6. Insulation and Ventilation: Check for proper insulation and ventilation to ensure energy efficiency and comfort.
7. Safety Features: Confirm that smoke detectors and carbon monoxide detectors are installed and functioning.
As I tell my buyers, the money you spend on inspectors before you buy, is the best deal in town. It could save you from buying a money pit or at least help you negotiate a little better deal.
Step 8: Park Approval
Getting Park Approval is the most misunderstood aspect of purchasing a mobile home. Buyers and agents alike often don't understand the process and get frustrated with the on-site staff responsible for qualifying potential buyers. Understanding this dynamic is important to a smooth sale. Nothing is worse than having your home in escrow with your loan approved only to find out you don't qualify for the park. Here is how to avoid that:
1. Remember that parks don't need your business.
2. Make sure to understand in advance what the park is looking for.
3. Complete the application 100%, don't leave gaps, even if you feel the information you are providing is repetitive.
4. Write legibly: You don't want your application to be rejected because they couldn't read it.
5. Be prepared to include your proof of income, proof of funds, and bank statements if necessary. Sometimes over-submitting is better than undersubmitting.
6. Know the park's age and pet restrictions before you turn in your application. Parks rarely make exceptions to these two policies.
7. Know the parks income and credit requirements.
8. Be patient, the State of California gives park managers 15 Business Days from the time a complete application is turned in. If you application is missing information or not readable, the 15 days resets so make it count the first time. Many parks can turn around a decision sooner than 15 business days but they are all allowed the full amount. Lesson: The cleaner the application, the easier it is to process and the quicker you will get it back.
What is the park looking for?
This can be tricky since, again, every park is different. In general, they look for 3 things: Do you have the ability to pay the rent, Are you going to be a good resident and are you the right age? Let's look at these in a little more detail.
1. Do you have the Ability to pay?
The ability to pay is the key question for any park manager. To determine this the park manager will want to see how much you make, what is your income source and do you make enough each month to cover your space rent, mortgage and other living expenses.
Most parks use a formula to determine if you can afford to live in the park. For example 3 times the monthly space rent. If the monthly space rent is $1,500 then the park will want to see proof that you have gross income (before taxes) of $1,500 x 3 or $4,500.
2. Are you going to be a good resident? The real question here is whether you are the type of person who pays on time, follows the park rules, and is a good neighbor. This information is gathered from your previous landlord if any. Be prepared to let your landlord know that you are buying a house so that they aren't surprised by the phone call from the park.
3. Are you the right age for the park? A Senior Park, often known as a 55+ Community, restricts the age of anyone living in the home. Again, each park is different but all will want to know the ages of each applicant or person living with you. Here are several variations of parks in the area:
55/55 Parks require all occupants to be 55 years old or older
55/50 Parks require at least 1 family member to be 55 or older and all other family members to be 50 years old or older.
55/45 Park requires at least 1 family member to be 55 or older and all other family members to be 45 years old or older.
55/40, 55/35, 55/25 & 55/18. You get the idea.
An Exception to the age rule: The Live-in Caregiver
In cases where a family member is also a caregiver to a homeowner who is 55 and older, the caregiver is allowed to be 18 years of age or older, even in a park where the second age is over 18. For instance, in a 55/45 park, caregivers can live with the homeowner provided they are over 18 AND the homeowner's physician has prescribed in writing that the homeowner should live with a live-in caregiver.
Step 9: Closing on Your Mobile Home
Once you've completed the inspections, received your park approval letter and secured your financing, it's time to sign the appropriate documents and close on your mobile home. Here's what the closing process entails:
Step 1: Sign Escrow Documents
Both you and the seller will sign escrow documents, outlining the terms and conditions of the title transfer and closing. Signed documents are sent to escrow until the transactions is closed.
Step 2: Fund Your Purchase
It's now time to fund your purchase. For a cash sale, you will need to wire your purchase funds into your escrow company so that can close the loan. If you are financing, then you will want to wire the down payment into escrow and get ready to sign your loan documents.
Step 3: Sign Loan Documents
Now that your lender has approved you for financing, they will issue loan documents for you to sign. Those loan documents are sent to Escrow where you will sign them in front of an escrow officer. The signed documents are then sent back to the lender for approval and within 3 business days, the lender will fund your loan which means they will send the loan amount to escrow so that the funds are available to purchase the mobilehome.
Step 4: Sign the Park Lease
Before escrow can close, your escrow officer will need proof that the park management has accepted you. To prove you have been accepted, the park will send a Declaration of Rental Agreement to escrow.
Step 5: Close the Escrow
Once the escrow company has received the Declaration of Rental Agreement, your down payment, and your loan deposit, escrow can close.
Step 6: Move-In and Set-Up
That's it, upon escrow closing, you are the new owner of the mobile home. You've been approved by the park and are ready to get your keys and begin the move process.
Mobile home ownership offers an affordable and flexible housing option for a variety of individuals and families. By following the steps outlined in this guide, you can navigate the process of purchasing, financing, inspecting, and closing on a mobile home in a mobile home park. Whether you're a first-time homebuyer, retiree, or simply looking for a more budget-friendly lifestyle, mobile homes can be a practical and fulfilling choice for homeownership.
If you are in the market to buy or sell a mobile/manufactured home or an agent needing help with a mobile home client, please call for a free phone consultation - (949) 613-1044.
Peter Jorde is the Owner/Founder of South Coast Mobile Homes and has nearly 40 years of real estate sales and management experience. If you have a need to buy or sell a mobile home or manufactured home, please consider reaching out with any questions. You can reach Peter at (949) 613-1044. Please sign up for our "First Call Newsletter" for tons of insights into the buying and selling process. Sign up here: https://www.southcoastmobilehomes.com/lead-collection. And please check out what our clients are saying: https://www.southcoastmobilehomes.com/ff