Finance Problem. Need Help
I posted in bird dog forum by mistake. I think it should have went here so here we go again. 
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my husband and I own 3 acres of land-free and clear. We have found 3 double-wides and want to place them on our land to rent out. We have had the land appraised @ 49K. We need to borrow around 113K to get things started. (for purchasing DW's, septic tanks, brick underpinning etc.) Double-wides appraised at 93K. We have great credit, but yet the bank keeps giving us the run around. First, they said we could apply for a title for loan, (put up titles of DW's for the loan) and put up the land. Then she said No, we need to talk about doing a Commercial Loan because it's over 100K and they don't lend over 100K for title for loans. Now the Commercial lender is talking about since we don't have the homes already put on the land it can't be considered a Commercial loan. I explained to him that the whole reason for getting this loan is so that we CAN get the homes on the land. I'm getting frustrated and confused and hoping I'm saying all of this right. Does anyone else run into this problem. I told them from the very start that we did not want to even begin all of this unless it was do-able because we don't want to keep going from bank-to-bank. It seems we run into a stumble everytime we turn around. At first they were saying, yeah we'll loan 90% of the titles & appraisals and land. Then it went to 65% and now their saying they'll try to swing a Commercial loan. How the heck does everyone get started into this? I can't understand that people with good credit and land free & clear should be having such a hard time to get a freaking loan. What are we missing here?
Hi Timberlane. I don't have any experience with mobile homes personally, but my sister just bought some land in MO and received an additional loan to do exactly what you want to do. She had similar issues with her bank and in the end, went to a private lender who specializes in and/or is accepting of manufactured homes. So it is possible.
I'm a newbie and have only bought & sold 4 different properties (SFR's) in the past few years, but my biggest frustration has always been finding a good lender. I refuse to work with banks as I don't need the headache.
This most recent purchase, I decided to take on the attitude that it's a numbers game, and if I want a good deal, I have to play it. I decided that I am not at the mercy of lenders, if they want my business they must earn it (it helps to have excellent credit if you take on that attitude). I called as many as ten different brokers & lenders and settled on one who worked out great, and may just very well be my lender on future purchases. Most people will settle on the first lender they talk to, or simply their bank since they are familiar with them, despite the costs or problems.
My advice is to do the footwork & research (as laborious & frustrating as it can be) to find a lender you like & does not give you the runaround. You need not give everyone you talk to your SS#, give them all your financial stats so they can give you the most accurate figures in return, but simply tell them you are shopping around and don't want a bunch of credit checks run. If you know your credit score (or close to it), it will help. But if they tell you they NEED your SS # (for a credit check even after you've told them your score) before they can even give you any input whatsoever, I would politely move on to the next lender. Some may even give you the "if you're just shopping around & not serious enough to give me your SS#, I really don't want to waste my time" speech. That's fair enough. Don't waste their time, move on to the next.
Once you find someone you are comfortable with after the initial conversation or two, then move forward with them.
I found it best to call and state all my #'s & problems straight out, and then ask if they can help.
For example: My first conversation with a lender or broker will be:
I make $x a year.
My credit score is xxx
My debt is xxx
I want to get a loan for $113K to put 3 doublewides on my property to create rental income.
I don't want to pay over $x in closing costs (be realistic about this #, both for your benefit & theirs).
Can you help? If so, how?
They will ask you for additional info if necessary. With this straight-forward approach, I have been able to save alot of money & grief with each of my purchases. Once I get over the "right" lender hurdle, I find that the rest goes pretty smoothly (relatively speaking, as escrows go).
Remember, you are their client. They are making money off you. Since you have good credit & own the land free & clear, things should be a little easier for you. If you're not in a rush to find a lender, more power to you.
I know you said you don't want to keep going from bank-to-bank, but the effort you put into the beginning footwork may pay you well in the long run. Not only for this loan, but for the bigger picture of receiving an income from 3 renters in the future.
Good luck. And I hope my humble advice helps!
Hi Timberlane - I don't know what state you are in, but here in PA, if you take the wheels and axles off and put the home on a "foundation" (I am using that term loosely), you can surrender the titles for deeds, at which point they are no longer "vehicles" that can be towed away in the middle of the night.
See if your lender would accept this method of development.
Thanks so much for the ideas. I'm definitely going to call some Brokers and see what they might can do for us.
Timberlane,
Just because you have great credit doesn't measn you can get a loan. That is just one factor in the game. You must have reserves (money in the bank) regardless of what kind. Credit shows how you managed your personal life up until now. What you are doing is very risky to a lender. That is why someone suggested private money.
Private money may not really want the property if something goes wrong, but they will at least know what to do with it. As your local bank is in the banking business not the RE business.
You said the house is only worth $49K, but you want and need over 100K. That's over 200%. How much money are you using of your own? Based on what you are saying your stumbling block is the amount of money you personally have to work with. NOT your free and clear land. That is another debt to the bank and more unwanted RE if you go bad.
This is just based on my experience of situations like yours. Your story is missing a big chunk in my opinion. BAnks don't go from 90% to 65% unless there is a good reason.
Lori
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I like the idea of staying leveraged. That is why real estate is so profitable. The key is that you don't want to be too leveraged. No more than 70% of your equity should be leveraged. That way you can ride the booms and the busts of the real estate market.
The answer to this question depends on you and your goals. I know many landlords that hate the business but only do it because it provides them with a retirement.
Sorry pal but no one else can really answer this for you.
True. I understand about the goals. I was wonder if others thought about this and what thoughts they had.
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