Frustrated With Bank. Is This Normal?
Hello, 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?
If you're having a hard time with your current bank/lender, then go to another bank/lender.
You may be just jumping the gun a bit, though.
Have you made a business plan out for this business venture? In other words, do you have a written, detailed idea of how you intend to make this successful? If not, that is one of the major upholds here. You need to show the lender that you do indeed know what you are getting into and that you have a good plan on paying back the money. This will help you much more than you realize. It's also good to go in there with two years of tax returns, current check stubs (if employed), and a current copy of your credit history. This makes you look much better to them because you seem very prepared.
Don't know what state you're in, but have you checked to make sure that you can setup 3 DW's on your property? States and counties are very particular about what, where and how these are setup. For example, here in NC, any doublewides that are newly setup or sold now have to have permanent foundations (brick, stone, etc.) and have to be deeded as real property. In other words, the DMV title must be surrendered and the DW and lot it sits on is joined together as real property (like a stickbuilt). Also, have you have the property perked to see DW's will even be able to be put there? If you know and have all these things, put them into your bank file as well, so that the lender will have that info too.
My initial suggestion based on your post would be to have the 3 acres separated into 3 (or more) DW lots. Lots will usually be valued at much more than raw acreage. For example, here, you can buy raw land for $5-10K per acre, but lots will run from $10-20K per 1/2 acre lot (or thereabout). Once that is done, you could setup ONE DW on one lot (from funds borrowed against the lots). Once that is done, the lot value will increase again because the lot becomes a homesite. Changes are that you LTV on the homesite will be enough to pay off the current debt and still have enough funds to buy one or both of the other DWs.
Roger
Yes this is normal. Banks are the most frustrating part of the business. (Well maybe second most frustrating). Look around for a mortgage broker or a lender who specializes in Mobile homes.
I don't know which bank that you went, but big banks are last place you should go to get a loan for a complicated situation like this. You might want to try a broker who does a lot of MH financing or small community bank. Just let you know, a lot of lenders will not touch MH's or if they do, they will give you loan with low LTV.
Is this land zoned residential with MH allowalable? Can you devide the land like that? I hope you talked to your county about it already.
You're trying to climb the mountain to get to the other side, when their is a tunnel going straight through. In other words, you're making this much more difficult than it needs to be, and the reason is because you're wanting to do it all at once.
First off, you're going about getting a loan all wrong. Read my first post. Lenders want to know that they will be paid back. Instead of going in and saying "I've got this great idea, I know it'll make money. Just give me a loan, okay," so them the written, detailed layout of the plan AND it's potential payoff.
Second with the loan, stop running around to banks begging for money. Go to a mortgage broker (preferrably one referred by another investor) and let them do that. That is what they get paid to do.
As far as getting this deal done, again, read my first post. Break it down into smaller parts and work from there. You said that the county would allow lots of .57 acres. Okay, that means you could divide this up into 5 lots and have 1/4 acre let roughly to make roadway(s). That's the first thing I'd do. If all of the lots perked, then you'd have 5 spaces, not just 3.
As far as financing this part of the venture, it would be fairly simple. The raw land appraised at $49K. Most lenders will loan against raw land at 50% of value, so that gives you about $25K to get the land lotted off. As stated above, lots are more valuable than raw land, so using your figures, a conservative value would be $15K per lot, or $75K total.
From this point, it would be simple to buy one DW at a time, set it up, appraise and refinance, pulling money out to buy and setup the next. My guess is that you would probably only need to carry one or two DW's with mortgages and the rest would be free and clear.
Roger
Thsnks Roger, that is exactly what we are in the process of doing. The bank called yesterday and set us up an appt. for this afternoon. She said instead of doing it all at once, we'll figure out what we can do now. Then after setting up one, we will reappraise since the home will be on the land and then buy another. We'll start off gradually and build up to what we want. Thanks so much guys! Off to bank we go....Pray for us!