Pay Dirt Series – Financing Mobile Homes on Rented Pads

Mobile Homes on Rented Pads:  Can these be financed?  Yes, but…

Legally, if they have a serial number, it’s usually possible for a mortgage lender to take them as security.

But practically, not all homes or parks will be approved.  Why is that?  3 things to consider:

The lender wants a fairly new mobile home.  They are depreciating assets, so the newer the better.   A 40 year old stick built house usually still has some remaining economic life, but a 40 year old mobile home is usually at the end of its life.

Lenders want a park owner’s consent to the mortgage.  In effect, the lender wants to know if pad rent payments aren’t made and wants the right to cure any defaults.  If the park won’t consent or provide the form of consent required by the lender, a mortgage may not be possible.

LTV and Amortization will be lower than a traditional home.  Because the mobile home is depreciating, the amortization will often be lower.   And because the borrower doesn’t own the land, the Loan to Value will likely be more conservative.

Mobile Home mortgages aren’t as common as freehold mortgages, so when one does cross your desk, ask around as there are often lenders for these deals.