What are mobile and manufactured homes?
Mobile homes and manufactured homes are often interchangeable terms in real estate, but they have distinct definitions. Mobile homes are factory-built structures constructed prior to June 15, 1976, the date that the U.S. Department of Housing and Urban Development (HUD) enacted rules to govern building codes for these dwellings. Factory-built homes constructed after this date are designated as manufactured homes because they meet HUD’s higher standards for quality and safety.
What is a mobile/manufactured home park loan?
Factory-built housing units are often placed on adjacent lots in what’s known as a land-lease community. These communities or parks can be large or small, consisting of a few homes or hundreds. While residents own the manufactured or mobile home itself, the owner of the park earns revenue by leasing the land beneath the homes. These properties also may include short-term rental space for recreational vehicles. Therefore, a loan for these mobile- or manufactured-home communities is classified as a commercial mortgage.
There are a few reasons for a property owner or investor to obtain a mortgage for a manufactured-housing community:
• To purchase an existing mobile-home or manufactured-home park
• To refinance an existing loan into one with a favorable interest rate or terms
• To obtain a cash-out refinance that can be used for repairs or improvements
• To acquire land and develop it into a manufactured-home park
Who offers loans for mobile-home or manufactured-home parks?
These properties are among the top-performing assets in the commercial real estate industry. Manufactured-housing communities consistently produce steady, reliable income for investors and the sector has not recorded a decline in aggregate net operating income in any year since 2000. This makes the typical manufactured-housing community an attractive investment for banks, credit unions, conduit lenders and private debt funds, among others. The government-sponsored enterprises Fannie Mae and Freddie Mac offer long-term financing of up to 30 years for manufactured-housing communities.
Mortgage brokers can find commercial mortgage lenders to connect to a variety of manufactured-home park lenders. Although some lenders only offer mortgages for purchasing or refinancing these properties, you also can find companies willing to lend on new construction.