MH/ Land Questions - Posted by John C in Fla

Posted by Ernest Tew on September 16, 2003 at 07:00:42:

John, since the property you describe includes the land, it would be classified as real estate. But, when closing the purchase, be sure that the title to the home is transferred to you or the entity you choose.

While there are several ways to do it, here is how I have done a few similar transactions:

For the mobile home, I enter into a Net Lease Agreement and an Option To Buy Agreement. Because most of the risk is in the mobile home, most of the customer’s available cash is used to pay for the option (for example, $1,500).

Then, I sell the land for a small down payment and interest only for about ten years. About $500 is used for a down payment on the land. After allowing for interest only on the mortgage (secured by the land), anything else is used for mobile home payments.

By allocating much of the price to the land, the price of the home will appear more attractive and the customer may never pay off the land. (Interest has the same effect as rent.)

Using this approach, there will be no sales tax on the mobile home and little or no property taxes. Provided a Florida homeowner has title to the land and is living on it on January first, they will be entitled to a $25,000 homestead exemption. That will probably eliminate the property taxes that you would be required to pay if the land were leased. Furthermore, you will be entitled to depreciation deductions on the mobile home and installment reporting as opposed to being required to pay tax on the entire gain in the year of sale.

MH/ Land Questions - Posted by John C in Fla

Posted by John C in Fla on September 14, 2003 at 20:40:00:

Hello All,

I have a few questions about MH/Land deals.

What would be the steps in order to proceed with a MH/Land lease purchase? Here is an example of the deal I have come across. And what I would like to do.

I found a 2 bd / 2 bth singlewide on it’s own land, just needs a good cleaning, overall in really good shape, all appliances work and stay,(also includes a lawnmower). asking price is $25,000.00. Not listed in the paper or with an agent. The land and MH are free and clear, comparable sales in the area are $28,000.00 to $35,000.00, the owner just wants out.
I would like to lease purchase this property, sell the MH on a lease or rent (I think this is called a wrap) and collect a positive cash flow on the spread. All the while renting the dirt. Exercise my option after a year or so and/or negotiate a cash out offer to the seller.
I am a little confused and unsure what steps to take and what order to take them, what forms to use, how to record the paper work, to protect my self in these types of transactions. I have searched the archives and have found very useful info,but still unsure. If I left any information out in order for an answer please let me know. Thanks so much, this is a great group.

John C
in South Florida