Yes it is. Even though the unit is not a piece of real estate it can be registered with the state of Texas as real property and has successfully been used with a 1031 exchange.
Yes it is. We have many clients who use this vehicle for their IRAs. We work with the financial institutions to provide them with monthly reporting and transfer of funds to the IRA each month.
The cost upfront is the unit itself, a $500 closing fee $125 maintenance warranty package, Insurance $240 and $185 titling fee.
In the state of Texas each manufactured home has a unique label number issued by the state. This is similar to a vin number on a car and works similarly. There is a document we fill out and have you sign called a Statement of Location (SOL). This document transfers ownership from one party to another and includes the location the unit is currently residing. The filing fee is currently $55.00 (already included in the titling fee) and would be mailed in along with your signed SOL.
The land is not included in the purchase. We currently have a long term lease with the park owners granting us a 15 year lease on the land which will renew automatically at the end of the lease.
Lot rents are paid by the tenant only. The agreement we have with the management company on the ground is that they collect lot rents from the tenants for which they are fully responsible to obtain and maintain.
There is a closing cost of $380 per unit which covers the administration fees and buy in on the maintenance warranty package.
In most cases we can prepare all of the documents within an hour. We upload them to an electronic platform where they are emailed to you for review and signature. As soon as you sign them and wire us the funds we are done. It takes 7 to 10 days for us to fully process your paperwork
There are five documents used in the transaction. First is a simple bill of sale stating the exact location, unit and label you are buying. Second is the Mobile Home Sales Agreement which outline the details of the sale itself. Third is a Management Agreement outlining the details of our responsibilities in managing the units. Fourth is the land lease and fifth is the maintenance warranty.
Rents are collected within a calendar month. (April 1st to April 30th) Any rents collected within that period are run through our reporting system and funds become available usually by the 5th of the following month. April rents get paid out in May.
Funds are electronically transferred to your bank of choosing and a report is sent detailing income and expenses.
It happens that all documents get finalized somewhere within the month, say the 23rd. We would pro-rate the rent starting on the 23rd through the last day of the month.
It is hard for you to know what day your documents were finalized and when your rents start. It has been a source of upset when a client wires funds to us on the 15 and we finalize our documentation on the 23rd. They expect to be pro-rated from the wiring date however this is not possible as it does take a little time to transfer the ownership and no rents are collected for you until all internal transfers have been complete.
The current insurance rate is $30 per unit. We are always working to reduce this cost. It covers Fire damage and general liability. You can always obtain additional insurance if you desire.
We provide a maintenance warranty which covers all repairs on the home. Limitations are only on (Full replacement of air conditioning / heating unit and roof. Replacement of these items is not covered under the warranty.
For those who do not have the warranty repairs and maintenance are handled on site by our management teams at the rate of $20.00 per hour plus parts. They are authorized to do repairs up to $250.00 and are required to obtain written permission for any repairs above $250.00.
6% of the rent collected, $30 for insurance, $48 for maintenance coverage.