Manufactured Home Investing: How Land-Home Packages Create Affordable Housing

Rehaan Khan (00:00)
You mean like what would be the resale price for it? Yeah. Okay. It depends on the area that you’re in, like in Virginia, it’s above three hundred, three fifty in some areas, because contractors are more expensive, permitting is more expensive, land is more expensive. But if you go to North Carolina, then typically on average two fifty is, what the resale price is that we’re looking after, for a fifteen hundred square feet home.

On an acre, of land.

Dylan Silver (01:58)
Hey folks, welcome back to the show. Today we’re joined by Rehaan Khan, founder of True Prevail Ventures and affordable housing provider in several states along the East Coast. Rehaan, thanks for joining us here today.

Rehaan Khan (02:11)
Course very welcome.

Dylan Silver (02:12)
What types of deals are coming across your desk these days?

Rehaan Khan (02:15)
The types of deals that are coming across our desk these days, you know, vary, from land, to, single family houses that need to be, renovated to commercial properties. We have a pipeline of different properties that are coming along our way, we’re looking at the market, currently as it’s slowing down and we’re picking and choosing the ones that work for us.

Dylan Silver (02:35)
Now you mentioned several different segments. Where is the affordable housing fit? How do you acquire these deals and is there anything specific that you have to do make sure that they’re in that avatar?

Rehaan Khan (02:47)
Yeah. In the current economy, affordability is an issue. And we saw this, a while ago and now even the government is changing their laws like to, make it easier to build affordable housing. Basically we look for land, or land that has a structure that we can demolish because the utilities is what, we’re looking for. And then, we build on that land we

Clear the land, we make sure it’s feasible, to put a brand new manufactured home on and, that’s the strategy that we’re focused on right now.

Dylan Silver (03:14)
You mentioned manufactured homes. I’d like to dive in here and get into the weeds of this. You also mentioned utility access. When you’re looking for an opportunity to potentially put a manufactured home, you’re looking for utilities, there anything else you’re looking for that would be an ideal spot to place a manufactured home?

Rehaan Khan (03:34)
Yeah, the first thing we look for is demand. We wanna make sure, there is enough demand in the area to sell that asset. There’s enough job growth, there’s enough population, there’s enough going on in that area where we are, we determine that asset should be selling, in a fairly short amount of time. Second thing is zoning. You wanna make sure, the zoning is correct.

Again, the government is making it easier now. We don’t know when those laws will change, but zoning is, getting easier to put manufactured homes on there. These are the two, main things that right off the bat that we look for. But there are, obviously other things, that we look for. There’s, probably a dozen other things that we check, before we actually acquire the land.

Dylan Silver (04:14)
Let’s talk about the tenant profile. Is this someone who may be transient or is this someone who’s gonna be staying there a long time? Is this someone who’s younger, older, right? Are they someone who might be considered like non-QM, non-qualified for a traditional home purchase? What does that tenant look like?

Rehaan Khan (05:20)
When we do two types of, investing with affordable housing. One is like, on land, brand new construction, and then we also have mobile home parks. With the mobile home parks, then we have tenants. We want to make sure, that that they pass the background checks and that they have good credit and that they’re able to, take care of their home and be able to like pay their rent.

But with the new construction, the one that I was, mentioning earlier, we’re actually selling those homes. We resell those homes, we have a profit margin that we shoot for. And then it typically it’s traditional financing FHA buyers for brand new homes.

Dylan Silver (05:54)
I’d like to dive in here. We’ve had a lot of folks talk about manufactured home sales, but if I’m not mistaken and correct me if I’m incorrect, Rehaan, you’re doing a land home package. You’re selling the manufactured home and the land together.

Rehaan Khan (06:09)
That’s correct.

Dylan Silver (06:09)
This is an interesting niche, right? Because there’s such a demand throughout the country. And we talked about in the green room several of the states that you’re active in, if I’m not mistaken, the Carolinas, Virginia, Pennsylvania, even more of a heightened demand in those areas for affordable housing. The type of buyer that we think might traditionally be looking at manufactured home is now changing. And it’s now people who may feel like boxed out of the

A traditional single family home space. On your end, is that something that you’re seeing firsthand as well? A type of migration of who is a owner of a manufactured home?

Rehaan Khan (06:48)
Yeah, absolutely. If we look back at mobile homes, manufactured homes, they started off as a very luxury item, in Europe where, the ultra wealthy people used to be, were able to like purchase them. And then after World War, like government, the US government started building them on a mass scale for military families. And they were considered,

Trailers or, very, very like cost effective, items. Since that time up until the nineteen seventies, they weren’t really regulated. Then from the nineteen seventies, HUD started regulating them. They started improving the the the buildability and the materials that are used for building them. And now in the current market they have gone from mobile homes to manufactured homes. A lot of them are built with the same materials that

That single, family houses are made out of. People are surprised even to look at them and say that, this is actually a manufactured house. Because they’re really nice and you can have whatever finishes you want, jacuzzi tubs and, double vanities, all types of like modern finishes. They are quite nice. And that’s why you call them manufactured homes now. You don’t call them mobile homes. Lenders lend on them. FHA buyers are approved for them.

Dylan Silver (07:54)
I want to ask you about a different side of this picture here. If someone is looking at purchasing a manufactured home and they’re looking for the land, are there folks that can then help them? And do most manufactured home dealers help them affix it to the land? Do they have to do this themselves? Because that process does from the outside looking in sometimes feel disjointed. If I want to purchase a manufactured home and I may be able to find the land,

How am I gonna affix it to the land?

Rehaan Khan (08:22)
Yeah, absolutely. There’s several steps involved in, in fixing that home onto the land. And for retail buyers, yes, the the dealers do provide a full, service for them and they charge them for that. But as investors, we tend to do those, steps ourselves. We have our own contractors, we even have our own dealer’s license, in states and we’re able to like, save that cost there.

Dylan Silver (08:43)
I wanna ask you about the dealer’s license. When people hear dealer’s license, sometimes they think, vehicles, right? But there’s a distinction here between a VIN number and something that would be considered a home. Can we dive in there and talk about that distinction? What would make something a home versus, something that’s gonna have a VIN number?

Rehaan Khan (09:41)
Yeah, manufactured homes, they came from mobile homes. They do come with a title, which is similar to, a vehicle. However, when we actually, get it from the manufacturer themselves, there’s like major manufacturers in America like Champion Homes, Clayton Homes. Once we get them, we’re able to detitle those homes and turn it into a deed. That’s what the attorney helps you do.

And at that point, it’s affixed onto permanent foundation becomes just as a single family house.

Dylan Silver (10:07)
Detitling, I like this term. I haven’t heard this term before, but this is now the type of granular information that’s helpful for folks to hear. If someone then is doing this on their own, let’s say that they’re an investor, they purchase the manufactured home, they get the title to the manufactured home, they identify the land, they have a crew that’s gonna permanently affix it on the land and take it from chattel to real property, so to speak. They also need an attorney who’s familiar with this to then detitle

That home from a something with a title to to a deed, right?

Rehaan Khan (10:39)
Right, right, exactly.

Dylan Silver (10:41)
When we talk specifically about the investment side of this, of course land acquisitions is gonna be super critical. What is your buy box and is there anything in particular that you’re looking for with land?

Rehaan Khan (10:55)
Yeah, typically like if if we’re buying in North Carolina, we wanna, be out of like major metro areas, like we’ll stay an hour approximately, give or take, out of Raleigh, or any other metro area. Wanna see that there is enough demand for manufactured homes there. If there’s new manufactured homes that people are selling, we typically look for at least like a two thirty thousand

Sales price on those, two thirty and above. In some areas it could be two thirty to two eighty to three fifty. We we see that and then along with that we want to make sure that we have enough land. People, they like freedom, especially in America, they they like to have land. For us we want to have at least half an acre. And the market, the area that we’re targeting, if homes have like an acre or two acres

Of land that’s that’s what we wanna get, an acre at least or two acres then we wanna put a brand new home on it, for an affordable price, like that’s that’s what we we’re after ’cause like people like to have, a lot of land, a brand new home, a pickup truck, there’s freedom to live in the countryside. That’s a lot of people’s dream and we provide that dream.

Dylan Silver (11:57)
Once you have that land home package, what might be the spectrum of of market price for that manufactured home and and the land together?

Rehaan Khan (12:07)
You mean like what would be the resale price for it? Yeah. Okay. It depends on the area that you’re in, like in Virginia, it’s above three hundred, three fifty in some areas, because contractors are more expensive, permitting is more expensive, land is more expensive. If you go to North Carolina, then typically on average two fifty is, what the resale price is that we’re looking after, for a fifteen hundred square feet home.

On an acre, of land.

Dylan Silver (12:32)
Seems like an amazing return opportunity, especially when we consider what you could purchase a manufactured home for in some cases. How long though might these properties potentially sit before being sold?

Rehaan Khan (12:44)
Typically like we shoot for like ninety days, keep it, safe. Sometimes it might sell within a week. Sometimes it takes, over sixty days. Right now the market is slowing down. We do, account for that. As long as our product is good and our price is good, it is gonna sell. Just, sometimes it takes a little bit longer in the current market cycle.

It depends on where we are in the market, if it’s also the winter time, if it’s the summertime, springtime, you know, and the area you’re in. There’s a lot of factors that play a role there. But we wanna make sure that eventually it’s gonna sell.

Dylan Silver (13:14)
When you’re selling these properties, is it beneficial to work with a broker that has an understanding of this space specifically or is the marketing and sales process the same as with a traditional home?

Rehaan Khan (13:28)
Yeah, a lot of it is the same, especially when you detitle it. But it does, help a lot when you have a knowledgeable broker or realtor who has done, a couple of these. And especially if, if they’re a local expert, like sometimes you don’t even have to list them on the market. They have their buyers. They know the people around, they go above and beyond to make sure that they take care of you and take care of your home and get you a good sales price.

Dylan Silver (13:52)
If we look at a different segment in the real estate space, new construction, where might some affordable new construction homes start at in those markets? Are there new construction opportunities in the low three hundred thousands?

Rehaan Khan (14:06)
Yeah, absolutely. And if we’re talking manufactured homes, yeah, there is in some parts of the country, like there is new construction happening at a hundred and eighty thousand. I know investors are selling their units for a hundred and eighty, a double wide with with land and they they tend to sell pretty fast.

Dylan Silver (14:21)
In in your area, and the areas that you’re active in, if we look at the stick built side of new construction, what might be the most cost effective property that someone could get new construction stick built?

Rehaan Khan (14:33)
Well, to be honest, I haven’t, done a new construction stick build, I’m not the the—

Dylan Silver (14:37)
A shallow water in that space, fair enough.

Rehaan Khan (14:39)
Yeah, but we we typically for manufactured homes we wanna keep our price seventy percent that of a stick build house with with the same or more square footage and more land. That’s where we have our edge.

Dylan Silver (14:50)
That is a huge edge to have, right? And I think, and you mentioned this earlier, the differences now are becoming smaller and smaller. I’ve seen and I don’t know the full distinction between modular and manufactured. Maybe you can enlighten me here, but I’ve seen some manufactured homes that look like, no no distinction between what you would consider a stick built home.

Rehaan Khan (15:12)
Yeah, absolutely. Especially with the newer models, they are quite nice. But the main difference between a manufactured home and a modular home is a manufactured home, is a single story unit. You deliver it with a truck, you have your setup guys that, assemble it together and you’re good to go. With a modular, you can have multiple like stories and you need a crane, it’s not just a truck and a setup crew.

It’s much more expensive and it’s much more sophisticated to, install a modular home. It’s a level up than manufactured homes if if that’s what we’re talking about.

Dylan Silver (15:45)
I’d like to ask about durability, because I’m sure that’s on people’s minds. If they’re looking at a manufactured home, they might have an idea of what a manufactured home is that may not pair with the reality, right? How how durable are manufactured homes versus stick built homes?

Rehaan Khan (16:01)
Yeah, so traditionally speaking, like the mobile homes, they were created, for, parks a lot of the times and the buildability quality wasn’t the same as stick built homes. It would, also depend on like how you take care of, your home as well. Like some people they would have a nineteen sixties model, that would be in much better condition than a twenty twenty model. It depends on how people take care of them.

But currently like the new manufactured homes, they’re actually building them, with the same material that stick build homes are made out of. They’re still durable, they’re really nice, and it depends on how you take care of them. For the first couple of years you probably don’t have to worry about anything. But then after, maybe the ten year mark, you would have to like start, maintaining some things, painting some things, things of that nature.

Dylan Silver (16:43)
Now, we look at the back end component of this, maybe without giving away all of the gold, but a little nugget for for our audience here. When you’re looking at purchasing a manufactured home, as an investor, better to buy with cash that you’re not paying, the bank, so to speak, or is it better to finance it for that short time period that let’s call it the ninety days that you’re waiting on the NBR?

Rehaan Khan (17:04)
Yeah, it depends on where you are in your business. If you’re doing one or two, you’re just starting out, then cash may be the best option ’cause, it’s a learning curve as well that I had to go through and I still go through it. But if you’re scaling it to multiple projects then you obviously need to have more capital partners financing and things of that nature.

Dylan Silver (17:22)
Let me talk about that if we can. Again, giving away a nugget, but not necessarily the whole gold bar. The biggest bottleneck that many real estate operators face is financing and their capital stack. I understand that with manufactured homes, it’s basically, like car interest rates versus home interest rates. In many cases, that 2% higher or or sometimes more than that.

Is there a formula that you have an a specific amount down that you’re looking to put on each of these homes? Are you going into this with business partners, capital partners as well? What does that purchase portion look like for you?

Rehaan Khan (17:56)
Yeah, it depends, which strategy we’re gonna use. I look for capital partners, people that understand the business, that believe in us and we can partner with them. And then we basically joint venture. If they’re giving us a partnership, we’ll give them a certain rate of return, on their income and a certain timeline. And if we go past that timeline because of weather delays or contractor delays or what have you,

Then we have an extension, on that. And we keep giving those returns back to our capital partners. At the same time, we also, have people like other investors who use lenders, there’s an origination fee for the, for that portion, you pay that fee, and then there’s a certain percentage that you’re supposed to pay. There’s certain points. It’s it’s similar to how you would maybe flip a house.

Dylan Silver (18:39)
Want to pivot to something you had mentioned earlier. You mentioned looking at the comparable manufactured home land packages and looking for what they had sold to see where you’re going to price. If we look at just the land acquisitions portion of this, there’s many ways where folks are finding land. They’re looking through the market, what’s being listed, they’re looking through broker relationships.

They’re also looking through maybe wholesalers who are feeding them deals and opportunities. Do you have one land acquisition strategy that has been particularly fruitful for you lately?

Rehaan Khan (19:14)
Yeah, for us it’s direct to seller. That’s that’s the land acquisition that we get the best return on. We’re we don’t have any middle men in in the middle that, take their fees. That’s typically, the best strategy that we we tend to use. We also have wholesalers that bring us land. We just closed on one last week where it was, it came through a wholesaler.

But that was kind of a messy paperwork. We had to go back and forth, there were some lenders involved, some title issues. A lot of people gave up on it. But we didn’t. We kept on digging until we cleared all the paperwork and, we were able to acquire that land.

Dylan Silver (19:49)
When people are buying land there’s some due diligence that needs to be done. I’ve heard, site survey, soil testing, even, consulting potentially an attorney who can help understand, access and so forth land rights, if you will. What is your due diligence that you’ll do before acquiring some land?

Rehaan Khan (20:09)
Yeah, we have a checklist of due diligence, that we go through. Typically, some items maybe like the first thing is, we look at the location. We want to make sure the location is good. There’s no junk or anything, next to the land. There’s actually nicer homes, around that there’s demand in the area. Then we’ll look at the zoning, like I’d mentioned earlier. We wanna make sure the zoning approves of, what we’re trying to do.

Utility access, if it’s gonna need a septic or a water well, if it has public utilities, and then if there’s enough road access to it. Because with manufactured homes you also have to factor in the truck that is a heavy duty truck, they come in, they have to deliver the product as well. Things of that nature, if if it’s wooded,

Like how much is the clearing gonna cost? We’re gonna have to do a gonna have to get a a soil scientist to do a septic, test, make sure the soil is good. Other than that, there’s there’s a lot of things involved, we can go on and on. But these are like a couple of things, initially that we look for, when we’re getting land.

Dylan Silver (21:05)
It’s incredibly important, right? Because if you buy land improperly, I mean it’s a huge it’s a catastrophic error, right? Because you could buy land that’s on an island, there’s no access to it, there’s no easement to get to it, that’s of course, precarious. You can buy land where the soil is not suitable or needs to be compacted, that’s additional. You can buy land that’s not been properly entitled, right? Or zoned properly. There’s many

Different thorny ways where this becomes challenging, where investors do make mistakes. I’m sure you’ve heard many stories. Is there any one thing that you see investors doing wrong when it comes to land acquisitions?

Rehaan Khan (21:41)
Yeah, of course. I think that the the mistake that a lot of investors, retail buyers, they make them more commonly, not investors, where they just buy a piece of land and they think they can put anything on it, and then later on they find out that’s not the case. With investors, when they’re using a new strategy is they fail to ask people who are experienced or partner with someone who’s experienced. They think they can figure it out on their own. And, a lot of times they’re able to do that, but then

A lot of times maybe they, make mistakes and then it costs them, extra. I think that’s the biggest, mistake that investors make. Terms of with land, there’s many variables, that they could make mistakes on. I think zoning would be one of the biggest ones. Even if zoning were permitted, maybe there it’s in an HOA, it’s in a subdivision and they have bylaws that you can’t put, type of home that you want to put on there.

Dylan Silver (22:29)
I wanna pivot to the direct to seller acquisitions strategy. You’re active in several different states, Virginia, North Carolina, Pennsylvania. When you’re going direct to seller, are you, purchasing, seller leads, folks who would like to sell for for cash? Are you able to to pull lists and reach out to them that way? What’s your strategy?

Rehaan Khan (22:48)
Yeah, we’re targeting different states. We’re based out of Virginia. We do North Carolina, Maryland, West Virginia, Pennsylvania, Delaware, the surrounding states. It’s a lot of marketing. The way we do it is we use different channels. We we can do texting, we can do cold calling, we do signs, we we use wholesalers, we do mailing.

And now, with the whole AI, stuff going on, looking into that as well. We have used SEO, which is pretty good. Our website bring brings us leads as well. There’s just different channels that we’re using and you never know where a lead is gonna come from. It’s a little bit of everything.

Dylan Silver (23:24)
It has to be that kind of blanket approach, right? Because any one channel might potentially dry up for lack of a better term, right? Or or pivot or algorithm can change. And that can be challenging for many investors. Once you have though seller or a deal on the hook, what does that conversation look like with that seller?

Rehaan Khan (23:44)
Yeah, typically would have, when someone from my team or when I have the time, maybe even myself, we would, talk to the seller and try to get details, on the piece of land or, property that they have. Once we find out that their sales price is close to what we’re looking for and, it actually meets our criteria, then we’ll look into it further and we’ll,

Put it under contract. Typically we wanna get at least forty five days of due diligence. And then from there like we contact the county, contact the attorney, contact, the soil scientists and we start our due diligence process see if this is actually gonna work. If it does, great, we move on to closing. If it doesn’t, then we either renegotiate or just terminate our contract.

Dylan Silver (24:24)
There’s so much that can come up in deals, right? And it feels like it’s not over until it’s over, right? When we talk specifically though about land acquisitions, there there is a complexity which can sometimes be understated, right? Because there’s not always a home on the land, but that doesn’t mean it’s any less complex, especially when you’re developing on the land or repurposing the land.

What are some common things that come up at the end of this process here when you’re a couple of days out from closing? Are there any wrenches that routinely get thrown into these deals?

Rehaan Khan (24:56)
Yeah, there’s obviously like until it’s closed and done, it’s, never done. You gotta keep on, pushing. One of the things that’s, that personally for me it’s common is, the closing team they’ll send you an ALTA statement, has all the numbers on it, and the numbers that you were expecting are not the numbers on that document. Then you have to go line by line item with them to see where all these fees came from.

And that’s, something that you have to maybe renegotiate towards the end. I’ve had to do that, on a couple of occasions where maybe there’s a mistake or maybe, they put something in the contract that wasn’t understood. That’s something, that, personally for me it’s pretty common. You just gotta stay on top of, your numbers. Make sure you you’re all right on those.

Dylan Silver (25:34)
That’s I’m sure felt universally from investors outside of the manufactured home space, right? If we’re looking at the HUD statement, right, as they call it, right? Or if you’re looking at the closing documents and you’re seeing additional fees, sometimes that can make or break a deal in many cases, right? I wanna talk specifically about what closing looks like, right? I can imagine it’s a similar

Process, but maybe there’s some differences. Are are mobile notaries common? Do you do you meet, seller and buyer together at the title company? You’re of course operating in several different states, I can imagine this might be a different type of closing process.

Rehaan Khan (26:12)
Yeah, typically like if we are closing on land, it’s a similar process to that of a single family house. We have a closing team and they send us the documents and then, typically we do a mobile notary, where we, notarize the documents and mail it back to them. However, if we are buying a mobile home for a park, ’cause we do those as well, they come with titles and we’ve signed titles on,

The hood of a car from a seller, it’s it’s pretty it’s pretty interesting.

Dylan Silver (26:39)
I’ve done that in in the past, not not with mobile homes, but in my years working in the the automotive industry. It’s a little bit of a different type of deal, right? ‘Cause now you’re potentially, finding other information that you might not do the same way when it comes to a single family home or at least differently, right? And when we talk about assigning over or signing over a title, right, on the hood of a car, I can picture what that might look like.

Once you have that title, it it’s yours. Is there typically in in that case a cash transfer and exchange of money that’s had right then and there? Does that happen before? Does that happen after? How are the logistics when it comes to that situation?

Rehaan Khan (27:18)
Yeah, typically like people would pay cash or maybe they have another way to pay for that title for us. Since we’re a company, like we have, a check that we provide them. We provide them with like the purchase agreement and all the legal documents. If it’s a higher purchase price, then we we could meet at a bank even a closing company, even for a title. Or even use a third party. Like we sold a mobile home in a park earlier.

This year it was over a hundred thousand. It was a hundred and forty thousand sales price. We can’t sign a, title on the hood of a car for something like that. We had to like, pay for the title fees and, have a company be the third party in that transaction.

Dylan Silver (27:55)
That must have been a nice mobile home. We are coming up on time here, Rehaan. Any new projects or activities that you’re working on? Also anything you’d like to mention directly to our audience?

Rehaan Khan (28:05)
Yeah, absolutely. First of all, thank you for the opportunity to come and, spend this morning with you. I just wanted to, share the knowledge that I’ve learned and I still keep on learning that. We are doing deals in North Carolina, Virginia, and the surrounding states, like I’d mentioned. This is a new strategy. The government is changing their laws. We are looking for capital partners, that, are willing to put their capital

In real assets for real returns. And we tend to give them good returns back. If anybody is interested in that, can reach me at, [email protected]. That’s my email. I’ll also probably, share our socials, in this in the show notes. Other than that, we also have a non-for-profit

Called True Prevail Humanity. We just did a 5K run and we donated to the homeless shelter yesterday. It was pretty awesome. As investors when we do make profits and even if we don’t, it’s it’s a great way to give back and you’ll see those returns in your life, in your family, and for for many years to come. If you’re interested, in donating, we do a lot of good work. We have big plans ahead. That’s at

www.trueprevailhumanity.org. We’re a charitable organization and we’re on a mission to make the world a better place.

Dylan Silver (29:20)
Rehaan, thank you so much for joining us today. Thanks for your time.

Rehaan Khan (29:24)
Course welcome.