I am 100% into mobile home investing. I have a few homes in my portfolio which are all getting me highly positive cash flow. I'm end game is to buy 1 or more MH parks. My question is will banks finance a park? If banks dont touch them what would be my best financing step? Thank you in advance for your responses.
Hey there! Good on you for making the decision to go for it.
To answer your question, it really depends on the park. Banks will usually finance parks that are stabilized and have a certain occupancy (I believe around 70% or so but I could be wrong). It also depends on the bank. national banks like chase or Wells Fargo will definitely be more strict about it but local banks that can give portfolio loans will be able to work with you more if you build a relationship with them.
One thing to keep in mind about banks is that they will only really consider the lot rent as income into how much the park is worth. mobile hone rent is not considered because of the expenses that go along with it.
if the bank financing doesn’t work, the next popular strategy is seller financing where the seller becomes the bank.
Hope this helps and best of luck!
@Farris Roach III banks are more likely to finance parks greater than $500k in value. It wouldn't be worth while for them to make a loan that small for a mobile home park when they can simply make a loan on a $500k single family home. So if you want bank financing, go for $500k + parks. If the park you want is lower than that, go for seller financing. I purchased 2 parks (1 about to close) under seller financing with rates better than what banks could offer me. One was only 10% down.
@Farris Roach III you will find it difficult to get a bank's attention on smaller parks for the reasons described above. Seller financing or cash works the best on smaller parks.
If you find a bigger park that will be worth a bank's time, the best banks to approach will be local or regional banks. You can find out which banks have an appetite for parks by asking the MH/RV brokers in your area, networking through other owners of parks in your area, or simply obtain list of the smaller banks in your area and just call them to see if they lend on MH/RV parks. It would be good to do this legwork in advance of buying the park, so you know beforehand who you are likely to bring the loan to. That will also allow you to understand what the lender may require you to do prior to refinancing if you choose to purchase the park for cash and refinance once it' stabilized.
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