Mobile Home Park- Gap Funding NEEEEEDED...
Hello everyone,
My name is Chris Keil, and I am look for $350K for GAP funding on a Mobile Home Park, that is already cash flowing in Raleigh, North Carolina. We had a partner that was going to be able to provide the funds, then had some "changes" and went MIA...I need some help to figure out how to continue to close without giving up the deal. I have $9000 already invested non-refundable in earnest, the additional $9000 for earnest escalation is due on the 31st of January.
Who may have some creative ideas, or connections that would help me keep this deal moving forward?
I am not the biggest investor and may have bit off more than I can chew this round, so I am willing to do what it takes to make this happen...(within reason, lol)
Yes, I'm under contract. There is 30 days left, the deal is supposed to close March 1st. Any thoughts or directions, or connections that anyone has in mind to keep this rolling? Do I need to give someone equity in the company?? Thanks everyone!
Are you coming up short on cash/debt to buy it?
Hey @Chris Keil
Sounds like you're just looking for short-term financing while you fix up the park and refi? This might not be necessary if the park is already cash flowing. I would call up every bank in the area and pitch the deal to them. Explain it's already cash flowing and you plan to add value by doing BLANK. Then, you'll refi in x years (with the same bank) when the park is more stabilized and performing even better. If the numbers look good this will be a no-brainer for any local bank that does MHP lending. You just have to find one, but I recommend getting at least two onboard just in case one drops at the last minute.
Definitely do this before you bring in an equity partner, unless you could also use help or a mentor.
And please, feel free to reach out anytime if you have other questions or just want to chat!
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Real Estate Agent Georgia (#401878)
- 404.737.0018
- [email protected]
I have some thoughts @Chris Keil. Feel free to DM me
@Mario Dattilo yes, and I feel like giving away equity in the deal is going to be the only way to get it done now.
@Brenden Mitchum exactly my plan. There are a couple of value adds, and the finacing that was found requires a down that is now missing. And after a non-refundable earnest deposit, the partner dropped out. So we need cash to close.
@Dave Rav DMd
@Chris Keil Ah, I see. Coming up with downpayment funds that suddenly disappeared is not going to be easy. Yes, you will most likely have to bring on a new capital partner. I don't know of any lenders who would be cool with taking a second on an MHP. Best bet is to shop the deal to your network of experienced MHP investors to add a capital partner/mentor.
But, don't think of it as "giving up equity." Think of it as hiring a mentor with an immediate return on your investment. I see this as a Win-Win if you find the right person. You'll avoid some costly beginners mistakes and they'll get access to a good deal. Compare this to the alternative of losing the deal...
Last thought is to ask the seller to fund some of the downpayment. They might be willing if you've built a strong relationship.
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Real Estate Agent Georgia (#401878)
- 404.737.0018
- [email protected]
@Brenden Mitchum thank you. That is a great way to reframe that mindset. I'm reaching out to investor connections on FB, connectedinvestors, and personal connections as well, so great thought. And I'd agree 50% of a deal is better than 50% of nothing.
@Chris Keil I will not suggest you can't find LP by offering equity contribution for 50% split. The question is why would they do it? Decent MF syndication will offer 70%/30% split with 7-8% pref and established MHF (Mobile Home Funds) will also offer 50%/50% split after 8% pref. Ask yourself, what is in it for your LP relative to everything else he/she can invest in?
Please don't take this as negative, just current reality of the marketplace.
I can only think of one thing that may attract an investor in your case. You are buying a park at discount.
Good luck.
Alex
@Chris Keil there is a large and active group of mobile home park investors on Linkedin. It is run by Jefferson Lilly. I would join that group and ask them.
You may also want to approach some large hard money lender‘s or private lenders. Good luck!
I know it is a very difficult position to be in @Chris Keil. We do syndications and run private REITs for accredited investors. I think what @Al Lev mentioned is right on the money in terms of syndicated deal structure, waterfall distributions and backend profit split.
There are many ways to structure the deal and I am sure many folks who are much smarter than I am, may have recommended them. I would also ask for a short term seller financing. In mobile home park asset class, we have been very successful at that, but of course you will bring in your downpayment in most, if not all scenarios. I haven't seen deal financial details but happy to help brainstorm, if you want to DM me.
Good luck, you will find a solution. That's what we all investors do.
Best,
arjav
Quote from @Arjav Parikh:
I know it is a very difficult position to be in @Chris Keil. We do syndications and run private REITs for accredited investors. I think what @Al Lev mentioned is right on the money in terms of syndicated deal structure, waterfall distributions and backend profit split.
There are many ways to structure the deal and I am sure many folks who are much smarter than I am, may have recommended them. I would also ask for a short term seller financing. In mobile home park asset class, we have been very successful at that, but of course you will bring in your downpayment in most, if not all scenarios. I haven't seen deal financial details but happy to help brainstorm, if you want to DM me.
Good luck, you will find a solution. That's what we all investors do.
Best,
arjav
I always appreciate the opinion from other investors. I managed to work a seller financing deal with my current deal after talking with the seller more about his stressors and what would be the way he could "creatively finance the deal, if he were in my shoes", so instead of finding partners to bring $300k cash, we only need $100k cash.
