Funding a Mobile Home Park
Hey everyone!
Wanted to get some thoughts/advice on this - I'm looking at a investing in a mobile home park (purchase price will be around 550k). After all expenses, it cash flows almost 4k per month half the year, and $4,500 the other half (seasonal lawn care that the current owner has in place). However, I only qualified for a loan of 65%, leaving me to come up with 35% down, which I don't have. I've tried to look into some private / hard money loans, but borrowing that much money seems to eat up almost all the cash flow.
Does anyone have any thoughts about different ways to fund or structure the deal? The owner has already turned down seller financing.
I appreciate any thoughts and feedback!
Thanks
@Ethan Wilson - you could bring in some equity partners. There are some securities laws that go into that but if you bring in equity partners that will be active with you then that might be the easiest - just verify with an attorney first.
#5 Medium-Term Rentals Contributor
- Lender
- Youngstown, OH
- 2,354
- Votes |
- 2,845
- Posts
#5 Medium-Term Rentals Contributor
- Lender
- Youngstown, OH
Quote from @J Zev J.:
@Ethan Wilson - you could bring in some equity partners. There are some securities laws that go into that but if you bring in equity partners that will be active with you then that might be the easiest - just verify with an attorney first.
I agree. I would hit up your local REI meetup to find some potential partners.
Congrats on the contract @Ethan Wilson ! That is not the lender I would go with. You should call every local and regional bank in the area or region. Sometimes takes calling 10-20 banks to get favorable terms. Without knowing your deal, we typically get 75% loan to cost (includes improvement $) 5-7 year fixed (aim for 7-10). 25 year am with relatively favorable rate from local/regional lenders on turnaround communities. Just closed one today with those terms.
Being new may have a little weight on ther terms but I would not get quotes from 1 or two banks and think you have to take one. When they ask what you're looking for tell them the terms I stated above. If they are concerned with track record then consider JV'ing with an experienced operator with a good track record and balance sheet
Don’t try to educate lenders on MHP, sort through them and focus on the banks that have financed, understand them, and have an appetite for them. Skip the rest.
Check out my profile for a couple great resources that will help with financing strategies.
You can raise equity as well. If you have a preferred rate of return on that equity it will eat up a good amount of cash flow on a tighter deal but it is still a good strategy. As mentioned above, get a securities attorney involved before raising equity from investors to CYA.
Go get it brother and reach out if you need more resources to get the deal done. 💪🏻
I have to agree with @Mario Dattilo on this. Either the lender knows how to finance them or doesn't. Don't be the Guinea Pig for their new program they put out there so they could lure interest to them...
Any particular reason they are knocking the LTV down so far? Is your Liquidity, FICO, or experience low? Worse case I see lenders go to 70LTV on MHP. Not unusual to see 75-80LTV at all.
Keep shopping around or find a commercial mortgage broker to do it for you!
Cheers!
Quote from @Nick Belsky:
I have to agree with @Mario Dattilo on this. Either the lender knows how to finance them or doesn't. Don't be the Guinea Pig for their new program they put out there so they could lure interest to them...
Any particular reason they are knocking the LTV down so far? Is your Liquidity, FICO, or experience low? Worse case I see lenders go to 70LTV on MHP. Not unusual to see 75-80LTV at all.
Keep shopping around or find a commercial mortgage broker to do it for you!
Cheers!
I appreciate everyone's feedback!
Nick, the reason for the LTV is my low liquidity and lack of experience. I only have one SF deal under my belt, and don't have a whole lot of cash saved up right now, especially for a commercial deal.