Lending options for small MHPs
Hello,
I was wondering if anyone has had experience with getting a loan on a very small MHP (<20 pads) by just asking for a land loan for a 5 acre parcel (that just happens to have some "old, tenant-owned mobile homes on it") from a bank vs. an actual commercial loan for an income-producing small MHP? Just wondering which would be a better way to approach a bank with this. The deal I'm looking at right now is 7 tenant-owned homes on 5 acres, supposedly producing ~$2600/mo in lot rent; well & septic in a rural, but growing area. Asking price around ~$250K; I figure the land itself is probably worth at least a third to half of that. What angle do you think a bank would give me better terms on? 780+ credit score.
Bank won't give you a land loan on that , if they do it would be too small a price to do anything less than 60%. Use the $2600 a month to get a MHP loan and make sure to get estoppels . Maybe you can get 70/30.
Seems like a good deal for 250k imo
Quote from @Patrick Sears:
Hello,
I was wondering if anyone has had experience with getting a loan on a very small MHP (<20 pads) by just asking for a land loan for a 5 acre parcel (that just happens to have some "old, tenant-owned mobile homes on it") from a bank vs. an actual commercial loan for an income-producing small MHP? Just wondering which would be a better way to approach a bank with this. The deal I'm looking at right now is 7 tenant-owned homes on 5 acres, supposedly producing ~$2600/mo in lot rent; well & septic in a rural, but growing area. Asking price around ~$250K; I figure the land itself is probably worth at least a third to half of that. What angle do you think a bank would give me better terms on? 780+ credit score.
Try local credit union, commercial lending department.
I have been working with small local banks. I was quoted today at 70/30. I would reach out to small local banks
Thanks everyone for the replies!
Quote from @Dave Kent:
I have been working with small local banks. I was quoted today at 70/30. I would reach out to small local banks
Hello Dave,
When you day "small banks" are you talking like ~5 branches or smaller? Virginia-based credit unions? In the past I have tried the "small bank" approach with my SFH refinances, only to end up having the bank pit me through the same conforming loan b.s where they quickly sell off the loan to Freedom Mortgage or some other scumbag giant Corp.
Was this quote a commercial loan? What kind of terms are you getting offered? Are they wanting you to move your accounts over to them?
Thanks!
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#3 Mobile Home Park Investing Contributor
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@Patrick Sears If you are buying the park, the best option would be seller financing. However, if that is not an option, then the best option will be local and regional banks (or credit unions). You can find out which banks have an appetite for mobile home 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/region and call them to see if they have loaned on parks in the past. If they have not, don't waste your time. Take the time to find the lender who already knows MHPs and likes them.
Some lenders may require you have the operating account for the park at their bank, especially if you don't have a strong track record of operating parks. Also, consider opening the operating account there gives them more incentive to do a smaller loan. Small loans take just as much time as a larger loan, so they may need to justify the effort.
All the best,
Jack