Mobile Home Park Finacing

7 Replies

Hello All! 

My partner and I have a great deal on a mobile home park. We are working with a local bank and everything is progressing smoothly! We will buy a second park immediately from the seller and more to follow after that! We also have a few deals in the pipeline ;)

We want to get some backup financing in place. We were misled on one private lender and are now looking for other private money options?

The rates we were given was 35% down at 10.25% interest for 2 years, with a 2 year extended option interest only. Is this common in the private money world? We were told 30 years at 7.5% when we started the application... 

So who will do private money on a mobile home park? We have deals coming and need to secure financing. 

Any help is gratefully appreciated!! Thx all. 

Few details on park. 

Purchase price 700k

33 out of 48 lots occupied

Most are park owned home - recently been rehabbed, other trailers taken out and several newer homes. 

Tenants pay city water and sewage

excellent location - right next to everything

lot rents and park owned rents are all low - will be raised upon purchase 

The two lenders who have seen our underwriting package and spreadsheets have been impressed. It is a good deal. 

Originally posted by @Paul Sofia :

I will be happy to take a look at it.   I will need some more details.  Sent PM.

Hi Paul, we have a similar situation and are looking for financing for what we think is a great deal on a small park. If you don't mind, could you PM me for more info too, please! Would love to know what kind of loan products we may be able to work with so we can make this happen. 

Thanks!

Extremely difficult to get financing when majority are park owned homes. It would be wiser to seek out communities with all tenant owned homes.

If you do end up with some POHs you will need to work toward offloading them to tenant buyers since expenses will consume most of the rental income. Profit center is on lot rent, rent on homes will be a wash long term.



Originally posted by @Zoe Mercier :
Originally posted by @Paul Sofia:

I will be happy to take a look at it.   I will need some more details.  Sent PM.

Hi Paul, we have a similar situation and are looking for financing for what we think is a great deal on a small park. If you don't mind, could you PM me for more info too, please! Would love to know what kind of loan products we may be able to work with so we can make this happen. 

Thanks!

Sent

Hi @Zachary Phelan ,   @Thomas S. Brings up a good point.  When you have a park where less than 40% of the homes are park owned then you will have many more commercial lending options open up for you.   The 30 year term with 7.5% interest you mentioned hearing at first is totally realistic if you have this Tenant Owned/Park Owned Ratio I'v described.  

Lenders really only want to lend based on the value of the land + improvements (lot rent).  

IF you have a hairier deal with more POHs you MUST get lot rent separated from home rent on the rent roll..... As a broker, I have to really put on my salesman cap and tailor my approach when pushing MH parks to lenders because they all of their own nuances but as anyone who has analyzed them knows, they can be cash cows and great investments!

@Zoe Mercier where are you looking at parks?

I recommend anyone on this thread tune into Jefferson Lilly's podcast Mobile Home Park Investors. (from Park St. Partners)  It's one of my favorites.