I’ve been talking with an op of a MHP . We have a lot in common and he has a desire to see the people and park taken care of by someone local. I’ve become interested in this space and pitched an idea to him as a way for me to get into the opportunity without having a lot of capital tied up. I asked him if I could lender finance the deal and if he would be willing to owner finance the down payment. He said he was totally open to a creative option like this which was encouraging. I also would like to purchase from someone willing to invest in my growth as I learn and he seems willing to which is awesome. The issue is that most lenders want to see the roads paved and the houses predominantly owned by the “tenants”. This park is not a paved road park and currently the park owns 13 of 18 homes. So my question is has anyone seen a process like this through, and how did it go? As well , does anyone know of any lenders that would lend on a park like this?
He’s received two full price offers and hasn’t accepted because he wasn’t comfortable. He’d like me to proceed in investigating this option...
Thank you for all who are able to help...
18 pads , 13 owned homes, room for expansion. One stick built home.$10,100.00MONTHLY INCOME
9.09%PRO FORMA CAP
$72,150.00TOTAL CASH NEEDED
58.33%CASH ON CASH ROI
11.88%PURCHASE CAP RATE
10% down payment @ full price. Just for numbers sake.
Assuming your numbers are based on the rental income from the homes and lot rents combined this is potentially a very bad deal.
However you have not provided sufficient details.
My advice would be to negotiate full seller financing with minimum down payment from you. This way if it goes south you walk away and lose less money. Chances of getting bank financing with POHs is probably nil. No one likes POHs.
@DJ Tosh Here is a tip I aquired from a podcast about mobile home parks:
Call the department at the local county (near the park) who handles records for mobile home parks. The county clerk should be able to provide you with information about who owns the park and which lender has the mortgage on it. That way you can better find banks who provide mortgages to MHPs in that area.
Best of luck!
Something doesn’t seem right. The first thing I do when evaluating a park is to look at the cost per occupied pad. If the cost per pad is at about $20K, then I am interested. That number will very depending on market location and a bunch of other things. If the number is $40K per pad, then the location (rents) better be double the US average. What is the current lot rent?
Nevertheless, definitely continue nurturing that relationship. Learn as much as you can about the financials and meet with every local bank.
@Ingrid J. - thanks for the tip!
@Jeros C. - thanks for the quick rule of thumb you look at. I agree the price is high and was contemplating bc of location running more of a rental model opposed to the preferred mhp scenario. I am looking at another opportunity that is all owner homes and traditional in nature. Seems almost everyone from purely an investment position shifts parks this way.
@Will Graham - thanks for the input. Agree price is high. See above. Does anyone run parks close to them more as rentals? The area is a strong rental market and Im a GC so I’m thinking everything in one spot would be nice over multi’s here and there...