Under contract on two MHP package. One is >80% occupied with TOH. The other is >50% occupied with <10% TOH. We are having challenges finding a lender that will blanket the two or even accept the second park. Does anyone have any contacts that might help us? Thank BP!
I would reach out to Matthew Newman at Chesapeake Bank. They seem pretty open to creative deals. I don't have a business relationship with Chesapeake Bank or Matthew Newman, I've just heard good things from others.
I would call John Medernach at First Secure Community Bank of Joliet. We've worked with him for years now and they are really good people and very reasonable on park deals -- they have a good understanding of the industry.
@Frank Rolfe In the situation John Brinkos described above, it seems like he has two very different properties:
- 1. one park that is a strong performer with seeming low complexity (due to low POH %); and
- 2. one park that is a weak performer.
In your experience, have you found that banks and/or agency lenders and/or conduit lenders are willing to lend on a portfolio of 2-3 MHP’s even though they vary widely in their characteristics and operating results? We have a few parks that we are turning around and are considering a path whereby we pursue a portfolio loan of ~$2mm in a year to extract equity while posting 2-3 very different, but performing, parks as collateral. They differ in geography (Major metro in TX; small town near Florence, SC; and mid/large metro in NC) and profile (all TOH park, 25%/75% POH/TOH, and 100% POH) but they all are 80%+ occupied, collections are strong, and financial results are solid.
I’m curious if you’ve been through this before and can share any considerations that lenders keep in mind when determining whether to lend on a heterogenous mix of MHP’s.
P.S. I listened to your recent interview, Episode #339 of the BiggerPockets Real Estate Podcast, and it was excellent. Thanks for being so generous with your knowledge.
Bundling properties often creates more difficulty than it helps including:
1) Most lenders have a preferred property type (or even geography) and when you bundle two with different stats (like high occupancy and low occupancy) it results in them being uncomfortable with one of them, hurting their terms on the one they liked.
2) When you bundle parks together, it can cause problems if you then want to sell one, as you have to often break apart the loan and the defeasance cost (on conduit) is massive.
That being said, all that matters is the actual situation and the lender at hand. We use loan brokers on virtually all of our acquisitions and refinancings as they know the lenders that are the most attracted to MH at any given moment (whether it's bank debt, conduit, or agency). They can tell you from experience and current market conditions if you should bundle or not. Our favorite loan brokers (now called "capital consultants") include MJ Vukovich at Bellweather and the DiMarco brothers at Security Mortgage Group. You can simply call them and bounce the deal off them at no cost. That's what we do.
Thank you @Frank Rolfe . Very helpful. We appreciate all that you do!