Bank land loan terms

6 Replies

My local bank is offering a land loan towards a purchase of MHP, their terms are below.

Up to 60% of appraised value or purchase price

Max term is 3 years

Max amortization is up to 15 years

Does this sound reasonable? Depending on what my LLC get approved for I was going to contact the seller regarding doing seller financing for the remaining amount owed for property.

Any thoughts from my investor community?

Term is too short, amortization is too short. Especially where we have a possible recession on the horizon. I would really want at least 20 year ammo. 5 year minimum term, really 7 is better, 10 is strongly preferred. All this will take into account the actual deal and upside seeing what the cash flow will be. Then 60 LTV is slightly low. Maybe share the deal numbers.Always see what you can work out with seller financing as an option maybe even the best option . @Jordyn Rodriguez  Study the asset class also before buying. Mobile home university is a great place to start

@Jack Baczek thanks Jack, yeah I planned to see what I could possible work out with the seller. Once I have details on the deal, would I be able to run them past you to get your perspective

@Jordyn Rodriguez Just post them here once you have the property under contract.  Doesn't have to be the address just the basics , so others can learn as well. 

Ok sounds good. The seller is asking buyer to assume $350,000 loan and 100k down payment for 15 lots and one single family home. NOI is $40,330. Cash on cash return 12.61% and cap rate 8.96%. I would like the cap rate to be 10% or higher. I believe the property is over priced, so was thinking to offer $415,000 (waiting to LLC filing to go through to see how much I get approved for) and see how much I can seller finance.

As they say trying to figure out the terms that give me a good return. Please share your thoughts.