Financing mobile home park

[Chris Gavre]

How do you guys finance mobile home parks?

Banks of course won’t, I’m trying local credit unions and they aren’t willing to either.

How do you set up a deal with a local investor? Do you give them a percentage of the cash return each year/month, a stake in the park itself? How does setting up deals like that work?

Thank you!

[Daniel Ryu]

@Chris Gavre

Typically the order of preference for financing mobile home parks:

• Agency Debt - Best rates and terms. However, typically $2m minimum size loans, 30% fewer POHs, and the parks would have to be higher quality: offstreet parking, signs, lights, etc. Ask a lender for their Fannie Mae Buyer's Guide (or you may be able to google it) and look up the mobile home park section.
• CMBS - Before COVID, CMBS was a good alternative to Agency. Rates weren't quite as good, longer periods before payoff was allowed (defeasance penalties could be very high), and the nerve-wracking nature of not knowing until you close whether the loan is going through - not sure if that's for all loans, but we didn't know for certain until the day before closing. Not fun... CMBS was more lenient on POH requirements - we received a CMBS loan despite having a high POH count, WWTP and wells.
• Local / Regional - Might be recourse, but can potentially do smaller loans.

I've heard of a few a MHP lenders that will do sub $750K loans - reach out to me if you're interested and I'll see if I can dig it up in my notes.