Help Choosing which Lender Offer to Accept

[Allen Martin]

Whats good My Realestate Fam
I hope one day I can return this favor back to you. I have 2 lender offers on the table for a 200k loan & I need help deciding which is the better offer to accept. Offer 1- Eva Bank: 20% down, finance amount160k, 7.29% with a 5/1 ARM Monthly Payment 1,260 ish. Offer 2- Bank Independent 35% down finance amount 135k, 15yr / 5-year balloon

* I was told that even if rates go up it can only go up legally 2% from my original amount & Keep in mind I plan on paying either loan off early. I am purchasing a mobile home park 5.5 acres with 7 occupied slips in place, sewer septic, and well water. Projected gross $2100 a month / $300 per slip. I plan on adding more slips therefore more homes can be brought in.

[Frank Rolfe]

$2,100 x .5 x 12 = $12,600. At a $200,000 sales price, that's only a 6.3% cap rate, which is far too low on a small park. On top of that, you have private utilities, which is generally a bad idea on small parks. One problem with your private water and sewer and your whole deal is wiped out financially.

The bottom line is that I'm not sure you should take either offer or the park in general. The only person winning on this deal may be the seller.

The only thing that would change my mind is if the market lot rents are $700 per month and the park is located in downtown Austin.