All Forum Posts by: Ernesto Duran

@Daniel Freeman there are two parts to this answer. To a lender POHs (park owned homes) are rental units that have the potential for high turnover. TOH (tenant owned homes) are the opposite since the tenant is a homeowner and rarely move out, resulting in low turnover. 

When a lender is contemplating a loan on a MHP, they are really lending on the land under the homes. Therefore, their concern is how stable the cash flow is from the individual spaces in the park. 

With park filled with TOHs, a lender can be highly confident that the income will be stable. With POHs that are used as rental units, the risk to the bank is that the tenants do damage to the homes and leave, resulting in a unit that is not earning any income. Mobile homes are not designed to be used as rental like apartment units are. 

Lenders tend to look through the lens of worst case scenario. With an apartment building, worst case is the lender takes the property back and they own an apartment building.  With a MHP, worst case is the lender owns land with a bunch of vacant mobile homes. Banks don't want to own mobile homes. 

All the best,

Jack