So I just bought a mobile home park with a car loan..

[Brandon Brown]

Hey BP, I am excited to share my creative finance story on this deal I just wrapped up.  So the mobile home park details are as follows:

Purchase price: $110K

13 homes, 2 lot rent and 11 park owned.(2 vacant units)

City water/septic 

Rent: $200-450

Auto Loan 20%down, 7.75% for 6 years full amortization.  

The payment is kinda high but I like the idea of having it paid off in 6 years.   This local bank proposed these terms and I accepted. It was by far the easiest loan process I’ve ever done.  So now I own 2 mobile home parks, a duplex, and my single family home.  The wheels are starting to spin faster and I’m building momentum.  Please respond with comments and questions.

Brandon

[Frank Rolfe]

Here are some suggestions for you:

1) Give the POHs to the existing residents and raise their lot rents to $300 per month (if the homes are not part of the collateral pool to the car loan). Only the real property rent goes towards the cap rate, so put all the emphasis on that. Plus, at those rents, you're actually losing money on the homes when you factor in R&M, taxes and insurance (after you subtract out the lot rent).

2) Renovate and sell off the two vacant homes for whatever you can get, focusing on the $300 lot rent.

3) You now have the following economics: 13 lots x $300 x 12 x .6 = $28,080 NOI.

4) Your payment is roughly $2,000 per month P&I, as far as I can figure. So you can completely cover the debt.

5) After 6 years, if you continue to increase the rent only 5% per year, you will be taking home about $36,000 per year in net income. NOT BAD ON A $22,000 INVESTMENT. 

VERY CREATIVE WAY TO FINANCE A MOBILE HOME PARK!

We've used everything from credit card debt in the early days to seller carry -- but never a car loan.