Mobile home park brokers

[Dominick Dahmen]

While looking for deals, do brokers fairly price parks? I've seen some that take the "upside" into account and some that don't. Do a majority of brokers under value parks based on super low lot rent, or not?

Thanks!

[Frank Rolfe]

The institutional lenders -- CMBS and Agency debt (these start at a minimum loan size of $1 million +) -- do not have higher rates for mobile home parks over any other real estate sector. Right now, these groups go down to around 4% in certain circumstances. We can borrow at the same rates as office, retail, industrial and multi-family.

Small or regional banks, however, may charge you more because they don't understand the industry. Many banks have never done a mobile home park loan before, so they may charge a higher rate because they perceive it as a higher risk -- probably from watching too many reruns of "8-Mile" with Eminem. 

The "stigma" against mobile home parks by the average American is both good and bad for the industry. It keeps competition out which creates higher cap rates, but it also can sour lenders and appraisers that are unfamiliar with the actual product and think only of "Trailer Park Boys" and other false narratives created by the media (which has learned that the words "trailer park" to any TV show will produce higher ratings with the American expectation of sex, drugs and violence). It's a sad state of affairs, but there is nobody that defends "trailer parks" from discrimination by the 92% of Americans that don't live in a mobile home.