Brrrr a mobile home park

[Erik E.]

Hello,

We are investors in SFH and have brrrr'd (buy, rehab, rent, refinance, repeat) properties in the past.

We have been looking into the mobile home park space as we have some friends that are investing in that space and I hear Brandon talk about it on almost every podcast :)

Is it possible to brrr an entire mobile home park? For example, buy a property that has the opportunity to infill and/or raise rents and make general improvements (such as roads). Then once you have it fixed up and cash flowing at its peak, refinance with a bank and get most of your capital out of the deal. Is this a common practice in the mobile home space?’seems like the best of both worlds with high cash flow + financial leverage.

Any examples folks can share?

Erik

[Frank Rolfe]

Yes, we call that a "cash-out refi" and we have done that over a hundred times. To accomplish it, however, you have to use the following framework:

1) Buy it at a fair price with a lot of upside in raising rents, filling lots and cutting costs.

2) Finance it with seller or bank financing.

3) Enact your plan and boost the net income.

4) Season the higher net income.

5) Refinance with a CMBS "conduit" loan or a Fannie Mae/Freddie Mac "agency" loan with non-recourse.

It's important to note that very few normal banks do "cash out" so you're only shot at this plan is to use conduit or agency debt -- and that means your deal will have to be at least $1 million by the time it is completed.