MHP LTV/MHP Contract Assignment

[Chris Battaglia]

Hey All! My partners and I currently have a 34 unit MHP under contract in Upstate NY. We just got a commitment letter yesterday from a local CU yesterday and the LTV came in at 75%. We're a bit bummed since we were really hoping for 80%. That 5% adds up when it comes to the down payment! I've got 2 questions for others that have obtained MHP financing somewhat recently:

-What LTV are you seeing and from whom?

-Have you ever gone back to the financing source and successfully had the LTV changed?

Another topic I've been reading about a bit since the news of the LTV is contract assignment. MHPs seem to be growing in popularity and we felt the park was selling at a very good price. Has anyone ever assigned a contract on a MHP and can you elaborate a bit on the specifics and how the transaction went.

Thank you! 

[Jack Martin]

@Chris Battaglia 75% is about as high as it LTCs get in the MHP arena, especially during COVID. Lenders for mobile home parks include local and regional banks, credit unions, conduit (aka CMBS), life companies, and agency (aka Freddy/Fannie). If you have the appropriate track record, liquidity, and net worth requirements, you can pursue the latter lender types. If not, the best targets will be local /regional banks and credit unions.

As far as assignment goes, the clause "and/or assigns" is more commonly used where you make an offer on a property in your operations company name, knowing that during escrow you plan to establish a single purpose entity for the property.  Once that work is complete, you assign your deal to the name of the new entity. 

Of course, if you know someone seeking a park and the one you have in escrow would be a good fit, that could be a consideration as well. That would be akin to a "wholesaler" type of transaction and it would be best to make sure your seller is cool with that, or they will be surprised at the closing table.