MHP financing for deal with 50% vacancy

[Joshua Schoer]

Hi,

My partners and I have come across a value add deal with huge upside. However we can't seem to find financing even though it is already cash flowing well because it is about 50% vacant and about half of the homes are park owned. The purchase price would be about $735k and it is 113 pads on city utilities.

Between us we own a few parks, so we have experience managing, and can show decent income and net worth.

I believe we can find investors for the deal, but don't want to do so if we can't get financing.

Any help anyone can provide would be great.

Thanks

Josh

[Frank Rolfe]

You may still be able to get a small-town bank loan on a deal with 50% occupancy -- but you'll have to have a good narrative on why there's so much vacancy and how you're going to fix it. You'll also have to have a price that is extremely attractive so the bank is not as exposed if you fail in your mission.

We've obtained financing from small-town banks on deal just like this, and here are the steps:

1) Do a Google search of every bank in the metro area.

2) Eliminate any that are national or regional banks. Look for ones that have just one or a few branches.

3) Build a really great loan request with ample documentation of your plan and how to mitigate the risk.

4) Build a really good narrative on your experience in real estate or business that would allow you to pull it off.

5) Contact each and every bank in the market.

6) Get every single one that is willing to consider the loan.

7) Keep pushing it until you have at least one interested group and then try to wrap it up.

Deals like this are never easy to find financing for. But it does exist if you look around hard enough. We've never had to pass on a deal due to lack of financing.