How to fund a rv / mobile home park

Question

Hello everyone. I have a huge challenge ahead of me. I'm fairly new to real estate

investing. I'm a W2 earner, I have a note I'm carrying for 5 years and 1 rental.

I came across a rv park with 9 spaces and 6 1970 mobiles that come with the property. The place is full with a great monthly return.

The owner wants 250k and is open to a small carry for a very short term ( 1 year or so )

My question is how can I finance this property?

Thank you for taking the time to help me!

Daniel Ryu · Answer

@Brenden Mitchum

Thanks for the mention!

@Bryan Compton

Good luck!

Bryan Compton · Answer

@Brenden Mitchum thank you. Lots of great information. I’ll look into what you suggested.

Brenden Mitchum · Answer

Hey @Bryan Compton, welcome to the BP community!

As @Mike Reynolds mentioned you will definitely want to start with an analysis. However, do not use the BP calculators for this as they are not designed for MHP. You wouldn't use a hammer to screw in a bolt right? So your first step here is to learn how to properly analyze a park. There are plenty of great learning resources out there, some paid some free. Check out @Daniel Ryu's youtube for some fantastic free content. You might also want to take a look at the MHP Tribe on facebook. We do weekly calls and just got done with a series on deal evaluation. You can watch the replays on the group page. Also, the deal evaluator used is free for members of the group.

Next you will definitely want to figure out financing. That 1 year seller carry is a joke. Just pretend like they aren't offering to carry the note at all and that you need to find financing now. Best bet is a local bank. It sounds like you have already begun to build these relationships, which is great. You might have to call up every bank in a 50 mile radius though to find one to finance a park that size, especially with RVs (unless they are long-term). The only thing the bank will care about is the lot rent income - they won't touch those old homes or RVs. So make sure you understand this when presenting the deal. You might find that the only option is cash or actual seller financing. I bet the seller knows this too so working with them to make this happen while searching for banks is probably the way to go here.

Hope this helps a bit! Please, feel free to reach out anytime if you have other questions or just want to chat MHP!

Rico Nasol · Answer

@Brian Bistolfo you got some great advice here. let me know if you need help narrowing down lenders. we have some MHP lenders in our network that might be able to help.

Jack Martin · Answer

@Bryan Compton I agree small local banks are going to be the right direction. Since you may not have the tools and experience to correctly position the deal to present to the bank, you may have to ask the banker to get on your team and "help you help him" if that makes sense.  Lenders are motivated to get loans done, so if you feel you are qualified to get the loan, prove that first and then ask for help.

Ask the lender to put the deal aside for a minute and get real with you about potential deal killers with respect to YOUR qualifications as a borrower. Do they require a certain amount of net worth, liquidity, operational experience, ownership of other assets, etc.  Once you can demonstrate YOU are worthy of attention, then you can look at the deal together and build a package for it that will be presentable to the loan approval committee.

Keep in mind that lenders and brokers of all types are always concerned about one thing: surety of close.  They are always asking themselves, if I spend time with you, am I confident a deal will get done?  Help them become sure.  Then they will spend time with you and help you get a deal done. Once you do one, the gates are open for more.

All the best,

Jack

Bryan Compton · Answer

@Mike Reynolds thank you. Lots of great information.

Mike Reynolds · Answer

Run the numbers on the BP calculators.

I had the same issue with a MHP in Little Rock. It was 240k. Very close to the one you have working.  They wanted to run the land only. It came up at 165-180 max. I was curious why but banks do what banks do lol. Then we proposed running the numbers and I can actually get 100% financing if I want. I can do this because of the BP calculators. They are awesome. They have all the info you need plus pie charts, graphs and everything else. 1 year to 30 year projections.

So, they want to run a commercial appraisal now. It comes up pretty close to the BP chart. Just don't be optimistic on your numbers. Be pessimistic a little. Figure an extra AC unit or road work. They will appreciate your pessimistic numbers when theirs come out better than yours.

Bryan Compton · Answer

Steven Wilson, thank you for the advice. I have 2 local banks I'm in touch with right now.

Other than land value, how would you show the underwriter additional value? My thoughts are previous tax returns from the seller?

Steven Foster Wilson · Answer

Special Commercial lenders or special HML. Since alot of Mobile home parks usually have MH that are owned by the people, its less leverage for the bank in case they need to sell. But there are those lenders out there. Id start googling and calling all commercial banks asking for references.

How to fund a rv / mobile home park

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