Mobile Home Park Financing

[Jordan Vires]

Does anyone know or recommend where one can get financing on mobile home parks?

Banks seemed scared to death to do them. 

Thanks

Jordan

[Brad Johnson]

21st Mortgage lends on mobile homes, I don't believe they have a park financing arm. 

Financing mobile home parks can be challenging depending on the size of the park, the occupancy and the number of POH (park owned homes). 

There are couple financing options:

• Regional Banks
• National Banks
• CMBS (Commercial Mortgage Backed Securities - aka Conduit Loans)
• Life Companies 

A park below say $1.5-$2.0 million in value will likely need to be financed by a regional bank. National banks typically want to finance large commercial deals. CMBS lenders can finance smaller deals as they are going to package the loans and sell them to Wall Street, but they generally don't like to go under say $1.5mm in debt proceeds. Also CMBS lenders tend to like deals with higher occupancy (say 80%+) with not too many park owned homes.

There are a couple Life Companies that love mobile home parks but they are really relationship driven and they are going to want larger, stabilized deals as well. 

Therefore, the majority of mobile home park deals will be financed by regional banks. You're best bet here is cold calling every regional bank within say 100 mile radius of the mobile home park you're looking to finance. Not a fun exercise, but this is the only way to ensure you've explored all financing options on a smaller park. 

Alternatively, you can hire a mortgage broker that specializes in MHPs. However, as they are typically paid 1% of the loan amount, they too prefer larger parks and may or may not spend much time working on smaller deals. If you're park is located in a small market, they might be able to help if they happen to know small banks that are willing to lend there, but they are unlikely to call every regional bank. If the park is located in a larger metro area, they probably have connections with several banks and will save you a ton of time (and perhaps secure you better terms).

If you pursue all these avenues and still strike out, then you have a compelling reason to go back to the seller and request he/she offer seller financing. If they won't (or cannot) then move on to the next deal.