All Forum Posts by: Edward B.

@Stuart Nebeker, are these all POHs, I am assuming they are. I am also guessing that you are satisfied with the price since you did not ask about that. I agree with @Ryan Groene that you will likely have to self manage something this small or have an offsite PM, which can be problematic with MHs. Based off of that, how close is the park to you?

In terms of the seller financing, you just need to sell them on minimizing their tax hit in year one if they stand to make a large capital gain on the sale. Also, steady income for the next several years without the headaches of management. What do they intend to do with money? Because if they don't have plans then this is a good way to keep it invested. Maybe offer them a lower cash option or option with them in second place if you are in a position to do so. Often times that can entice them to go with the full owner financing because they feel that getting their price is the best deal.

@Patrick Shawn Faherty, that's fine if that's what you want to do. Just understand that you are exchanging your lower fixed rate mortgage for a higher variable rate HELOC. You will wind up paying more in interest than you would if you just put that money toward your mortgage without using the HELOC.

@Patrick Shawn Faherty, do more research. There are better and cheaper ways to accomplish the same thing. The HELOC strategy is for people that have trouble managing there money or don't understand how this really works. There is nothing magical about it and they wind up paying more in interest than they would have if they just paid their mortgage down faster. But honestly, why would you even do that. A mortgage is some of the cheapest money you can get, why would you lock up all your money in equity where it is maybe earning inflation?

@Nick Senella, short answer is that many investors appear to be offering at a 10 percent cap rate for a park that is just renting the pads. So rough math 20 times $200 equals $4k per month or $48k per year. Expenses and everything depends on a variety of factors but should run between 35% and 55%. Assume 50% and you are looking at a value of roughly $240,000. Actual value will depend upon the actual revenue and expenses and a variety of other things. That would be the long answer, though, and I would need a lot more information to determine that.

@Shea Spinelli, sounds like a money pit, but I wanted to throw out there just the same that there are lots of ways to calculate the value other than price. Owner financing can be very valuable and the deal may (MAY) make more sense with better terms from the seller. Less down, lower interest rate, interest only for a period of time, etc. 

Point is that price is important, but it is not everything and it may be more important to him than you. I've seen sellers accept crazy terms to get their price (100% financing, 0% interest, no payments for the first year, etc.) However, sometimes a money pit is a money pit, no matter how you try to pretty it up.

@Will Graham, that is exactly what you do to determine what the park is actually worth. However, I would ask the seller what if anything he is attributing to lot rent. May let you start your negotiating off at more favorable offer.

@Matt Kauffman, it is highly dependent on the appraiser as to the quality of your appraisal. Ideally they will use someone who specializes in or at least has experience valuing MHPs. I am not sure why the appraiser would not have access to the financials if the bank is considering loaning on it. I don't know of any bank that would do a commercial loan without knowing how much income the collateral is generating.

If you can, I would call the two different appraisers and determine what their level of experience is with MHPs. Go with the one that has real experience because if they don't, God only knows what kind of a value they will come in at, but it could be ridiculously high or low.

Number 3 will not negate the due on sale clause. The way most are written you will still be in violation. You are just obscuring what you are doing. I also heard recently that at least one major lender already has a system in place to question all loans that have been transferred to a trust in order to determine if the due on sale clause has been violated if they decide to start exercising their right to accelerate the loan.

@Kelvin J., you can get a HELOC on an investment property, but as pointed out, the terms are significantly less favorable. I would say a CLTV of 80% tops and more likely around 70%. Owner occupied HELOCs can be had for 100% CLTV. Shop around. Your current lender isn't the only game in town and your mortgage adviser is misinformed.

@David Sanford, I closed a blanket loan on four properties in 2016 with them and was pretty pleased with the process. It was expensive and the interest rate was on the higher side, BUT it was 30 year fixed on investment property and they closed the loan when local banks wouldn't even consider it. If the numbers work, I would recommend them.