Posted by wes on July 26, 2005 at 17:06:05:
There are several things that can be big factors in the possible financing of a Mobile Home Park
Among them is the Loan Size. Smaller than $400K - $500K and the lender/financing choices available to you will be be limited.
Another is the vacancy factor. Most lenders want a park to be 80% or more occupied in most cases.
Then there is the fact most lenders will only count the “Pad Rent” as income towards the NOI and in calculating the debt service ratio.
Park owned “units” might exist and be adding additional income, but most lenders will not count them. The sellers on the other hand will usually try and use this additional income as justification of a higher sale price.
Due to this fact, there are many times where you might find a desirable park that produces a great cashflow, but when the lender looks at the numbers, they will conclude there is not enough income for debt service based on the purchase price and the amount of the loan you (the borrower) are requesting.
At this point, if you are still interested in the park, you will have make a decision or a deal. Primarily to either negotiate the price lower with the seller or make a larger downpayment than what you might
have originally planned.
If you find a park in which you are interested, but are not exactly sure of the financing angle, we would be happy to take a look at the numbers for you.
Best of Luck!