Posted by Michael Morrrongiello on June 07, 2005 at 17:13:26:
Marketing your MH park for sale with owner financing is a smart move. Given some of the “Flaws” you alluded to involving your park, its doubtful any institutional investor will make such a loan to a buyer.
However that said, these “flaws” do affect the value of your park and do create some additional risk for anyone financing the sale of the park. Your park is ripe for some type of upgrade to the waste disposal system used in the park (perhaps tying into public utilites, or engineering some type of waste system that can be approved and used to service all of the homes in the park) - albeit that will be costly.
If you still sell the park under the current circumstances, and also finance the sale, then the resulting seller financed “paper” will need to be at a conservative LTV - loan to value exposure level.
You might consider taking back (2) two Notes and Trust Deeds… a well secured 1st lien Note and Trust Deed which can be sold and converted into a cash sum and then a 2nd lien which you might retain for income.
Given the fact that any new buyer of this small “mom n pop” mobile home park cannot replace the existing trailers with newer model homes, or that there could be sewage problems that might develop in the future because only 2 older septic systems are servicing 5 homes (we have seen this exact scenario unfold on several occasions)- you will need to be realistic about how to best structure the sale and the owner financing.
Another “twist” to consider is to find a buyer who might be willing to purchase your MH Park but allow you to take back your Trust Deed on THEIR other collateral as opposed to the park.
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