Why would
anyone want to buy Mobile Home Parks?
More and more investors
are contacting us to help them finance the purchase
of a Mobile Home Park, Manufactured Home Communities,
Manufactured Home Communities but again I ask you
why?
The reason is very simple THEY ARE A CASH
COW! as so aptly said by our recent
investor, Michael C. from San Diego.
Michaels’ company is a development firm that is
constantly looking to purchase existing parks. His
company loves the cash flow from the leases. His
company turned to our firm to help secure financing
for a park that was located out of state.
We were able to secure a great Mobile
Home Park Loan for him at very attractive rates
and points, the problem was that at the end of the
day we were unable to close the loan because the
property did not appraise at the purchase price.
So why would I talk about a loan that
did not close...
It is to make a point that we can learn from misfortunes,
and what we learned was that no matter how the property
cash flowed, a key ingredient of a mobile home park
as with other commercial ventures is the final appraisal
of the property by the lender
A cardinal rule when working with a lender is not
to contract with an appraiser. Most lenders will
not accept an appraisal that they did not order.
So save your money and let the lender order the
appraisal or you may wind up having to pay for two
appraisals.
The investors were a bit gun shy
on this transaction because the owner of the park
owned more than 25% of the coaches. Another key
underwriting point is that the investors or lenders
do not like to lend on parks that own the coaches
outright as well.
Many of the lenders that specialize in the area
of mobile home park loans will not lend on park
owned coaches. In actuality they will deduct the
fair market value of any park owned coach from the
purchase prices.
Most parks are owned by an investor who leases
out the spaces to the owner of the individual mobile
homes. The investor then gets monthly a rent check
with none of the traditional headaches that come
along with traditional multi family income properties.
The rental income for the individually owned units
remains in place for as long as the owner or the
tenant of the mobile home has his space in the park.
Many of the nicer parks also have other income based
amenities that increase the projects bottom line.
For further discussion on the underwriting requirements
for Mobile
Home Parks.
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