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HOW TO FINANCE A MOBILE HOME PARK ACQUISITION
Mobile home parks have some uniquely attractive attributes, but one of the most appealing is the many different financing options available to buy a mobile home park.
You will find more creative financing options in mobile home park investing than in all the other sectors of real estate combined.
And this allows new investors to enter the business with lower risk and less hassle, as well as seasoned investors to take advantage of some extremely attractive structures.
Seller Financing Options – Nationwide!
This is one of the best things about mobile home park financing – the ability to structure an incredibly attractive loan from a mom & pop seller who owns the park free and clear.
At Harris Commercial Capital, we help you every step along the way. We work with potential buyers to make sure your protected against any shady owner financing options. Never sign a deal without us reviewing all your options. Give us a call today at (954)706-4336.
Seller financing typically includes:
1) no credit check '
2) no loan committee
3) low down payment (as low as 0%)
4) 5 to 10 year term
6) 30 year amortization
7) assumption allowed
8) seconds allowed
9) creative terms on the front end, such as interest only in the early years.
It’s no wonder that seller financing is the key driver for most people to enter the business – it’s just too good to pass up. We will walk you through this option, protecting your interest.
Assume Lien Financing Option - Nationwide!
Another option that is popular with mobile home parks which means that the buyer essentially “assumes” the first lien without telling the bank that they are doing so.
These types of arrangements allow the buyer to skirt any type of bank committee or credit check, but include an element of risk, should the lender discover the property has been conveyed without their approval.
In those cases, the loan can typically be called due and payable, and might lose your down-payment. So be careful with this financing type.
Always bring us on board with this type of financing. Harris Commercial Capital looks out for you at (954)706-4336
Master Lease with Option – Nationwide!
This is something that you only see in mobile home park deals. The structure is that you lease the entire mobile home park from the owner for a flat rate per month for a specific number of years, and during that time you have the right to buy the park at a pre-set price.
This is a very handy method to employ when the mobile home park is so poorly managed that it cannot support a note of any size. Once the lease begins, you scramble to raise rents and cut costs and, if you structure it correctly, you have a large positive cash flow per month quickly.
Then you have two options to secure your position:
1) sell the park to a third party and have a simultaneous closing
2) buy the park, with a new appraisal so much higher than your option price, that you can end up with a zero-down bank loan.
The best part about the Master Lease with Option is that, if you bet wrong and you can’t turn the park around, you can just walk away from it with no harm done, other than the loss of your time.
Always let Harris Commercial Capital guide you on this type of financing option at (954)706-4336
Bank Financing of Mobile Home Parks – Nationwide!
The down payment is typically 20%, the loan term 15 years, and the loan is recourse.
Both fixed rate and variable rate interest are common. The great thing about bank financing is that it’s so “safe” – banks are tightly regulated by the U.S. government, and you always feel that you are going to be treated fairly.
In most cases, Big banks typically will not give you the time of day, and have no interest in learning the business, unless the loan is large. At Harris Commercial Capital, we have great relationships at large commercial banks as well as other large financial institutions willing to work with our direct client referrals. Always work with Harris Commercial Capital at (954)706-4336.
Traditional bank financing is one of the most attractive types for mobile home park acquisitions.
Also known as CMBS loans (commercial mortgage-backed securities), these are loans that are originated at regular banks, and then sold on Main Street.
They are so sought after because:
1) have 5-10-15-20-year terms
2) are non-recourse
3) have low, fixed interest rates
4) allow for cash-out.
The best way to obtain a loan is through www.HarrisCommercialCapital.com (954)706-4336.
Hard Money Financing Options - Nationwide!
At Harris Commercial Capital, we work with several reputable family funds as well as hedge funds who are experts in Mobile Home Park Financing. We help you navigate their lending application process from start to the closing. The best way to obtain a loan is through www.HarrisCommercialCapital.com (954)706-4336.
All-Cash Option - Nationwide!
There’s nothing wrong with buying a mobile home park with all-cash, but you must understand that it is going to seriously damage your overall yield.
When you do not bring sensible leverage into a real estate deal, you lose one of the key drivers to high returns. A 10% cap rate mobile home park, financed at 80%, can often derive a 20% cash-on-cash return. But if you do not use leverage, your maximum yield on the same park will only be 10%. So not using leverage at all is not a good idea.
The best way to Acquire a Mobile Home Park is through Harris Commercial Capital at (954)706-4336.
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