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MHPs are very unique commercial properties with some specific challenges. There are several good books on the subject, one is "How to find, Buy, Manage and Sell a Manufactured Home Community" by George Allen. If you are interested in that asset class then you might want to get that book. If you need financing let me know.
Hey Don, I am a mortgage broker in Birmingham, Alabama, and we had a client that needed to refinance a mobile home (singular) we could not find anyone to do it. What is the name of the company that you use, or can you do the financing?
Thanks much.
I own 3 MHPs and they can be a very attractive asset class. However it is one not to be enetered without due diligence.
To find a good park that has solid infrastructure with strong occupancy at a reasonable price is a challenge.
The positive of this type of property is that if bought and managed right can offer much lower cost of operation and maintenence in comparison to your traditonal brick and mortar properties.
That being said you need to understand what has happened to the manufactured housing industry in the last ten years. In the late 90s a glut of homes flooded the market in robust times when financing was easy to get. It was the "no credit, no problem" attitude. The end result was the creditiors were left holding the bag on billions of dollars in defaulted mobile homes. Thus most traditional banks backed away from financing homes and mobile home parks.
Today there are a handful of banks that will carry the note on the land only in a park. When evaluating cash flow ,only tenant owned units will be considered toward the actuals of estimating true value. Do to the lack of financing many mobile home parks finance the new homes in the park to drive occupancy. In the banks eyes, those park owned homes are a risk and detract from the value. There are banks that will carry paper on such parks but you will pay a hefty rate for it.
If you can find a park with all tennant owned homes that are less than ten years old have a very low vacancy rate offered at a 5 cap or higher, you just found a needle in the haystack.
There are many many factors to consider in MHCs. Bought and managed correctly they can be excellent cash flowing machines. Buying the wrong one will do you in.
Mobile home parks can be great for cash flow and also for development. The zoning for MHP will usually have a high density per acre and because of such they have been sought after especially run down ones that are bought fairly cheap, due to funding problems because of low cash flows from old run down mobilehomes. Building town homes with the high density has been quite successful.
The funding on MHP loans is not so different from apartment loans.
3, 5, 7, 10, 15-year fixed rate options with 30 year amortization.
After fixed period, rate converts to 6-month adjustable at LIBOR plus 2.50%.
80% LTV
10% of down payment from gift allowed!
10% Seller-Carry-Second on other than the subject property allowed.
Seller can pay buyers closing costs up to 3%
Minimum of 15 spaces, and no more than 25% park owned units allowed.
I currently own a MHP and if you have newer homes and no junk, the rents come in on time and its a good cash cow.
Johan:
MHPs are very unique commercial properties with some specific challenges. There are several good books on the subject, one is "How to find, Buy, Manage and Sell a Manufactured Home Community" by George Allen. If you are interested in that asset class then you might want to get that book. If you need financing let me know.
Don Wilson
Hey Don, I am a mortgage broker in Birmingham, Alabama, and we had a client that needed to refinance a mobile home (singular) we could not find anyone to do it. What is the name of the company that you use, or can you do the financing?
Thanks much.
Thanks Robert
I have some reading to do. Thanks for the advice. Have you ever invested in a Mobile Home Park?
Regards
Johan
Johan
I own 3 MHPs and they can be a very attractive asset class. However it is one not to be enetered without due diligence.
To find a good park that has solid infrastructure with strong occupancy at a reasonable price is a challenge.
The positive of this type of property is that if bought and managed right can offer much lower cost of operation and maintenence in comparison to your traditonal brick and mortar properties.
That being said you need to understand what has happened to the manufactured housing industry in the last ten years. In the late 90s a glut of homes flooded the market in robust times when financing was easy to get. It was the "no credit, no problem" attitude. The end result was the creditiors were left holding the bag on billions of dollars in defaulted mobile homes. Thus most traditional banks backed away from financing homes and mobile home parks.
Today there are a handful of banks that will carry the note on the land only in a park. When evaluating cash flow ,only tenant owned units will be considered toward the actuals of estimating true value. Do to the lack of financing many mobile home parks finance the new homes in the park to drive occupancy. In the banks eyes, those park owned homes are a risk and detract from the value. There are banks that will carry paper on such parks but you will pay a hefty rate for it.
If you can find a park with all tennant owned homes that are less than ten years old have a very low vacancy rate offered at a 5 cap or higher, you just found a needle in the haystack.
There are many many factors to consider in MHCs. Bought and managed correctly they can be excellent cash flowing machines. Buying the wrong one will do you in.
Hope this helps
Mobile home parks can be great for cash flow and also for development. The zoning for MHP will usually have a high density per acre and because of such they have been sought after especially run down ones that are bought fairly cheap, due to funding problems because of low cash flows from old run down mobilehomes. Building town homes with the high density has been quite successful.
The funding on MHP loans is not so different from apartment loans.
3, 5, 7, 10, 15-year fixed rate options with 30 year amortization.
After fixed period, rate converts to 6-month adjustable at LIBOR plus 2.50%.
80% LTV
10% of down payment from gift allowed!
10% Seller-Carry-Second on other than the subject property allowed.
Seller can pay buyers closing costs up to 3%
Minimum of 15 spaces, and no more than 25% park owned units allowed.
I currently own a MHP and if you have newer homes and no junk, the rents come in on time and its a good cash cow.
Good Luck,
Robert
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