financing help help help - Posted by paul(ok)

Posted by Bud Branstetter on October 13, 1998 at 16:47:46:

I would think that a commercial loan would be easier to get at times because the loan officer deals more in business. I would get a letter from the county that no zoning problems exist. A letter from a sewer company or engineer as to the suitability and capacity of the septic system. Will it have to be increased? At what cost?

Get estimates from contractors to place the pads, tie in the sewer lines, run water and electric lines.

The report should show everything possible. It will show the income and expenses,future income and expenses, ratios etc. There are some packages that show how to put together a report for the Banker(Wright Thurson has one). You are going to sell the Banker that initially and in the future that this thing will make money for you so that you can pay him back his interest and principal.

If you don’t want to put this together and have sources of personal loans you can buy it and gradually increase the size.

financing help help help - Posted by paul(ok)

Posted by paul(ok) on October 13, 1998 at 10:01:42:

we have found a quasi-mobile home park. 5 acres, 5 lonnie mobiles, 1 mobile under a roof, and a small apartment, all are rented. There is room to add on about 8 more trailers. It grosses 18.7k yearly. Expenses are 27% of gross according to schedule “e”. If we purchase that should go up about $300 for mowing the frontage. There is no onsite manager, but it is 20 miles from my house. They are asking 68K. We don’t think these properties will appraise at the asking price, but how can I show the value of the property to lending institution. The owner will not finance, nor will he refinance and carry. He has poor health and wants money to pay off bills to retire. Any help would be greatly appreciated. Thank you.

Re: financing help help help - Posted by Bud Branstetter

Posted by Bud Branstetter on October 13, 1998 at 12:09:18:


The standard approach would be to say find out how many of those bills you can assume and pay over time instead of cash or on a mortgage. The difference is that you are dealing with a “MH Park.” Things like zoning, water, sewer are more important because of the potential for more pads. Since you would be expanding this park for your Lonnie deals you want to consider that financing in the equation also.

The banker will not be as concerned with replacement values of trailers as he will be about the longevity of the notes on the trailers or the rentals. A provable cash flow is what he will want to give a loan. This sounds like a project to put a proforma package together and head for the commercial side of the bank.

Re: financing help help help - Posted by Jimbob

Posted by Jimbob on October 13, 1998 at 10:26:52:


Based on your numbers, I calculate the net operating income (NOI)to be $13,651. At a cap rate of 10% the market value would be $136,510, and the seller is only asking $68,000???

Two thoughts come to mind, either this is a screaming hot deal, or because of the extrordinaryly high cap rate, this is a very volitile property, i.e. high turnovers, non-rent paying tenants, etc.

I dont know how the financial institutions in your are operate but if the property is in decent condition and you needed to borrow $68,000 against a yearly net income of $13,651, you should not have much trouble.


Re: financing help help help - Posted by Paul(ok)

Posted by Paul(ok) on October 13, 1998 at 12:54:31:

They owe 19k on the property and did not want an assumption. He is now a heart patient and doesn’t want the stress. The zoning shouldn’t be a problem due to the fact that it is not in the city limits. The water is provided by a rural co-op, but the the sewer is septic tank.

Is a commercial loan harder to get than a personal loan? Where would I find information about putting a performa together?

Re: financing help help help - Posted by Mike

Posted by Mike on October 13, 1998 at 12:45:03:

Explain “Proforma Package”