Posted by karl on January 11, 2005 at 03:26:12:
I wrote with the same question last week. Afterwards, I went to see a banker, laid out the numbers. She was impressed about the cash flow. Asked me how I found the deal and was able to negotiate such a good price. Her reply was “consider it done”. Then she followed with, “Can you join me for lunch on Monday?” (this was friday). My point is…if you are making money, bankers will entertain the idea of financing a MH park. Show them the numbers the place is bringing now. Explain that you are paying X amount based on these numbers. Then show them how you can improve on these numbers once the property is in your possesion. (eg- seperate water meters, add spaces, increase rents, etc). Be conservative and realistic. Pie in the sky projections will turn off bankers. In other words, if you plan to increase rents show what other comparable parks are charging given the same ammenities. It also doesn’t hurt to have an exit strategy should you need to get out. Show the bank that you have no intention of letting them hold the bag.
Since I never have owned a park, I mistakenly thought I had to get a commercial loan from the MH park specialty lenders. The local bank was the way to go and I got a New York Strip to boot.
Keep plugging away and good luck!