I spoke with a couple of lenders on a small park.
Both stated that lenders are tightening up lending. Requiring larger down payments, and higher credit scores and just tougher underwriting.
Anyone have feedback?
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Agency debt is still an option for clean, stabilized parks, but escrow reserves for 12-18 months of debt payments are now required.
CMBS is frozen right now. No new issuance.
Local banks were seized up with PPP loans, but are coming out of it now. Yes, I agree with 30%-35% down, that was the feedback I received from a broker I worked with on a lot rent only park in NC.
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Good observations on the market and status of debt at various levels. I am wondering if MHP owners currently looking to sell will be more willing to owner finance. Or if they are just planning to cashflow through the Corona crisis and any downturn that might follow. What do you all think?
I heard similar tightness from brokers in my network. Banks are requiring a higher quality borrower b/c lenders know their balance sheet will have more defaults on their books.
The owners that I speak with that are ready to sell or are a year away from selling want to sell because they are in their sixties or seventies and do not want to own a mobile home park anymore. It usually comes down to health issues or just being done with being a landlord. So, for these individuals Covid-19 and the economic downturn that has started and will worsen when unemployment runs out doesn’t really factor into their decision-making.
I think the downturn caused a few sellers who were ready to market their parks to hit the pause button, but I would expect those parks to hit the market sooner than later.
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