How much MHP can I afford?


#1

Hello
I am new to posting on the forum. I have not been able to locate a formula for how much MHP I can afford. I don’t want to find a park to purchase and then find out that financing it would be impossible. Is there a formula and is it similar to a home mortgage - based on down payment? I want to find out what kind of park would be an option, “run the numbers” and then determine if this is an option for me before attending the boot camp and university.
Thank You


#2

That’s a very complex question to answer. Not all lenders will have the same lending criteria. And there’s seller financing, where you can basically negotiate anything. Even zero down (good luck with that one). If this is an asset class that you’re even somewhat serious about investing in, the boot camp is definitely a great way to get started.

I learned some things from the boot that saved me a very decent amount of money. Easily enough to cover the cost of the boot camp.


#3

I agree with Dominic730… generally, you’ll have to have 20 to 30% cash as a down payment for the park and cash for loan closing costs. In addition, I recommend having cash reserves in your account to handle any issues that may come up. If the park needs work or has homes to rehab you might want cash now to make fixes.


#4

If you can point me to financing for 20-30%equity, please let me know. I have a park under contract and the best I can get is 35% from a local bank. $825k purchase price. Thanks to anyone who can help.


#5

@JWR From what I’ve seen, 30-35% is pretty standard from most lenders for a park under 1 mil. Once you go above that number, terms tend to become more favorable.


#6

I was quoted 75LTV on a 5/20 at 5.75-6.3% depending on risk the bank sees for a sub-$1MM loan amount. Note, this is due to a longstanding existing relationship, extremely strong liquid balance sheet, and understanding that acquisition loan amounts will increase in the future.

As everyone else has said, if you do not have a high degree of liquidity, track record, exiting relationship, etc. or some combination thereof I would not expect the terms I’ve listed above.

Afford is a complex question, as it’s not only about the downpayment but capital reserves in the event of issues or myriad other factors.


#7

For deals under $1 million I’ve found that local banks offer the most favorable terms. It depends on the market, but they’re often willing to lend at competitive rates (prime + 1/4 point) with 20-25% down and 20-25 year amortization. It would be nearly impossible to find these terms with a national lender or broker.