The problem is it is actually harder to get a small balance loan. It’s more difficult to get a $300,000 loan than a $3,000,000 loan. For most commercial lenders the pay day is too small, the deals are often trickier, and the sponsors are often less experience. The downside is that since it’s your first deal you don’t have the track record for good debt and probably not the equity. You still have options,
- find an owner financed deal. Not always easy, but on smaller deals sometimes it’s the sellers only real option.
- Raise private debt. If you offer 6-8% returns there are some people that would be happy to get that yield. It beats putting it in the bank or a C.D. At first it will probably be friends or family members. You can structure it as straight debt, or as equity.
- Form a relationship with a local bank that might take a chance on you. This is how I started. I didn’t start with MHPs. I did it with products they were more comfortable with; single family & Multi-Family, and then moved into MH, but some banks might take a chance. Get them comfortable with you as a borrower and they will gradually start to trust you with bigger deals. Open deposit accounts there! They depend on deposits. You may be able to directly meet with the main decision makers in many cases.
- Form a relationship with partners that either have lending relationships, a track record as operators, or preferably both. You need to provide value. Find deals, have time and effort to operate the deal, etc. This is likely your best option if you can pull it off, as it you’ll get an education in the space, your learning curve with be steeper, and you can avoid making some costly mistakes that they’ve already learned the hard way.
There are many more ways to get into the space, but these are the best advice I can give you.