Loan Packets

mobile home university
1

Just under a year ago we struggled like mad to get bank financing for one of our parks, hardly anyone seemed interest in dealing with us period… The park was very much undervalued and in need of some work which I thought was the main reason. WRONG!

I actually spent the time to put together a formal loan packet for the refi on our parks, the binder is professionally bound and looks amazing. The cost was $14 each and it took around 10 hours to put together, this was time and money well spent!

I got a completely different reception when I started walking into banks this time, and one sticks out in particular… I went walking in to a small bank in which I have no relationship and the manager almost everything but threw me out when she found out what I wanted and would have if it had not been for the loan packet. Humoring me she took a quick look at the first couple of pages and started asking me a few questions, her demeanor very quickly changed and she started trying to figure out what it was going to take to get our business. After about a 1/2 hour she told me that there is only one person in their bank that does commercial loans in the bank, he’s stuck in a hole somewhere at the corporate office inaccessible to the general public and she picked up the phone and called him…

Her conversation is what stuck out to me, her first words to the guy where “you need to get over here tomorrow, I’ve got a guy that wants to refi a couple MH parks and he’s got a very professional presentation and actually knows what he’s doing” the conversation went back and forth and she popped off with “this isn’t some fly by night operation, he knows what he’s doing and you need to get over here tomorrow… He’s shopping the loan!”

I don’t know how this whole process will turn out but we are asking for a fairly large LOC at 7.5%, but the reception we have received is completely different this time around! If you are looking for bank financing for a MH property take Scott, Tony’s, & Ray Alcorn’s advice, put the proper documents together and go in to the banks armed with a nice professional presentation! I didn’t even get asked to fill out any bank forms or applications, yesterday was a good day. =)

Best wishes,

Ryan Needler

2

Ryan, is there any way I could get a look at what you put together? We own a small park in Texas and will want to refi also.

Thanks

Heather

3

Post Edited (04-14-11 22:09)

4

Ryan, Heather & Dale:

To Ryan:

That is great that you put all that presentation together to present to a bank. I can tell you right now since I’m a broker…you could have saved the 10 hours of work and I would have never turned my nose up to the whole MHP deal…this is a large majority of the loans I do for people all over the country. People tend to sterotype MHP’s as trailer trash deals when really they are great investments to any class of people.

Heather & Dale:

To save you time…I need some minor details about your park to get the ball rolling. Down the road the lender will require more detailed information but I promise you don’t need a fancy loan packet for me to give your loan thought and attention (no offense to Ryan because it’s banks that will sometimes snub out people that aren’t up to their standards)Ryan did the right thing to get their attention but I wish I could have talked to him first to save him all that time…

Lisa

5

Heather & Dale,

Just a suggestion, but I think you would get more out of the process if you did the work yourself… There are many resources available online that describe what’s in a loan packet.

As in Ryan’s post, he learned how to make his presentation by trying, failing and then trying again.

While we are all here to help each other, I think Ryan did just that by telling us about his experience. Asking him to provide a document with a LOT of sensitive information about his personal and business finances, not to mention information about his investors; properties, etc. goes a little far.

By the time he removed all the stuff that’s NOYDB, it would be the same info you could get by googling “good bank loan packet”. Not to mention it would probably take him a few hours to make certain he had removed that info- and we all know what a busy guy he is.

So thanks, Ryan, for the good advice. And for the rest of you, get busy and do your homework!

Anne (giving the schoolmarm glare over her bifocals)

6

Lisa,

You do this for free, of course. Am I right?

Anne

7

Ummm… What Anne said! It would take several hours to scrub the information and then I still wouldn’t be able to get it to you in a format that would help you put it together for yourself. I will likely scrub the packet prior to Scott and Tony’s BC and bring a copy for those that wanna see.

The information and layout was pulled from a mix of Scott & Tony’s material and Ray Alcorn’s. I’m a BIG beliver in doing things myself when it comes to major issues, if I was to have had someone else (broker) put the packet together I’d likely have an extra 4-5k in cost (to save 10 hours and $70), get pounded with a higher rate, and I wouldn’t know exactly where the information was in the packet when the bankers asked for it.

In a nut shell the packet contains:

A cover sheet with the loan request and how the loan will be repaid.

My personal financial statement

Individual CF & CAP analyst on each of the 3 parks

Pictures of the properties

a copy of all leases

2 years of tax returns

Articles of incorporation

Operating agreement for the LLC

State registration & proof of ownership of the LLC

Tax records for the properties

Deeds and purchase agreements

All of the above was copied at staples and bound in to a black binder with a clear cover.

We have really promising responses going with 2 of the 4 banks, one bank told me they couldn’t get remotely near the rate I’m looking for but if I don’t like what the other banks can do please come back and give them a chance, and the last I haven’t heard back from yet. The way it looks it will likely boil down to who offers the product that will allow us to best accomplish our goals. After 4 banks I still have not been asked even once to fill out the banks paperwork which floors me! I want to get the packet in to one more bank and than the chips will fall where they may unless I’m forced to visit more banks to get what I want.

It’s been an incredible experience this time around and you won’t catch me going in to a bank unprepared again regardless of the property.

Best wishes,

Ryan Needler

8

Thanks Anne and Ryan. I hadn’t thought about the sensitive info involved. Of course, you are perfectly right. Your list of what was contained in the report is plenty to get started.

Lisa, our park is very small and we are in the process of fixing it up. The amount we will be looking to refi will probably be too small to involve a broker.

Thanks again Ryan

Heather

9

Thanks Ryan for taking time out of your busy schedule to post hot button items for a good loan presentation! This forum in most cases keeps people from stumbling around and trying to reinvent the wheel on their own in many areas. There are a few that would prefer that the masses were kept in the dark and not allowed to learn from others. Again thanks!

We are considering selling also before the loan needs to be refinanced in about 2 years. We contacted several companies to see about a market evaluation for the MHP. They both came in at about where I expected for the value for the mhp. One company seems to want to forget about the notes that will transfer with the sale. The other company used 2 different methods to value the notes. The result was a range from $200K-600K. Quite a wide range but they have put in several calls to other individuals that value notes and will get back with me when they narrow the amount down.

Thanks to all who have helped others from making big mistakes.

10

What Ryan is doing is looking for a portfolio lender (a bank that keeps the paper in house). These deals are usually small 50-200K and are annually renewable, in other words the bank want’s to look at the whole deal again in 1 year and if they still like it they will renew the note. If not they will call it due. Nothing wrong with this but not really a long term solution.

Now if you have a larger deal 500K and up then it makes sense to have a commercial mortgage person who is active with this asset class and has working relationships in place with multiple lenders. Thats why you need an independent broker who is not tied to one lender so if the lender shoots down the loan the broker can move the deal to another interested lender with ease. As far as fees goes I’m sure that you all would agree if the broker can close the deal according to the terms you have agreed too then he has more that earned the fee. I have learned the hard way “nobody works for free” and if they do you recieve exactly what you didn’t pay for…more costly problems!

If you want deals done (closed and funded) with no excuses, make d** sure that you use experienced professionals that get paid when the MHP is in your name! That would be me, just my 2 cents.

11

Don is exactly right concerning the use of a “qualified, competent, truthful, referred by a well respected contact” broker. Several deals that I have done early in my career on multi units resulted in sitting down at the closing table and getting sprung on me prepayment penalties, incorrect rates, and my favorite the “5 point broker fee, that was only 2 originally”. I would only use a broker that several others have used, liked, and only use them for all their deals. I don’t want to speak bad of others but every time there is a post about financing a certain somebody "parklending*****"blasts out a solicitation that smacks of newbie broker looking for their first deal. Never, never use anybody that cannot show you deals they have done in the past that are actually their transactions. Interrogate the heck out of them and then when you think they are the one ask more questions. You don’t ever want to sit at the closing table and be asked to sign a prepayment penalty fee that was never discussed.

Best Regards,

Eric Anderson