I’m working on finding my first MHP. I’ve read and listened to everything I can find about MHP ownership and I’m past the point where I feel ready to just get moving on making an offer and getting a property under contract. I’ve been in contact with a few brokers getting some leads and I have a couple I’m interested in. My problem is that with my work and busy life with my family and my husbands business, I don’t feel like I have enough time in the day to do what I need to do for this. Also I’m afraid the due diligence will be pretty time consuming. It’s new to me, so I’m unsure and hesitant. I’m considering leaving my job to put my focus on purchasing a park, it obviously takes up a lot of my day that I could be spending on my business. I have some bridge money saved up to get through until I start receiving monthly income from my park, but I’m curious how difficult it might be to obtain a commercial loan if I don’t have a w2 job. Does the bank just want to make sure the park is profitable, will my income really matter? I also have a nice down payment ready and will switch my 401k to a self directed IRA when I leave (the plan is to use that to buy a second park). Any insight would be much appreciated! Thanks in advance.
DO NOT QUIT YOUR DAY JOB JUST TO BUY A PARK!
This is not a time intensive business. You can find a park and do 80% of the due diligence within nights and weekends – and even then maybe one hour per day. Managing mobile home parks is also not time intensive, as long as you have an on-site manager or greeter and understand the systems. Listen to the recordings from the Lecture Series of people who own parks and how little time they devote to that. Maybe 4 hours a week for a single park.
You can quit your job because you hate it. But don’t do it because of the time that finding and buying a park takes, because it takes very little. Many people spend as much time playing golf per week as you would need to spend on the park business.
Banks consider far more than simply the profitability of the income property when evaluating a applicant for a loan. You will need the income from your job to qualify for a loan.
In addition if you are presently living off of you working income it is extremely unlikely the profit from a park will replace that income.
Yes and yes - I strongly agree with Frank and Greg. I switched to full time MHP after 4 years of working it part time and only when I was drawing close to my previous salary. At that point we had 4 parks going. Of course your timing may be different especially if your spouse has a full time income.
Totally agree with guys above. You won’t ever have enough time for this nor other things in life, so the quitting a stable W2 job’s risk won’t pay you back enough. Start as a part-time, take your time, then switch if thing are going well
I’m getting conflicting information in regard to not having a W2 job and getting a loan. I’ve heard some lenders don’t necessarily require that the borrower have a W2 job and I’ve also heard that they do. If anyone has experience with getting a loan without a W2 job please share. I understand everyone’s situation may be different (amount of cash on hand/net worth/debt to income ratio, the park’s income/purchase price, borrower’s park experience, etc.).
A lot of smaller lenders will use a surprisingly ‘common sense’ approach. They need to feel comfortable that they’ll get paid back and are lending to a stable operator. If you don’t have significant earnings on your tax return, either from a W2 job or from a business, it’s going to make it a lot harder to get a loan (but not impossible).
The first time I sought out a loan for a park, the park was in bad shape, had negative NOI on its tax returns, and my realized self employed income was low from the previous year. I got a loan offer, but at 33% LTV. I wasn’t upset - I probably would have had the same perspective if I had been in the banker’s shoes.