Anyone closed a deal recently? What LTV and rate was it?
Thanks as always,
HPD
Did a deal in KY a few months ago at 80LTV, 5.25%, 20yr AM.
We are looking at a deal in NY, term sheet came in at 70LTV, 4.97%, 25yr am and we have another term sheet back on deal in FL at 75LTV, 5.25%. 25yr am.
We put in a lot of work to find these lenders. Despite mobile home parks starting to come into the mainstream a little more, good lending is still tough to come by when the loan is under $1M.
80 ltv, 5 yr lock, 4.125, 25 yr am and term. Love local banks. Happy to take PG all day with those terms. And seller behind.
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What sort of valuation (Cap Rate) did the bank appraisals come in at for your three deals? Did they value the properties at around a 10 cap, 9 cap or 8 cap?
I just finished renovating a park and have my own money in it. I will be approaching local banks to do a cash out refi and curious to see what to expect an appraisal to come in at.
Thank you in advance.
The appraisal in KY came in at exactly the purchase price… as most do. I didn’t make it past the first page when I looked at the appraisal so I assume the bank just told them to make it $750,000. Our mortgage brokers typically tell us that the max bank loan is NOI/.11. Based on 65LTV for refis, that works out to around a 7-7.5CAP I think.
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My experience is that deals that don’t hit the open market will sell at a higher cap rate (100 to 300 basis points) than similar properties that were properly marketed. The reason being that many owners don’t know what their park is worth. I’ve literally seen a deal where the buyers had over $1 million in instant equity as soon as they closed the deal and it came out to about a 17% cap rate. In general, rates for parks with easy upside (raising rents to market) will be in the 5% to 8% range for a “going in” cap rate that turns to a 8% to 11% stabilized rate within about one year. Stabilized parks tend to be in the 8% to 10% range. Parks that need major improvement will have much higher rates.
So if your park is at stabilized occupancy and at market rents, the appraiser should be using sales of parks at stabilized occupancies and at market rents. What tends to happen is the local bank hires their “normal” appraiser to value your park. The banker says a prayer that they hit the purchase price…and they always hit the purchase price. Doing a refinance? Your deal probably blows up because the appraiser doesn’t have a number to target. The appraiser won’t know where to find good comparable sales and cap rates.
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