21st mortgage / PEP

in contract to acquire a MHP that has about $240K of debt obligation with 21st and PEP. How have other investors underwritten this risk? The likelihood of all the loan being defaulted on at once is very slim however there is a liquidity risk that i need to factor in. Any thoughts?

I’m assuming these are the loans 21st wrote to tenants where you are agreeing to takeover payments in a default.

The risk is that you’ll have to takeover the payments so look at what the home could be rented for versus the mortgage payment you would assume. I don’t think it’s an enormous risk unless they are asking you to pay off the loan in the event a tenant defaults. In that case, you’d have to tie up a good amount of capital in reserve not earning a return. That extra reserving cost (opportunity cost over time) would be what I’d discount the deal by in that case.