1 week prior to closing the bank informed me they want 90% of proceeds if I sell a park owned home. I explained that I will likely be putting in $5000 in repairs to prep for a $10,000 sale so this 90% number will make the park unprofitable. There is no value in owning these old 80s homes and there is crazy high demand in my area for affordable housing.
I have suggested a 50% payoff.
How do you handle a bank who probably doesn’t understand the low value of a park owned home vs a high lot rent. Most of theses homes rent for @700-800 but lot rent will be @499.
Aren’t the proceeds on your sale, in your example, $5,000 x .9 =$4,500 (I didn’t include the poh purchase price becauce one wasn’t provided)? If so, you are still coming out ahead. If the bank loaned you the money to buy the park and the poh’s, the bank will want that lent money back on the poh asset that you bought. I believe that their justification for lending you the money is that those poh’s are income producing and they are considering the poh rental income as value. The loan for my park covers the purchase of a small commercial building. I’m not allowed to sell it and take the proceeds.
In my experience we’ve assigned values to park owned homes at purchase (wholesale value, basically. Should be agreeing to this with your seller for tax purposes anyways!) To release the lien have paid 70ish% of that value as determined at purchase. Definitely something to negotiate with them though — 50% isn’t unreasonable in this case IMO.
I structured a mobile home park with park owned homes so that the park was on a loan and each mobile home was on a separate loan, made for a lot of paperwork but that way we could get titles back as we did rent to owns.