Same questions with my 2 cents.
Here are my questions :
- At which stage are loans usually rejected?
I’ll have to agree with Steve on this one. I have financed several mobile home parks and have never had an issue with appraised value. Loan professionals that specialize in multifamily will be able to estimate a value very closely as they are aware of market factors such as vacancy rates, expense ratios, etc. and can utilize these numbers in the same way an appraiser does in the capitalization approach to value (In my opinion the most important “investor value” indication as it is based on cash-flow and surrounding local comparable properties).
I have found the most common appraised value issues arise during a refinance rather than a purchase. There are too many reasons why things work out this way to discuss in this post.
- What is decent amount for a deposit ?
If we are talking about a deposit with seller for a purchase, then I don’t think there is really any good standard to use. I have seen as little as $500 deposited and as much as $200,000 for a mobile home park.
Regarding a lender typically this is collected after some initial screening and analysis. The biggest factor will be the “type” of money you are pursuing. Conduit loans you can expect at least $15,000 or as much as $50,000 or more to get the ball rolling. Local banks can sometimes get you going with no deposit or a very minimal one (This is very affordable for them from the higher interest rates typically charged). A good net worth or deposit account relationship can usually grease the wheels a bit. The “in between” portfolio money such as that of a national lender will most likely be in the range of $3,000 - $8,000.
Also all these program may have different avenues of securing a rate some more costly than others. Conduits will usually be a 1%-2% rate-lock deposit. Local banks usually don’t charge for this unless it is a forward rate-lock. Portfolio program will usually have some flat fee or deposit ranging from $500-$5,000.
- How much is average appraisal costs?
Appraisals are usually in the same range for mobile home parks of between $2,000 and $6,000. Multiple tax parcels or buildings will sometimes create a reason for higher fee. Also many lenders wrap the appraisal, inspection, engineering into one lump fee. Make sure you understand what your 3rd party fee covers.
- Are there lenders out there known for pocketing deposits?
I have heard many stories… However in my experience not a lot of companies make this a practice. I think the more typical situation is a misunderstanding of what funds are actually doing.
I.e. My company usually collects $5,500 after initial analysis in order to engage an appraiser, inspector, underwriter, etc. Up until the appraiser is engaged, all of the money is refundable. Once our underwriter signs off on the package and engages appraiser, $3,500 is committed (Appraiser is paid, because they are getting paid regardless of loan closing). $2,000 at that point may still be refundable. The more time into the process we spend the less money is usually available to be refunded. Sometimes a borrower may misunderstand the process and the specific lender’s deposit policy.
- DO lenders typically have issues with large cash outs from parks that have been turned around?
Typically a lender does not consider cash-out requests with a permanent finance option until the park has been owned at least one year. Typically lenders may have certain cash-out restrictions for years 1-2. Finally after two good years of seasoning your cash-out is only limited by a lender LTV max. We have programs that allow 80% cash-out for any purpose on a mobile home park.
For a “turn-around” I assume you are talking about making an under performing park a performing one. We have programs that allow a person to acquire a distressed property, apply capital improvements, increase occupancy, etc. and then can take out the interim financing on top of any verifiable capital improvements up to a 75% LTV with no seasoning other than stabilization (Typically 3 months, but as market tightens down these guidelines get tighter too. I have seen requirements of 6 months recently.). What one considers stabilized will depend on lender and surrounding market conditions.
- What are typical fees involved with the loan?
Steve and Finance Guy nailed this one…
Conduits: $15,000-$50,000 3rd party. 1%-2% Rate lock deposit.
Local bank: <$10,000 total
This also assuming no origination points. Typically though more points up front means lower rate.
I love multifamily financing!