Current MHP financing rates?

I have a small park under contract, and I’m getting financing quotes around 7% (25% down, 25 year amortization, 10 year balloon).

Are these really the current market rates? Can anyone a source for less expensive financing?

7% sounds high, but for small deals, the rates are all over the place because you are probably having to deal with a local bank that has never done a mobile home park deal. For our one mortgage that is in the sub-$500,000 range we pay 4.75% on a 15-year fully-amortizing note. You’ve got a longer amortization period, which would warrant a higher rate; but 7% rate sounds high.

That said, if you are buying the park right (10% - 12% cap rate+), and have no other options, then that’s the right number. We’ve found once we prove ourselves to banks over a few years, they are then generally willing to either lower the interest rate, or stretch out the amortization schedule. So your 7% number might not be ‘forever.’ Then again, quantitative easing may be slowing, and rates may be heading back up. I guess if we knew the answer to what direction interest rates will move and when, then we’d all be fancy Wall Street bond traders. :slight_smile:

You might also look around on LinkedIn for ‘hard money lenders’ and ‘real estate investors’ to find people willing to lend small amounts of money.

Let us know how it turns out,


We’ve been getting quotes for fixed 10-year balloon (25-year amo) at a rate which will be at the 10-year Treasury swap rate on the day of closing plus a fixed spread (of about 3%). At today’s 10-year swap that’s running about 6%. The spreads may have narrowed as the swap rate has risen since we got our quotes, but it sounds to me like you’re being quoted in the right ballpark for a smaller deal. Some people might be able to get under 6% these days on a 10-year balloon but probably not for a smaller deal. I’d bet you could make a million phone calls and maybe get lucky and cut 0.50% off your financing at most. But I wouldn’t count on it. In other words, I don’t think 7% sounds high.

I think the problem is that while the bigger loans can be packaged into mortgage-backed securities and thus there’s a lot of demand for them (which drives down interest rates) there just isn’t as much competition for these small loans from banks that understand the business and the interest rates for smaller loans remain high (when you can find a bank willing to even lend in the first place).