Hi there- absolutely love the forum. I wanted to talk briefly about financing.
I recently acquired 2 MHPs (a 10 unit and a 22 unit). The 10 unit was bought cheap, cheap, and, while I got a great deal on the 22 unit, it was bank owned REO and so they were insistent that we bring cash to closing.
I’ve still got good reserves but not great and would like to leverage the equity in the parks, specifically the 22 unit park. So my question would be whether banks will offer essentially reverse mortgages on these properties. Let’s assume that there are no prior year financials for the bank to assess and we are just looking at the assessed property values from the county, which is about 50% higher than what I paid for the 22 unit MHP.
My understanding is you will have a lot of difficulty pulling out the equity of a Park like this without any financial operating statements and history to show how well it runs as a business and that it’s worth investing. You will probably need to seek a private lender.
The county typically values an MHP based on the land and infrastructure. Typically an MHP is supposed to be worth a lot more as a business - so you “could” in theory get a land loan I guess, but I have never seen this for an MHP.
I would prioritize your reserves on the items that will help generate the most cashflow up front so you can use that to continue your investment in the Parks until they’re stable. It’s difficult to provide more input without more details.