How to finance this park?

Hello all,

I am looking at park where the current owner purchased it on a contract for deed 3 years ago. The park seems unlikely to qualify for bank financing due do its 60% occupancy and lack of financial records kept by the current owner. One other thing to mention is at the price the owner would like (not the price I would pay) the debt service coverage ratio is 1.19. I have spoken to local banks in the area that are looking for closer to 1.5 . The seller mentioned he needs to pay off his contract in order to transfer the property to me. Any ideas on how a deal like this could get done? I really like the location and a preliminary test ad on craigslist pulled extremely well.

Much appreciated,

Can you share the numbers? We don’t have enough of the story here to identify if its a deal and there is a way for something to be done.

Yes. I’d like to know the numbers too.

If the current owner has owned the property for 3 years and has only 60% occupancy to show for it, what will you do (better/different) to stabilize the asset to secure a bank loan?

Assuming you want a bank loan…

Mike Weiss
Las Vegas, NV

And what terms are you basing the DSCR? Are the tax returns are severely understated by Seller and won’t help cover the CFD?

Owner financing is obviously the easiest answer, but if you’re looking for bank involvement then Jack and Mike hit the high points with their questions. 60% occupied parks with tax returns can get their loan with the right local bank and buyer’s assets / personal guarantee, but you might need to come out of pocket to make the ratios work. Either purchase price is too high or expenses are through the roof with too many POH?

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@jhutson @Deleted_User_ME @mhmike

I do not have the property under contract yet as we are still too far apart on our numbers. He is asking too much for the park and I have been attempting to show him that not only his valuation of the park is too high, but it would never qualify for a loan at that number. The seller has not shown me his tax returns and will not at this point. The terms I based the DSCR on are his asking price of $640,000 , 25% down, 20 year amortization, 7 year balloon, and a refinement of the sellers stated income and expenses to come up with a new NOI for the park. There are no park owned homes in this park but maintenance cost is high due to water leaks. What I would to do increase occupancy is bring in homes a couple at a time as fast as I could fill them either through buying used mobiles (estimated $15k each after all said and done), or the cash program. Demand on my test ad was very high. Seller has brought in no homes in the three years he has owned the park. Rent would be raised $25 day one. Park is under 50 spaces.

I would of course prefer seller financing. But the seller has stated that is unavailable due to he himself needing to pay off the previous owner who provided contract for deed. So assuming we come to an agreement on price which would increase the DSCR but possibly not to the 1.5 ratio local banks have told me they would like. There is still the issue of 60% occupancy and if a bank would loan on that. I realize I could put up more cash but I need that cash to move in homes. I do not have unlimited cash. Just looking to hear all the options in a situation like this.

Thanks again,


We still don’t know the number of lots ,or the rents, or who is paying utilities. If the guy has debt on it you might not be able to do seller carry.

Some deals aren’t deals or just need time to be deals… Sounds like you are needing to overpay for the numbers to work out and thats never a sound strategy…

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All deals like this only end up with one of several endings:

  1. the owner is foreclosed on (which is my bet)

  2. the owner finds someone who is willing to overpay and bail them out of their mess (don’t let that be you)

  3. the owner fights endlessly and ends up selling it for what he has in it many years into the future, when rents have escalated over time

The only near-term way to buy this park properly is from the lender when #1 occurs. That’s what I would focus on. #3 is probably 5 to 10 years from now, and #2 is a bad strategy no matter what.


@Deleted_User_ME Sorry, 46 lots, 28 occupied, $250 rent, tenants pay utilities


Sorry for not responding earlier.

So you are saying that there are 28 lots @ 250 per month giving annual gross revenue of 84,000.

On a (640k minus the down) 480k loan , 25% down , 20 year ammo 7 year ballon , (I’m using 5.5% because i did not see a rate posted) looks like your monthly payment on that is 3301.86. .

Working backwards, you need NOI of 4952.75 to achieve a 1.5 DSCR as you are stating the local lender would need to underwrite. That translates to annual NOI of 59424. Equating a hypothetical property operating expense ratio of 70%. With a park with this vacancy ( not as many occupied lots to spread the fixed costs around) and water leaks. What are the current expenses showing at?

You say the deal is pulling strong test ad demand which is a good sigh. If there is rent upside , you get the guy to budge on price, maybe find a lender who will stretch the ammo to 25 , and find someone who will also do a slightly lower dscr, there could be something here. This will all hinge on getting into the higher expenses and seeing what the root issue is and see what the resolution will be (also in terms of capital needed for the fix).

If you want some help to look over the specifics i can take a look or if you pass on it , I think it worth prodding into a bit more.