Loans. On Property or on Mobiles?

Thank you all for great bits of info off of this site. I’m having a hard time deciding what to do here. I want to aquire 8-10 more new/newer units for my park. I will use these units as rentals.

Is there anyone that would finance new homes at a non-“predatory” rate?

Maybe I’m just dreaming here. But here’s my situation:

I have a new park near Houston with 24 pads plus 3 commercial units that are rented out. I have 8 pads occupied with me owning only 3 of the units. The rest are owner occupied. Because of the incredible demand for rentals in my area (and the fact that my lots are short-60-64 footers fit best) I wanted to purchase a block of homes as rentals. For a 2/2 unit, I can get $600/ month due to my location and the condition of the park.

So I’m already approved for a cash-out refi. The park appraised for 575K. The lender wants me to take the loan. But I am hesitant. I only owe 140K on the property. The cash out refi with more than double my mortgage plus increase the interest rate. The previous owner currently carries the paper at 7%. Pretty good. So with a lender (Silver Hill), I’m faced with all the broker/lender fees, higher interest, PLUS a 7 year lock-out. I can’t even pre-pay the loan or I face paying 5% of the unpaid balance.

My credit is AA and my income is pretty good. Is there a program for just buying a block of homes? I don’t want to pay too much in interest either. I’m too tight for that! I want around 100K plus I’ll be using around 50K of my own cash to snag these homes.

Does anyone have any suggestions?

Thank you, mucho.

good loan you have now…7% is very good. I have 62 homes left all 2/2 (66’) and 2/1(56’) in FL. these are 95 and 96 units. 2/2 are 8K and about 4K transpo to Houston. 2/1 are 7000. These might work even with transpo!

I would do almost anything to keep this 7% loan intact. Maybe hard money at 100K at 5 points and 12-15% interest?

I know that area a little bit and rentals are VERY strong…congrats on a great purchase in a strong area.

Have you called Bo? He is in resource folder and comes VERY highly recommended from Corey and Steve for finding good, cheap, homes.

Call me if interested,

Greg Meade

352.216.2020 Cell

352.288.0046 Office

Hi Justin,

I am not sure what you have been quoted by Silverhill, but we have pretty much an identical product we use for parks with a large portion of park-owned mobiles, loan amounts below 400 thousand, or properties with less than 80% occupancy. We sell these loans to some of the same investors as Silverhill. The product has it’s own place in the industry as it is not comparable with most conventional finance options.

You will almost always be better off with private money for the situation you are in. However if private funds are not available, then perhaps Silverhill could be a viable option for yourself. If you wanted to get about $147 thousand cash out of your park to purchase more homes, you would be looking at about a $287 thousand loan. That would peg you at a 50% LTV. Here is what Silverhill should be able to do for you:

2 year fixed with 5% prepayment penalty for 5 years: 7.00% rate (this may be a better option than a hard money since it gives you a decent rate of interest and you pay your points upon exit when you are more likely able to afford it)

3 year fixed with 5% prepayment penalty for 5 years: 7.875% rate (or make it a 3 year prepay with 3 year lock-out for an 8.25% rate)

5 year fixed with 5% prepayment penalty for 5 years: 8.125% rate (or add a 3 year lock-out for a 7.875% rate, or a 5 year lock-out for a 7.625% rate)

7 year fixed with a 5% prepayment penalty for 5 years: 8.250% rate (or add a 3 year lock-out for an 8.00% rate, or a 5 year lock-out for a 7.750% rate, or a 7 year lock-out for a 7.500% rate)

The typical cost would be 1% origination, about $3,000 on the appraisal, and probably another $2,000 other miscellaneous.

These loans are typically assumable for free.

If at all possible try to get some private financing lined up, but if not available then the options above should be viable especially the 2 year fixed if you are in need of a short-term option to get the park up and running. The options above are on 30 year amortizations as well. Once the park is up and running you could probably get some local bank financing to take out your Silverhill loan. Local bank would probably quote you at or around prime rate, 20 year amortization, 3 year fixed.

The problem you will most likely run into if you are looking for any kind of national lender program is that below $500 thousand there are not many options, especially if you add in the park-owned mobile component and even more so that the park is not currently at market occupancy.

Hope that helps you.