Local Bank Financing Terms

To anyone who has recently puchased a park using local bank financing, what are some of the best terms you’ve encountered?Down Payment?Ammortization Period?Fixed Period?Interest Rate?

We have our park for sale and our locale banks are quoting as low as 5% for 20 years with 20% down. Our locale banks have indicated there displeasure of multi-park ownership since the money leaves the community when owner-operators are not the owner of the property vr, out of town owners. Our locale banks can close in 30-45 days depending on the buyer here in NE Oklahoma.

I’d say 4.75%, 75% LTV, fixed for 5 years, 20 year amortization is probably about as good as you are going to get.  Maybe up to 80% LTV.Securing financing on mobile homes is nearly impossible.  That said, I did secure such financing with one bank after a positive 4-year relationship with their lending on just the land up to that point.  I always deposit the rents into the bank lending on the property - both because they like the checking account fees, and more importantly I want the bank to see the business happening right before their eyes.Good luck,  -jl-

I just closed on a park in NE Indiana and got 4.5% fixed for 5 years. Amortized over 15 years. I also got $0 down. After getting credit for all the security deposits and prepaid rents from the seller I actually walked away from the closing with a check. Local banks are the best. However I had several advantages in this deal most people don’t have. I had a well to do cosigner, and I have equity in other parks along with a 800+ credit score myself. I have a proven track record of managing parks in my area. My family has a good name in my neck of the woods. This was a perfect storm. But deals like this do still happen!

I am curious as to why you needed a co-signer when your score is so high and you have a proven track record?thanks

Look at the deal I got… Jefferson whom I believe to experience with park financing just said this: “I’d say 4.75%, 75% LTV, fixed for 5 years, 20 year amortization is
probably about as good as you are going to get.  Maybe up to 80% LTV.”  Look at what I got again. The bank felt like there was no way heck they would ever loose there butts on the deal so they gave their best terms. In addition I was a new customer at the bank that may have helped. I think they wanted the new customer. Did I need a cosigner to get a loan with a down payment? No I could have wrapped the deal up myself with terms more like Jefferson was talking about and those terms are fine. But the cosigner did me a favor and I believe it helped me get such great terms.

I guess I do not understand the cosigner part either , based on your comments, you are very successful with a 800 credit score. You should have been able to do this on your on.

I will probably be going for financing when I find “the” park. I have cash for a dp and an excellent credit rating. In addition, my wife. Into use to work with an excellent salary. I feel as if I can get as good as possible on my own. The only issue I no previous park management, will I be successful?

At one Time a few years prior I was able to get financed for 3 houses, about 500k total, and my income has doubled since then. I noo her own two of the homes.

One of the banks i talked to was asking for a commitment from the Mobile Home Owners and they need to sign and allow the bank to take possession of the Mobile home should they default on rent. Is this the norm for bank financing? How to tackle the question? Your guidance is much appreciated. Thanks.

Just purchased a small 37 lot park at a 12.5 cap for $290,000. Needs repairs totaling $150,000. No POHs, city water and sewer. All utilities billed directly to homeowners. Park 95% occupied. Park appraised at $510,000. Bank loaned purchase and repair costs at 70% LTV, 15 year amm, fixed for 7.5years at 4.85%. Looking for comments from you guys. Ok financing, or could I have done better?

PMarone - The financing terms from my perspective is very good.Just curious to know which parts of the park needs repairs to the tune of $150k considering the fact that there are no POH’s and City Water and Sewer.

Good question. 

Biggest ticket item is a 2000’ long x 20’ wide private asphalt paved road in bad need of repair/resurfacing.  Very costly.  Additional items are fence repairs, some electrical upgrades to the home connections, tree trimming, drainage improvements and demolition and removal of an old package plant that was used before the park converted over to city sewer.  

Some ideas for you. You should be able to get everything described done for far less than $150,000. Banks use a formula under which they take the highest retail price for repairs, and then add a buffer on top of that. An average person could probably get all that done for $100,000, and a good shopper for $75,000. Talk to the bank on how the escrow (I assume it is an escrow of $150,000) is released. Make sure that it’s based on the work performed to satisfaction and NOT on having receipts that total $150,000 – do you see what I’m saying? Don’t get in a bind on having to overspend just to satisfy the bank’s system. For example, if the bank said you needed a Lacoste shirt that costs $100 retail so they escrow $100, and you work hard and buy that same shirt at a “going out of business sale” for $25, then you want the full $100 released when you bring in the shirt, not get punished for being a good shopper and only get $25 released. On the packaging plant, call Mike Renz at (614) 538-0451 before you do anything. It may not be an environmental hazard at all, and may be easy to dispose of correctly. Many people think (as I did before Mike explained it to me) that human waste is NOT an environmental hazard (that’s what  large part of the environment is made up of, such as fertilizer). Some banks think that a packaging plant is a toxic waste dump that is as dangerous as a asbestos manufacturing plant – but it’s not. You may be able to safely remediate it for a fraction of what the bank thinks.And, by the way, those are great financing terms and you did a terrific job in negotiating them – we could not have done any better.

Sorry, just realized I had a typo in that. What I meant to say is that “many people think that human waste IS an environmental hazard” but it is NOT. That’s what I get for pushing “post comment” before I read what I write. Anyway, Mike Renz can explain it to you in far better detail than I can.And just to clarify, that’s not to say that human waste is not a health hazard. Of course, it is. But old, ancient human waste at the bottom of an old packaging plant is not really a health hazard, as old waste turns to fertilizer for the most part. It is not like gasoline or some other petrochemical that is always poisonous. We’ve learned a lot by using Mike Renz on our Phase I’s, but clearly I’m still not in his league in explaining it.

Unfortunately the $150,000 comes not from the bank’s formulas, but as a result of multiple bids I received from various contractors to perform the work needed.  I really don’t think the total bill will come in any cheaper.Bank will release escrowed money as I complete work, or at the very end, whichever I prefer.  Cheaper to draw one amount at the end.    Old packaging plant will not be an issue.  It has been decommissioned for years and is just collecting rain water.  It is a partially buried cement structure.  We will not permit the demo work.  We will use an escavator with a hammer attachment and break the visible portion of the structure down to below ground surface.  Use the cement debris and a load of dirt to fill it and cover it.  It was located towards the very rear of the park on a area too small to ever use as a lot so it won’t harm anything to remain buried there.  Bank has no issue with our plans to do so.  

You have a very understanding bank. A typical conduit lender would make you probably escrow $300,000+ for the same work.Again, evidence that you obtained a great loan.

Good Morning CarlWhere is the park you’re selling located geographically?Best

Good Morning J

Good morning Isaac49. We are located in NE Ok, near Grove on Grand Lake with clients that are retired and 2nd home owners with no children fulltime with 136 sites. Thanks Dennis