If anyone has loans expiring and need to be refinanced this year, it would be a good idea to get started early as in January 2008, things have changed. In order to sell the loan portfolios on wall street, the occupancy level must be at 90% level instead of old 80% level. Several banks that used to do MHP loans have dropped out completely - Washington Mutual has eliminated its commercial loan department and LaSalle Bank has cut back on loans. Just a heads up - perhaps those in the loan industry could shed further light on the subject matter!
On the flip side this is great for folks with the right education who are looking to buy a MHP in the coming year or so, when a seller starts facing issues like this it very severely limits the market for buyers! Thus enters seller financing…
As we do our deals in the coming year I truly think there will be some great terms given to the folks that can get a little creative in the next year. For example the last 2 parks we bought we put a total of 15k down and the seller carried 275k for 240 months at 8% fixed with no balloons or rate calls. In addition to this the seller also agreed to allow us to include an assumption clause, and a substitution of collateral clause in the note.
What these 2 clauses allow us to do is sell for cash and pocket the entire net proceeds if we desire by transferring the debt to another property of equal or greater value, we could also sell the parks to someone who can’t pay cash and not have to worry about IF they can get bank financing. i.e. the guy with 100k cash to put down but can’t qualify because the banks decide to require xyz or they won’t do the loan. The note in general also adds value to the property as well seeing as it’s hard to find 8% on smaller parks and no commercial bank product I’ve seen yet does not have a rate call of some sort.
This year is going to be great, Let’s see some deals!!!