Park Financing in Today's Market

I have spoken to two RE brokers recently (different firms) who specialize in mobile home parks and both have said the debt market for mobile home parks has pretty much dried up. It’s next to impossible to secure 3rd party financing these days (at least via banks, not hard money lenders).  And the sellers are extremely reluctant for the most part to take back a note.  They’re not saying it’s impossible but it’s like looking for a needle in a haystack.  I live in GA so is it possible that the debt market is that particular at a regional or local level?  Or is this a pretty big problem all over the place?  Even if I were in the position to pay all cash (or raise equity), the returns just aren’t all that interesting without leverage. 

I don’t know who the brokers are that you talked to, but if they seriously believe that then they are certified idiots. Mobile home park financing has never been this plentiful since the industry began. Why? Most banks have grown to love parks because they have the lowest default rate in real estate and have very stable revenue streams due to the $5,000 it costs to move a mobile home, as well as the demand for affordable housing, Those brokers are obviously looking for easy deals in which the customer wants to pay all-cash in a 1031, etc. so you don’t meet their profile. Screw them. There’s a thousand brokers out there and 44,000 parks that have no brokers involved. If you listen to brokers, you’ll be more misinformed than anyone on earth.

That’s a relief to hear.  These brokers have lots of parks that have been sitting on the market for a long time because buyers couldn’t find financing and sellers weren’t willing to help.  The brokers were encouraging the sellers to finance their deals but they weren’t budging.  But you’re right, they represent a small % of the overall mobile home park universe.  If anyone reading this knows of banks currently lending to this asset class in GA, I would appreciate the leads.  I rather have those conversations now so I can understand underwriting criteria in advance of spinning my wheels looking into deals that won’t fit their criteria.  Thanks.

I don’t know anything about banks in Georgia – as we don’t own any parks there – but the best resource in financing loans of $500,000 or more is through Security Mortgage Group at (585) 423-0230, and ask for Pierce. They are loan brokers nationwide, and that’s who we use on every deal over $500,000 in loan size. They do bank lending and conduit lending.

In the process of selling one of our parks for over $3,000,000 100% of individual do not have the 20% down and in one case I offered to help with the down payment which was no problem for the bank. The multi-park owners are also trying to secure other partners to try to buy the retirement property on a large lake and are fidgety. I have had good offers but their own financing is weak and cannot complete the transaction It appears that some buyers are maxed out and only asking for information and in some cases never even leave a phone number. I know some brokers looking for parks owner max out at $2,500,000 or below or are looking turn around properties. One buyer bragged about flipping 50 parks since 2000. The process of selling is very enlightening in general since there seems most of the inquirers are mostly tire kickers looking for an ignorant seller or a troubled park… The exception properties are rare but I have one.

What about zero down deals with owner financing. Frank, I know you commented on this for me a couple of months ago that you had secured a property with zero down. What do you put into your contracts that would be most appealing to a seller that way? I would assume a higher interest rate maybe and a balloon around 3 years? Also, are there park owners out there willing do a zero down with a park worth as
much as Carl’s above?

We would suggest: -  Local Banks…Local Banks…Local BanksWe received 3 Loan Commitments (from Local Banks) for a $500,000 MHP (65 Spaces On 12 Acres) with $200,000 Down:-  Local Bank 1:  15 Year Amortization / 5.5% / 2 Year Balloon-  Local Bank 2:  15 Year Amortization / 5.0% / 5 Year Balloon-  Local Bank 3:  15 Year Amortization / 4.75% / 7 Year BalloonAll 3 Local Bank Loan Officers took the time to drive through the MHP before making a Loan Commitment.Of course we secured Local Bank 3’s Financing and closed on the MHP.This was a rough MHP that needed a lot of TLC (ie…12 Condemned Mobile Homes just sitting there with broken windows) with 46% Occupancy.Please do not forget about your Local Banks!Now if one Local Bank tells you ‘No Thank You’, please keep looking.  We had a Local Bank that we have successfully and continuously done business with (one of our good friends is the VP) who just did not understand nor desire to understand Mobile Home Parks as an investment.  Please keep going to your Local Banks as it only takes one.We wish you the very best!!!

Our zero down deals come in two categories: 1) seller carry and 2) assumption. It is also possible in conduit, but that’s much more difficult. Traditionally, zero down deals originate from situations where the park is a disaster and nobody can get a real loan on it. You then convince the seller that you need to use your down payment for capital repairs, but instead cleverly figure out how to do the necessary repairs on a shoestring budget. On the assumption side, you buy a deal that is not making enough money to service the debt, and then make instant cuts and rent increases to more than cover the debt after closing. In our famous Kankakee deal, for example, we took a park that had an annual loss of ($38,000) the year before, and made it a $270,000 positive the first year, simply by firing the managers and maintenance crew, raising the rent, and filling some vacant homes. So the answer is that, to do a zero down deal, you need to be looking at damaged parks that you can fix (and fix much cheaper than the seller thinks). Carl’s park does not sound damaged in any way, so I don’t think he’s a zero-down candidate.

Zbird:Generally, parks should not have trouble with financing. The bank’s concerns would be the same ones that are identified here (small size, water sources, high vacancy, too many rental homes, poor market) which is why you should start with local banks, perhaps USDA (if you’re in a rural area).One of the reasons that you might be hearing about “financing trouble” is that it’s a way for the brokers to put pressure on their client to either reduce the price or think creatively on disposition. If you raise the issue, then they can show there’s support for their advice to the seller. I’ll be generous and accept “seller psychology” over “broker misinformation”, but Frank probably isn’t wrong.Will

The local banks know the property and will give a loan on the FULL asking price and will finance it with 20% down with a 20-25 year amortization with a 5 year renewal balloon at 5%. I have people upset at me trying to buy it with as low as $180,000 down after they sell their house and want me to help on their down payment and one person that had $475,000 I was willing to help with the down payment but the bank did not approve their credit. Some buyers are assuming parks in pristine condition warrant a seller to give financing when as a seller we DO NOT WANT TO BE THE BANK. Are boot-camp trainees just being told to make a questionable offer and then complain they need to fix items that when they buy it they will maybe never touch UNLESS it raises their income significantly or to tie up properties so the old owner relents and eventually sells for a lower price? There seems to be a lessening of diplomacy and ethics in the con

Carl,One of the key points we try to make at Boot Camp is that all negotiations need to be win/win, where both the seller and buyer are happy. We teach people that you cannot cram down the price on a successful property because it is impossible to bully a seller in the MH business (unless the park is one step from foreclosure). I don’t know your park or how you’re selling it, or even the economics of it, but we sell properties all the time and you are always going to have people tie up properties and then not get approved or go forward after the due diligence period ends. I’ve had a property that was tied up and dropped TEN TIMES before it closed (and, yes, that wasted a full year of time). So it may be that you just have not found the right buyer yet.

As a Real Estate Broker I agree with Frank that negotiations need to be a win/win on both the Seller and Buyer sides.A ‘Ratified Contract’ is a contract that both the Seller and Buyer agree to all of the conditions.Part of selling/buying real estate is negotiation.  It is a dance.  It can be a positive experience.As a Seller you have decide what is your Lowest Price that you are willing to sell for and what conditions you are willing to accept.As a Buyer you have to decide what is your Highest Price that you are willing to buy for and what conditions you are willing to accept.Any Buyer most certainly should place a Due Diligence Period & Financing Period in their Ratified Contract.  This allows the Buyer to investigate all aspects of the property and secure financing before purchasing.Thus, as a Seller you have to decide how long you are willing to have your property ‘Under Contract/Contingent’ (which means that most of the other potential Buyers will not actively consider your property unless it is a fantastic deal).As a Seller you can always take a backup contract (which will come in play if the first contract falls through).  However, again unless it is an excellent deal this will probably not happen.The last Mobile Home Park that we purchased we had placed 3 different Offers during a 3 year period.  Initially, when the MHP came on the market, the price point was too high and not justifiable.Please remember that the value of a property is what someone else will pay for it and a lot of the time what the Bank is willing to finance (unless you Seller Finance).We wish you the very best!

Carl,We may have some interest in your park for sale.  This is our first post here, but have been lurking for months.  We have been involved in the heavy construction business and are now looking to diversify.  We have examined several parks for sale with less than stellar results.  Most are overpriced.  The ones that appear to be priced right have many bookkeeping inaccuracies.  Please contact us at  We can further exchange contact info.  Thanks.Keith

Like Kristin, I just closed on 37 space park using local bank financing. The terms of my financing were nearly identical to Kristin’s. Your personal finances along with the appraisal of the land and condition of the park’s infrastructure will be the determining factors.