Rolling over note, white knuckles

It’s been quite a while since we’ve posted, but have some experiences to share with rolling over a park note.

We bought our park in Michigan in 2006. I know that was a “bubble” year, but our income has been very consistent over the last 5 years. The park is 10 years old, and in relatively good shape. Our bank is one of the largest, and most troubled Michigan based banks, so we knew rolling over the note was a potential problem. The original terms were 5 year term, 25 year amortization, 7.25%. We were told in March, when the note was due, that since we were a good customer we would receive a series of 3 month extensions while our ultimate fate was decided. We offered to purchase the note back at a discount, since we heard this bank was accepting 50-60 cents on the dollar on commercial loans, but since we were current, and hadn’t missed a payment, that was not an option for them.

We approached 3 different banks to seek financing, a very small local bank, a medium, strong, regional bank, and one of the largest banks and strongest in the world. We had strong relationships with all of them, and they all told us NO WAY, NO HOW could they do a non-owner occupied commercial loan, even though we owned it for 5 years, and had decent ratios and cash flows.

We were just informed by our original bank we can roll the note over for a 2 year term, 20 year amortization for 6.00%. The question now is, what happens in 2 years?? Are we ever going to be able to find longer term financing, or is this the “new normal”

Smart banks recognize interest rates will go up in 1-1/2 to 2 yrs. They have the potential to skyrocket (like in the 1980’s) in the next ten yrs. I would try and negotiate a higher 8-10% interest rate for a fixed-no-call 20 yr. loan. We hope they find that higher interest rate appealing but in 2014 or 2016 they will be sorry they did it…too bad.


the property back…trust me on this.

I’ve had two friends refi since Jan. One (1M+) demanded and got 15 yr. 8.5% fixed…the other Bank wanted 1 year balloons (600K) on a break even Park and the Owners turned the Note back when they refused to not reclose the Note each year (23K) Insanity but this happened. They wanted the Note fully closed (survey, appraisal, etc each year)

Both seem happy with outcome,



We are also in the process of a refi. It should have been done by now - our five years ran out yesterday. Anyway, bottom line is that we started with 20 year am, bank is moving it to a 12 yr. am with our refi. Variable interest, 8% floor, just like last time - there was no way they would do fixed. Also, our LOC is cross-collateralized with the mortgage, and that is moving to an 8 yr. amortization.

Hopefully we will find private money before the next five years comes along. We have gone from about 33% occupancy upon purchase to about 85% today, so in another time this would be a slam-dunk!

We found out that this was the only game in town for getting this done. We went to three other banks and were told they could not do it if the money for repayment was coming from the property being financed…