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”