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Mobile Home Park Loans

Loan for $3,825,000 Mobile Home Park purchase in Kansas

Tags: mobile home park financing, MHP loans, nonrecourse loans
Wednesday, May 30, 2018
by Angela Kesselman

The Madison Group (TMG), a leading source of mobile home park financing nationwide, arranged the $3,825,000 loan for the purchase of a mobile home park in Wichita, Kansas.  The borrower, a repeat client of TMG, needed to satisfy a 1031 exchange and requested a long term loan on an underperforming park. TMG secured the financing with a 5-year fixed rate of 5.75% and a 30-year amortization with two years of interest only payments.

The buyer was selling another park and had chosen this as the replacement.  The park is located in an excellent neighborhood of Wichita and is surrounded by country clubs and $300-400,000 homes.  The only competition is a neighboring park, which is 100% occupied.  This 360-pad park currently has occupied homes on only 140 pads in the park.  The buyer will begin to add homes as soon as she closes on the park and plans to add tenants quickly.  The park has an excellent upside, as it is being sold at the existing occupancy.  It should perform very well with this buyer’s experience in turning around this type of Mobile Home Park.

All the homes in the park are park owned and rented to the occupants.  This creates a challenge for most lending institutions, as they typically underwrite off of pad rents.  TMG was able to find a bank that would use the income from the existing pad and home rents to achieve the debt service coverage required.  TMG also was able to structure two years of interest only to help mitigate the mortgage expenses while the property is being stabilized.

The buyer can cash flow the property ‘as is’ with the interest only payments and will quickly move to increase the cash flow in this well located park,”  said Angela Kesselman, TMG’s Associate Director of Finance