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MHP financing

$3,395,000 loan for the purchase of a mobile home park in Kansas

Tags: mobile home park financing, MHP purchase loans, RV park loans
Wednesday, Aug 01, 2018
by Angela

The Madison Group (TMG), a leading source of mobile home park financing nationwide, arranged the $3,395,000 loan for the purchase of a mobile home park in Kansas.  The borrower’s goals were to purchase this low occupancy park using a 1031 tax-deferred exchange.  TMG secured the financing with a 5-year fixed rate of 5.57% and a 25-year amortization with a 3/2/1 prepayment penalty.

The 77-acre park is a licensed, 281-site community.  Amenities include a 23-acre lake, paved streets, public utilities, off-street parking, a two-story 6,300 sq. ft. office/community building, a workshop and a playground.

The park has 111 vacant pads and the buyers are experienced with filling this type of park and bringing in tenants.  The buyers are strong borrowers with over 30 years of experience.  They acquire under-performing assets, fix immediate issues, implement systems, upgrade the property and add new homes creating an improved family neighborhood environment for tenant longevity and stability.

Among the challenges arranging this loan faced, 111 pads are empty, requiring homes to be placed on them.  Only 59 percent of the pads have occupied homes.  The infrastructure is in place but some electrical upgrades are needed.  Additionally, two abandoned homes need some work.

TMG was able to find a lender comfortable with the client and their ability to fill the vacant lots with homes.  The client was coming out of a 1031 transaction having been very successful with that park, which was similar.  The loan closed on time, at a 75% LTV, fulfilling the buyer’s 1031 exchange requirements. 

The buyers secured a great rate and leverage on an under-performing park that just needed the right lender and buyer to allow for stabilization of the park,” said Angela Kesselman, TMG’s associate director of Finance.

The financing was arranged by Angela Kesselman at The Madison Group.