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.