The Madison
Group (TMG), a leading source of mobile home park financing nationwide,
arranged the $8,000,000 purchase of a mobile home community in Oklahoma. The parks income was largely derived from
park owned units. TMG secured the
financing with a 5-year fixed rate of 5.5% with a 7 year term and one year of
interest only payments and a 25-year amortization at 77% loan-to-value.
The property, which is located in a nice residential area and has
good access to the freeway, is fully occupied. The only current vacancies are empty
lots. The mobile home park consists of
200 lots on 35 acres. The park owns 160
homes of which 34 are lease-to-own units. The borrower needed to accommodate an
IRS 1031 tax-deferred exchange on another park that was sold in Tulsa. This
purchase met the borrower’s goals.
Some challenges TMG faced in securing this
finance package include the fact that parks with more than 35% of the homes
owned by the park are more difficult to finance. This park also had declining income due to earlier
poor management and increased collections. Additionally, the client lives out of state,
but has been very successful in this market with another park.
The Madison
Group was able to secure financing through a regional bank that was comfortable
lending on the park and the operations as a whole. The borrower is very experienced with this
property type and owns a large portfolio of parks.
“We were able to work with the right
lender and third parties to get this loan closed within the 1031 timeline. We were also able to secure a high LTV loan
for the client.” said Angela Kesselman, TMG’s
associate director of Finance.
The financing was
arranged by Angela Kesselman at The Madison Group.