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TMG arranged for the $6.5MM purchase and refinance loans for three RV Parks in Utah

Tags: RV Park Financing, RV and MHP commercial loans, SBA loans for RV Parks
Wednesday, Dec 30, 2020
by Angela Kesselman

Summary:  The Madison Group (TMG), a leading national lending source of RV Park financing arranged 3 loans in Utah totaling $6,500,000. Two of the RV Parks were purchases and qualified through SBA 504 loans and the other was a cash out refinance of an existing RV Park.

The borrower’s goals were to cash out his existing RV park and buy two other parks with SBA financing.  The three RV parks are in good locations near national and state parks.  Both purchase loans had a hard deadline and needed to be closed and funded by the end of the year. TMG worked closely with the lender and the borrower to meet the deadlines for a successful closing.

TMG provided a cash out refinance of one park at an LTV of 72% on a conventional loan with a 4% interest rate on a 25-year amortization and a 10-year fixed term.  This park has been owned by the borrower for two years and he had greatly increased revenues during ownership.  He used this capital to purchase the others two parks with 80% and 85% LTV SBA 504 loans, respectively. TMG was able to facilitate money for capital improvements on the higher leveraged park. The loan was slightly above the 85% purchase money underwriting guideline and included a 3-month interest reserve to be used during the slow season.  Both SBA loans were financed with 4% fixed rate financing on the first mortgages. The 2nd mortgages will be securitized at a rate in the mid 2s for 25 years.  In addition, they may both qualify for the SBA Covid stimulus providing no payments for 6 months. 

The Madison Group provided the critical piece of the puzzle by providing a cash out loan on the existing park. This access to equity enabled the client to purchase two more assets and grow his portfolio threefold. 

Location:  Utah

Property:  3 KOA RV Parks

Loan Amount: Combined for a total of $ 6.5M

Interest Rate: 4% on bank loans, mid 2’s on 2nd mortgages

Term:  25 Years

Amortization:   25 Years

Prepayment:   None on first mortgages, 10 year declining on SBA

LTV:   72% cash out on conventional loan, 80 and 85% on the SBA transactions

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