WHY WE LOVE INVESTING IN COLLEGE TOWNS by Dave Reynolds

Many people get excited about college football. We get excited about college-town manufactured home
communities. These properties display unique characteristics that provide greater stability and investment quality
than virtually any other attribute. Warren Buffett owns only one commercial real estate property: a strip center
across from NYU. He has said many times that the main reason he bought it was that college towns have
superior real estate performance. So why do we love investing in college towns so much?

Recession-Resistant Economies

If you look at the unemployment rate and general economic condition of college towns following the 2007 Great
Recession – when U.S. unemployment rose to around 10% — you’ll find that most college towns had around half
the national average. How did they do so well? It’s because colleges are not really affected by economic cycles.
Most parents are going to send their kids to college regardless of whether or not the stock market is booming or
collapsing. And there are plenty of student loan programs in case parents are struggling. Meanwhile, students
are subsidized from home so it isn’t a necessity to spend money – they are insulated from the real world and so
are those businesses that cater to them. In our opinion, there are three main employment drivers to a recessionresistant
market: 1) education 2) healthcare and 3) government (federal, state, county and city). And if we could
pick just one, it would be education, as colleges are catalysts for economic vitality.

Create Employment by Association

Colleges provide well-trained labor for some specialty industries. Many high-tech companies are located in close
proximity to major colleges with superior computer and engineering departments (such as Stanford and Google
as well as Hewlett Packard). Similarly, many healthcare concerns are located next to colleges to take advantage
of trained medical students (such as Barnes Hospital and Washington University in St. Louis). Equally important
is that many of these industries are high-growth and represent cutting edge technology, which has the power to
potentially shape an entire region (such as Silicon Valley). College towns are basically strong job creators that
are extremely prolific.

Stable Housing Markets

College towns are strong economic engines; therefore, housing prices are extremely stable and typically high.
Elevated median home prices and apartment rents create a strong need for affordable housing, making the
mobile home park one of the few solutions. Additionally, college towns are typically upscale, which creates a
living environment that offers superior public schools and other attributes that make people want to live in the
area, even if they work elsewhere in the metro. University Park, Texas – where Southern Methodist University is
located – has a median home price of $1,427,000. For those who think that’s the most extreme example in the
U.S., you will find that the median home price in Palo Alto, California (where Stanford is located) is $2,562,600.

GI Bill Legacy

At the end of World War II, the U.S. government offered returning soldiers the “G.I. Bill” which
essentially provided college at low or no cost. As a result, the government relocated the roughly
500,000 mobile homes they had purchased during the war (and used for base housing) to college
campuses nationwide. Mobile home parks became common fixtures that, over time, transitioned
from G.I. Bill to simple affordable housing. Virtually every college town in the U.S. has a selection
of mobile home parks, many of which have all the right features as far as city utilities, paved roads
large lots and strong locations are concerned.

Examples
We are the largest owner of mobile home communities in Champaign-Urbana, Illinois. We have a
large investment there because Urbana is the home of the University of Illinois, one of the largest
public universities in the U.S., with over 44,000 students. The metro area has a population of
238,984, a median home price of $129,000 and an average three-bedroom apartment rent of
$1,038 per month. And that’s why these properties do extremely well. We also have large holdings
in Austin, which is the home of the massive University of Texas, with over 50,000 students and
24,000 faculty and staff. The Austin metro is 931,830, with a median home price of $299,400 and
an average three-bedroom apartment rent of $1,610 per month. Again, this is the perfect market
for mobile home parks. But even in markets with smaller colleges, these same fundamentals will
often be found.

Conclusion

College towns are great locations for mobile home parks. When you see properties located in
these areas, you should definitely stop and take a further look. While college football is fun to
watch, college-town mobile home park checks are fun to deposit. That’s why we love college
towns!

Dave Reynolds has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. He is also the founder of the largest listing site for manufactured home communities, MobileHomeParkStore.com. To learn more about Dave’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.

HOW TO SUCCEED WITH SMALL MANUFACTURED HOME COMMUNITIES By Frank Rolfe

It’s often been said that the best things come in small packages – and that’s often true of manufactured
home communities. While large properties tend to be the most often discussed and written about, there are
thousands of smaller mobile home parks in the U.S. that are worthy of investment, and often offer
outstanding financial returns with much lower risk. So how do you succeed with these smaller communities?

Less competition often leads to lower prices

One reason that smaller parks often have such high rates of return is that there are very few buyers
seeking them out. Like anything else, supply and demand is a fundamental equation is how high asking
prices can rise. Not many people are looking for smaller properties, therefore you can often get a really
good deal. How good? My second park purchase was a 15 space community in Lake Worth, Texas that I
bought for $60,000 – and that included a three-bedroom brick house. I was the only one who ever
contacted the seller about buying it, and he named the price.

Seller financing commonplace

That $60,000 deal had a unique structure: I put down $5,000 and the seller financed the other $55,000 at a
low interest rate. Indeed, seller financing is very prevalent with smaller parks. This has grown out of
necessity, as it gets progressively harder to finance a deal with a traditional bank as the loan value drops –
particularly on loans under $250,000. Since seller financing is the best debt imaginable, this is a huge
asset to creating a successful small park purchase.

Often great locations

Small parks have some of the best locations in the industry, namely because they are typically from the
1950s and 1960s (although some date from the 1930s), and occupy sites that would never be approved for
a mobile home park use today. I can think of a park in Austin that is right off the downtown area, and
another in Dallas that is right across from the Arboretum. Most small properties are from a different
moment in time, and those locations that were not impressive in 1950 can be in between two office towers
today.

Typically city utilities

Most of the smaller mobile home parks in the U.S. are on public water and sewer. There are two reasons
for this. First of all, most small parks are right in the heart of the city, where public water and sewer lines
are abundant. Second, most small properties simply don’t have room for water wells or private sewer
services to be built. As city water and sewer is preferred, this is a great thing for small parks.

A priceless education

One benefit to small parks that some buyers seek out is the ability to learn the business on a small scale before
making a larger purchase – kind of like a real-life case study to learn from. My first park was kind of that way. I
bought it for $400,000 with only $10,000 down and a non recourse seller loan. My theory was that I could always
get out of it if I hated it, and only have a small loss. This gives many initial buyers greater piece of mind.

But the positives are also negatives in the future

Although smaller parks have some great things going for them, many of these same benefits become
disadvantages down the road. When you change from a buyer to a seller, you experience the same issues that the
person you bought from faced, such as not many buyers to choose from and the difficulty in the buyer obtaining a
loan and, as a result, asking you to carry the paper.

Try to hit $500,000 or more in “finished” value

One way to improve your position – to really harness the potential power of a small mobile home park – is to buy it
when it’s “small” and make it “large”. To many investors, a “small” park is not about the number of lots but the overall
deal size. Nobody considers a $500,000 mobile home park to be “small”, so if you can buy a mobile home park
for $200,000 (which is considered “small”) and increase the value to $500,000 or more when you go to sell it, then
you escape all those negatives that a small park owner often has to accept. So how do you do that?
By buying properties where you can greatly increase the net income as a result of increasing the rents, cutting
costs, renovating and filling vacant homes, and filling vacant lots. If you buy a small park that has little upside in
pushing the net income, then this mission is virtually impossible. So the best small parks to buy are those with
lots of room for improvement.

Some examples

Let’s look at the results of that 15 lot deal in Lake Worth, Texas. I bought it for around $60,000, and put down
$5,000, with the seller carrying the paper on the balance. I sold it as commercial land for around $120,000 about
seven years later, which was twice what I paid, but more importantly 12 times my down payment. But I was unable
to make it into a “big” park. However, I did another small park deal in Lake Worth that had an even better ending. I
purchased a run-down 24 space deal on the lake front for around $100,000. I cleaned it up, renovated and filled
vacant park-owned homes, raised the rents substantially and filled vacant lots. I sold that park for around $400,000,
which allowed the buyer to get a bank loan and me to have a great return on investment.

Conclusion

Small parks can be terrific investments, if you play the game properly. Use their advantages to the fullest, but
remember that the best deals are those that can take the property from “small” to “large” in net income, value and
return on investment.

Frank Rolfe has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. To learn more about Frank’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.

The Top Three Things I Learned from Greatest Generation Community Owners By Dave Reynolds

I’ve been working with members of the Greatest Generation for my entire career. These are the people that literally built this nation and it’s been a great advantage to spend so much time talking and learning from these legends. Here are three of the most important lessons I’ve learned from these mentors.

An unbelievable work ethic

I have never seen as much energy as many community owners can produce in their 70s and 80s. While others look at retirement as a time to take it easy, many community owners have no interest in such ambitions. I have been to properties where the community owner – although well past retirementage – is still mowing the entire property, fixing any water or sewer issues themselves, and still finding time to collect the
rent and make repairs to community-owned homes. Theyliterally work from dawn until dark seven days a week. I’ve learned never to complain about my own workload, as I can’t hold a candle to some of these owners and their desire to get the job done regardless of personal sacrifice. Every time I’m working on buying a deal or reading a lengthy report in the middle of the night, I think about what those Greatest Generation guys would say, and I know it would be “quit complaining – I’d be doing this and mowing the property at the same time, you big baby”.

A focus on cost containment

Greatest generation community owners are fantastic at keeping costs down. They examine every project and try to find ways to shave each line item. While younger owners may be fast and loose with spending, the Greatest Generation realizes that “a penny saved is a penny earned”. For example, let’s assume that you need to paint the laundry building. A younger owner would just go down to Lowes and buy some green paint. Total cost $100. The Greatest Generation owner would take ten minutes to call three stores and see who’s got the best paint prices, and that one ten-minute delay might save $40 – which comes out to $240 per hour. On top of that the Greatest Generation owner would point out that that $40 savings is after tax, and you’d have to earn $60 to net that much. If you talk to the original builders of these communities, they typically did much of the “grunt” work themselves to save considerable funds, such as digging the trenches for the plumber and cutting down trees. This thrift is an important lesson that has saved me a fortune over time. Every time I spend money, I think “what would those Greatest Generation owners do?” and then I pick up the phone and start calling around to shop for the best deals.

Honesty and integrity

This is one of the biggest takeaways from a career of working with Greatest Generation owners. It’s their unwavering adherence to the fundamental laws of honor. Their words truly their bond. If a Greatest Generation owner tells you something – and a better deal comes along shortly thereafter – they’re still going to honor their commitment with you. And they’re also going to go out of their way to help others, even if there’s no financial gain involved. This is a lesson that is lost on a lot of younger community owners. Years ago, I sold a community in Oklahoma, but the funding was not until the next day. Overnight, the community was destroyed by a tornado. In the morning, I could have collected my money and saddled the new owner with an extremely difficult situation, but instead I chose to give them their money back – even though it made no financial sense – and to go out and fix the disaster myself. I think that what influenced me to take this
extraordinary step was my lesson learned from these Greatest Generation owners that there’s more to life than money, and that being a good person is as valuable as any financial gain.

Conclusion

One of the biggest losses we will all have over the years ahead is the loss of the Greatest Generation of community owners. It will be hard to even explain the lessons learned from them to the younger generation, as they will not believe such people actually existed. I’m glad that I’ve been able to learn so much from them.

 

Dave Reynolds has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. He is also the founder of the largest listing site for manufactured home communities, MobileHomeParkStore.com. To learn more about Dave’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.

A Duke Economist Confirms that Manufactured Home Community Lot Rents are Too Low. So How Do We Increase Them Without Straining Our Residents? By Frank Rolfe

Charles Becker is a Professor of Economics at Duke University. He’s also the first economist to study the manufactured home community industry. We have been working with him for years now, providing data and insight as he worked on various industry topics. His latest paper is sure to grab enormous attention. He presented it on an MHU Lecture Series Event a few days ago: https://www.mobilehomeuniversity.com/emails-and-events/interviews/charles-becker/recording.php. The problem is not with the findings (which we all know are true) but with the manner in which we all take action on them.

Becker has found that manufactured home community lot rents are at least 30% to 40% under-market.

Through exhaustive research, Becker has determined that manufactured home community lot rents are roughly 30% to 40% beneath the levels that they should be at. Essentially, when compared to single-family and apartment rent levels, mobile home park lot rent levels are significantly lower than what makes sense from a strictly economic standpoint. Of course, we’ve been saying that for years. Why, for example, are lot rents in Austin $1,000 per month less than apartment rents? The culprit, of course, has been the “quantitative easing” of rents by mom and pop owners, who derive their return on investment by not only financial levels but also the affection of their residents. This has kept manufactured home community lot rents from being priced by market forces and has disrupted the natural state of things.

Educating residents on the necessity – and benefits – of higher rents

There are three basic problems with keeping lot rents artificially low. The first is that it does not allow owners to make necessary capital expenditures. Things like road re-surfacing and tree shaping and removal cost significant capital, and low rents leave no room for these improvements. That’s one reason that there are so many communities with low rents and low quality of physical structures. The second problem is that low rents equate to low management salaries, which leads to often poor management. But the biggest problem with low rents is that it frequently coincides with community re-development, as there are many other uses for land than a manufactured home community. It’s worthy of note that probably 90% of all manufactured home communities that get re-developed are turned into apartment complexes (which have a national average rent of around $1,200 per month per unit).

Finding ways to lower other costs to offset rent hikes

So if higher rents are a necessity, how do we approach this situation with residents? One way is to find methods to lower the cost of other parts of our residents’ budgets, so that higher lot rent does not add to their overall monthly expenses. For example, we have been aggressively educating our residents on the benefits of buying their homes as opposed to renting, which typically saves them $100 per month. We also recently completed a bundled phone and internet deal that saves our residents over $100 per month. We’ve also been working on initiatives to lower utility costs by making homes more energy efficient. We all need to think through each line item of our residents’ budgets and brainstorm ways to lower them.

Providing a better value for residents

We have found that most manufactured home community residents are more concerned about “value” than simply “price”. They are not seeking the lowest rent they can find, they’re looking for the best deal. That means that they are willing to pay more for a community that’s safe, clean and attractive. To accomplish this, we all need to continually upgrade our property’s environment and bring it to a higher standard. When the New York Times writer lived in our Illinois community in 2014 and wrote his article, he found that not one resident was anything less than thrilled by the value of their housing choice. What he didn’t know is that we had raised the lot rent by around 50% over the prior half-a-decade, while at the same time re-paving the roads and cleaning up the property. It really is all about the value.

Higher lot rents, going forward, are a given. They are rooted in simple economics and make complete sense. They are in the best interests of the residents, as they ensure good management, capital expenditures and the longevity of the land use. Although this is an unpopular topic with our residents and the media, the fact is that we can all take steps to lessen the blow and create a terrific value that is reflected in more than just price.

Frank Rolfe has been a manufactured home community owner for almost two decades, and currently ranks as part of the 5th largest community owner in the United States, with more than 23,000 lots in 28 states in the Great Plains and Midwest. His books and courses on community acquisitions and management are the top-selling ones in the industry. To learn more about Frank’s views on the manufactured home community industry visit www.MobileHomeUniversity.com. This article originally appeared in the Manufactured Housing Review, subscribe for free here.

The Madison Group Arranges $5,800,000 loan for the purchase of a Mobile Home Park

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.

The Madison Group (www.madisongroupfunding.com) is a commercial loan broker and consultant specializing in financing for investor properties nationwide. TMG provides flexible and reliable capital for real estate acquisitions, refinances, and re-capitalizations for a variety of property types including: multifamily, mobile home parks, credit tenant NNN net lease, office, retail, industrial, self-storage and other commercial properties in the United States. Established in 2001, The Madison Group’s intention is to provide highly competitive loan products through its superior capital market expertise and quality sources of capital. TMG works efficiently and effectively to get the transaction closed and funded.
The Madison Group can be reached at 435-785-8350 or by e-mailing Kesselman at angela@madisongroupfunding.com.

WHY YOU CAN EFFECTIVELY MANAGE A MOBILE HOME PARK INVESTMENT FROM 2,000 MILES AWAY

Some things require the owner to be there 16 hours a day to succeed, such as a restaurant. Others mandate that the owner be there 8 hours per day, such as a law firm. But in the world of real estate, no sector requires less time on the part of the owner than the mobile home park. Why is that? There are several reasons.

The owner offers no value-add, except for the vision

When you own a mobile home park, you don’t personally offer any value-add except for the overall vision of where you want to take the property. If you are there 16 hours a day, like the owner of a restaurant, your revenues will not increase, nor will your costs decrease – in fact, your costs will increase because you have to pay for your own travel and lodging. Renting land is a low impact endeavor, and the owner is simply getting paid for owning the property, not because their association with it is worth any more money to the resident.

High customer retention and low revenue elasticity

It costs $5,000 to move a mobile home from point A to point B. This cost is too high for any resident to even begin to think about moving their home. On top of that, any home built before 1976 does not have the HUD seal required to be moved into most any city in the U.S. When you add these two together, what you get is an industry in which an estimated 98% of all homes have never left the spot in which they were first delivered. You might then say “why is the word mobile even in the name?” That’s because they do come out of the factory on wheels – but nobody said they could travel twice.

You only rent the land

Unlike apartments – in which you have to repair toilets and replace roofs – mobile home parks just rent land. And land needs little management or capital expense. The average mobile home park owner simply fixes potholes annually and mows the common areas throughout the summer. And that’s about it unless there’s a water or sewer line stoppage. What the residents do on their rented land is their problem, as long as they meet the park’s rules guidelines, which are easily enforced by the manager without any help from you.

A simple business model with established management systems

Owning a mobile home park is not like owning a factory that produces smart phones. Nothing new ever happens and there is no technology shift to worry about or consumer taste changes. Renting land is a very simple business model, and one that does not require much thought on the part of the owner. In addition, there are established management systems that the owner can use to gauge performance and make sure that their investment is on-track and that the on-site manager is doing their job.

Technology helps a lot

Modern technology has also made it easier to manage a mobile home park from afar. You can “virtually drive” your property monthly using an HD Polaroid or GoPro cube camera shot by your manager. You are always available by cell phone or email in the event of emergency. You can even install video cameras in your park and see that everything is functioning smoothly from your laptop.

Conclusion

The mobile home park business model works well for the distant owner who is looking to invest in a different state or region of the U.S. – or even another country. Renting land coupled with the affordable housing crisis makes it a unique sector of U.S. real estate. And we practice what we preach – nearly our entire portfolio of parks is in over 25 states that we do not live in.

 

Frank Rolfe has been an investor in mobile home parks for almost 30 years, and has owned and operated hundreds of mobile home parks during that time. He is currently ranked, with his partner Dave Reynolds, as the 5th largest mobile home park owner in the U.S., with over 250 communities spread out over 25 states. Along the way, Frank began writing about the industry, and his books, coupled with those of his partner Dave Reynolds, evolved into a course and boot camp on mobile home park investing that has become the leader in this niche of commercial real estate. To learn more about Frank’s views on the manufactured home community industry visit www.MobileHomeUniversity.com.

Press Release: The Madison Group facilitates a $1.3M loan for a manufactured home community in Ontario, OR.

Transaction Description: The Madison Group (TMG), a commercial loan broker, facilitated the financing to purchase this manufactured home community in Ontario OR. The park is located in a small market, 60 miles northwest of Boise, ID. The buyers currently own another park in the area, and the purchase of this park offered them another solid opportunity in the marketplace.

Challenges: The experienced borrowers prefer the long term amortization and fixed rate options along with non-recourse features. The location of the park and the small market size presented problems for most institutional lenders.

Solutions: TMG assisted the borrower to close this transaction with a non-recourse lender that could accommodate the buyer’s needs. TMG successfully closed the transaction at a low interest rate of 4.95% fixed for 10 years with a 30 year amortization.

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

The Madison Group (www.madisongroupfunding.com) is a commercial loan broker and consultant specializing in financing for investor properties nationwide. TMG provides flexible and reliable capital for real estate acquisitions, refinances, and re-capitalizations for a variety of property types including: multifamily, mobile home parks, credit tenant NNN net lease, office, retail, industrial, self-storage and other commercial properties in the United States. Established in 2001, The Madison Group’s intention is to provide highly competitive loan products through its superior capital market expertise and quality sources of capital. TMG works efficiently and effectively to get the transaction closed and funded.

The Madison Group and Angela Kesselman can be reached at 435-659-2200 or by emailing Angela at angela@madisongroupfunding.com.

Press Release: The Madison Group facilitates a $1.7M loan for Mobile Home Park in Tulsa, OK

Transaction Description: The Madison Group (TMG), a commercial loan broker, has facilitated the financing of a Mobile Home Park. The park was purchased less than a year ago and has 219 pads of which 106 are occupied and has great potential upside for our experienced investor.

The borrower purchased the property from a seller that was unable to produce historical income and expense data on the park. It was a quick close and the investor purchased with an all cash transaction. She was comfortable with the market and low occupancy, as she had previously turned around another park in the area and understood the market.

Challenges: The out of state owner requested an all cash out refinance transaction on a park that had no historical data available, along with a less than 50% occupancy and needed some repairs and updating. She requested interest only for a period of time in order to make the needed repairs and still cash flow the property during stabilization.

Solutions: TMG successfully closed the transaction at a low interest rate of 4.5% fixed for 3 years on a 7 year note with a 25 year amortization and one year of interest only payments. All of the cash was disbursed to the borrower to use without holdbacks or escrows allowing her to use the cash to complete improvements on the property and purchase other properties for her portfolio.

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

The Madison Group (www.madisongroupfunding.com) is a commercial loan broker and consultant specializing in financing for investor properties nationwide. TMG provides flexible and reliable capital for real estate acquisitions, refinances, and re-capitalizations for a variety of property types including: multifamily, mobile home parks, credit tenant NNN net lease, office, retail, industrial, self-storage and other commercial properties in the United States. Established in 2001, The Madison Group’s intention is to provide highly competitive loan products through its superior capital market expertise and quality sources of capital. TMG works efficiently and effectively to get the transaction closed and funded.

The Madison Group and Angela Kesselman can be reached at 435-659-2200 or by emailing Angela at angela@madisongroupfunding.com.

Press Release: The Madison Group Facilitates a $2.475M Nonrecourse Loan for Senior Mobile Home Park

Transaction Description: The Madison Group (TMG), a commercial loan broker, has facilitated the financing of a Senior Mobile Home Park. The park has102 pads with 96 occupied and was being underutilized with excessive expenses. The park had a somewhat storied history, but was an excellent purchase – with great potential upside for our experienced group of investors

The borrowers took the property under contract with a down payment and a short-term seller carryback note. To finalize this purchase the group looked to enhance their position by creating a larger loan than would be possible at the time of getting the park under contract. TMG was able to provide a funding source that gave them a larger loan amount, based on the increased value from the time of contract to the time of closing the long term financing. The buyers were able to pay back their investors and have a holdback for additional monies upon hitting certain milestones.

Challenges: The borrowing group required a non-recourse loan to provide a vehicle for the investment team. When the park was purchased, it had below current market rents and higher than normal expenses. The borrower needed to get a loan that would allow for trailing 3-4 month in-place income while they raised the income and lowered the expenses.

Solutions:
TMG successfully closed the transaction, locking in a great rate of 4.90% with a10 year fixed term, 30 year amortization, and LTV of 78.5%. The final loan amount exceeded normal underwriting standards based on the lenders ability to set aside additional funds that will be dispersed upon the continued reduction of expenses and increased revenues. Once the borrower hits the milestones funding the final tranche will be dispersed. This allowed the borrowers to maximize their loan amount and to capture the aggressive rates available in the market and to avoid refinancing at a future date to recapture equity. It also allows buyers to have monies available for the purchase of other properties.

The financing was arranged by Jeff Meierhofer at The Madison Group.

The Madison Group (www.madisongroupfunding.com) is a commercial loan broker and consultant specializing in financing for investor properties nationwide. TMG provides flexible and reliable capital for real estate acquisitions, refinances, and re-capitalizations for a variety of property types including: multifamily, mobile home parks, credit tenant NNN net lease, office, retail, industrial, self-storage and other commercial properties in the United States. Established in 2001, The Madison Group’s intention is to provide highly competitive loan products through its superior capital market expertise and quality sources of capital. TMG works efficiently and effectively to get the transaction closed and funded.

The Madison Group and Jeff Meierhofer can be reached at 435-785-8350 or by emailing Jeff at jeff.m@madisongroupfunding.com.

Press Release: The Madison Group closes a $1.15M loan for purchase of MHP in Texas

The Madison Group (TMG), a commercial broker and loan consultant, has facilitated the financing for a 129 pad MHP in a rural location between Houston and San Antonio Texas. The borrower’s goals for the transaction were to bring in a group of investors to the transaction and enjoy the potential upside and increased income over time. The complication that made most lenders shy away from the transaction was that the property’s location and high vacancy rate. The borrower desired a loan with a 25 year amortization to be able to achieve the cash flow necessary for the investors. Making this an even more difficult transaction, the property had transient oil workers which made the income fluctuate.

“The special needs of this transaction meant digging in deep by our staff, but we were able to facilitate the most favorable terms to meet the clients goals, said Jeff Meierhofer of The Madison Group, who originated the financing. “The borrowing group needs the ability to take the time necessary to fill the park to a higher occupancy create cash flow. We were able to find the right loan program for this rural park and get the borrower’s a loan that closed.

TMG was able to source the transaction to meet the borrower financial goals and provided him with a 75% LTV loan with a five year term and 25 year amortization fixed at 5.5%. The loan has a declining prepay and has adjustments in years five through 25 but does not require a payment.

The financing was arranged by Jeff Meierhofer at The Madison Group.

The Madison Group (www.madisongroupfunding.com) is a commercial loan broker and consultant specializing in financing for investor properties nationwide. TMG provides flexible and reliable capital for real estate acquisitions, refinances, and re-capitalizations for a variety of property types including: multifamily, mobile home parks, credit tenant NNN net lease, office, retail, industrial, self-storage and other commercial properties in the United States. Established in 2001, The Madison Group’s intention is to provide highly competitive loan products through its superior capital market expertise and quality sources of capital. TMG works efficiently and effectively to get the transaction closed and funded.

The Madison Group and Jeff can be reached at 435-785-8350 or by emailing Jeff at Jeff.M@madisongroupfunding.com.