Mobile Home Park Financing Questions & Answers

Anita Huedepohl, Liberty Funding

How much down payment is required?

Lenders will provide up to 85% LTV(loan to value) based upon the park's performance and debt service ratios.

Can I use the seller financing as my downpayment?

A lender will not allow the seller financing to be used as 'cash down', however, you can take out an equity line(HELOC) on your own home and use the proceeds as down payment since it is secured by your primary residence.

How much income do I have to make in order to qualify?

The ability to purchase a mobile home park does not rely on your personal income. The park must 'qualify' based on its' income and if it is not sufficient, the lender will then look at other assets and income of the borrower to further support the payment.

If we don't have enough money for a full downpayment....are there any other ways of purchasing our 'dream park'.

If you do not have sufficient funds to purchase the park you have in mind, you may want to consider purchasing a smaller park to get started or partner with someone else to complete your purchase.

What credit score do I have to have to qualify?

Lenders can go down to a 600 credit score, depending on the overall strength of the borrower's application including assets and liabilities.

We don't have a downpayment at the present time but will have enough in a year...Is there any way we can still buy a park?

Yes....Sometimes owners are ready to retire and welcome creative ways to sell the park, especially if it has been on the market for a while. We can refinance the park for the owner providing them with cash out to give them a year's incentive. You can partner with them to run the park, gradually allowing them to retire while you are saving enough money to put as a downpayment and within a year you can assume their loan.

What is the current interest rate for a mobile home park?

Interest rates vary from park to park depending on debt service ratios and rent roll occupancy, not to mention the borrower's credit scores.
We have competitive market rates for commercial property starting in the 6% range and up. Once the rent roll, credit report and year to date profit 'n loss are received, we can provide you with options for financing the park.

My bank will only give me a 15 year amortization with a balloon note due in 5 years...Are there any other options that will keep the payment down?

Yes...we offer up to 30 year amortizations with no balloon notes. A balloon note means that at the end of the given time you must refinance the note, irregardless of the amortization. Oftentimes clients see really low 'teaser'
rates and are shocked when they find out that they only have a few years to enjoy the benefits. Most of our loans are fully assumable, which means that the person who is interested in your park may assume the payments, as long as they meet the lender requirements. The loan is also locked for as long as 30 years, providing peace of mind to our clients who plan to keep the property for a long term investment.

What if I want to sell the park in a year?.....I am getting it for far below value and want to fix it up to sell.

Liberty Funding has financing options that allow you to 'flip' the park and
make a profit with little or no prepayment penalties.

Can I use the value of the park's appraisal as downpayment since the owner is
'desperate' and selling below market value?

Typically lenders base their decision to lend upon the purchase price, not an appraisal value and a downpayment is a percentage of that purchase price. There are some lenders with higher interest rates that will offer some 'out of the box' ideas and it is best to check with our office as these are on a case by case basis.

Can you lend on a park that has park owned trailers?

Yes, we can.

Can we use the appraisal that was done a year ago?

The appraisal must be current (30 days) to be considered and even then it must be from an appraiser on the lender's approved list. Values on the appraisal are based on comparables(comps) and should reflect current market values in order to be considered.

For any other questions or to finance or refinance a mobile home park contact:

Anita Huedepohl
Chesapeake Building
205 Powell Place
Brentwood, TN 37027
Office 615-417-4710

Free MHP Investing Book