How to Acquire Loans for Mobile Home Parks
Investing in Mobile Home Parks can be a very lucrative business opportunity. Obtaining the financing for a mobile home park can be challenging but luckily there are lenders that specialize in just this type of loan. Each lender will have its own set of rules that they lend by including park size, loan size, the types of trailers they allow and even the population of the surrounding area. This guide should help you figuring out which type of lending is right for your deal.
Mobile home park financing
Before buying a mobile home park, you need to find the right financing solution to support your initial expenses. Neal Business Funding is one of the companies that you can trust when it comes to getting excellent finance options. They have flexible terms tailor-made to suit your financial needs.
Some of the highlights of their loans for mobile home parks are as follows:
• You can avail loans up to $20,000,000. However, they will finance much smaller parks too.
• The loan to value ratio will be up to 75%. This is the highest you can expect while acquiring loans for mobile homes.
• There are options to get hybrid loans from 3 to 10 years amortized for 25/30 years. This is the standard time period for almost all loan providers.
• You can also look for purchase, refinance, and cash out refinance programs while buying a mobile home park.
Apart from the loan highlights, you also need to consider the types of properties eligible under these loan options:
• Single and double wide coaches
• Park-owned coaches
• 1-star parks
All these properties must be located within a nationwide metropolitan statistical area that has a growing population of a minimum of 250,000.
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Financing options
The loan you take should have minimal risks when it comes to purchasing your mobile home park. That is why you should go through different financing options before finalizing a loan plan. Here are some of the financing options you can compare and choose the one that suits your needs:
- Seller financing
This is probably the most popular financing option for buying a mobile home park. There are many reasons why this type of loan has become widely famous among people who want to buy such properties.
• There are no loan committees scrutinizing your income and bank balance. They will not grill you with questions relating to your plans to repay the loan back within the specified time.
• You don’t have to show your credit history. This is more like a payday loan, but for a specific objective. You apply for the loan and wait for it to get approved. There are no strict credit checks that can put you in a spot of bother after applying for the loan.
• It has low down payment options starting from as low as 0%.
• You have up to 30-year amortization period. This is suitable for most people who want to repay their money in small amounts.
• You get creative terms upfront so that it becomes easier to acquire the loan.
Those who want to shift to a new location immediately but don’t have enough cash or bank balance often opt for seller financing schemes because of the variety of benefits they offer.
- Wrap mortgages
This is another popular loan financing solution popular among people wanting to buy mobile home parks. Although it involves a slight risk, you can end up on the gaining side if you manage to handle things carefully. This type of loan means that the borrower assumes that he/she has paid the first lien without informing the bank. It allows the borrower to skirt the bank committee or avoid any type of credit check.
Again, this method is slightly riskier than seller financing or traditional home loans. If the bank or the lender comes to know about this, they will consider the loan as due or payable. You may even stand to lose your down payment for the loan. That is why experts ask borrowers to be careful while opting for wrap mortgages for mobile home parks. In some of these cases, you can wrap your underlying loan. It means, you will have to work with an attorney about the things you can do and things you can’t while taking a wrap mortgage.
- Bank financing
This is the safest option among all the loans for mobile home parks. It is the most tried and test loan method; something that you may have heard among real estate experts. You will have to go to different banks and consult with them about the loan you want. The loan committee may want to speak to you about your credit history. This is no sly method where you can skip a process. It involves checking your credit history and comparing the loan amount with your monthly income.
If the committee passes your loan, you may have to pay a 20% down payment initially. This amount depends on the bank and its terms and conditions. The loan term usually lasts for 5 years and is recourse. You can opt from either variable or fixed rate of interest. This is the safest financing option to acquire loans for mobile home parks. It is better to compare the interest rates and the down payment options while searching for these loans.
Bank financing is widely available in various banks. Whether you are purchasing a mobile home park or a regular house, you can get a home loan almost instantly if you have a clean credit history and sufficient money in the bank. Wrap mortgages and seller financing are for those who don’t want to reveal their credit history. Although the rules and regulations of bank financing are strict, you have peace of mind that you are not doing anything illegal.
Mobile home parks have become an affordable place to stay, especially for those who live alone. The latest models of mobile homes are spacious enough to accommodate even a small family. They resemble the look of a traditional house but don’t cost a fortune like them. The price of mobile home parks depends largely on the location and the size of the property. Plus, if you want additional decorations or special designs inside, the cost will go up a notch. Fortunately, you have loans for mobile home parks to cover for you.
So, if you are planning to purchase a mobile home park, go through some of these loan options before signing the papers.
