The Glam, The Sham and The Truth of MHP Lending

If you’re anything like me, in your MHP treks you’ve definitely been caught up in the Glam of MHP Lending. The glittering lights of:

1. Anybody can get a loan on a MHP, it’s the best cash flowing assets
2. 100% financing is available in 24 hours!
3. You can find a private money lender faster than tomorrow

And most likely the fine print you definitely didn’t hear is:

1. Proof of Cash Flow can be hard to prove
2. I spend most of my profession chasing rent rolls, P&Ls, tax returns sometimes it takes months
3. Lenders build in expense ratios and there’s no walk around there
4. Most deals cannot meet the 1.3 DSCR for stable desirable debt…this is where most of my focus lies
5. 100% financing is available in about 2 weeks if you have a seller you’ve spent the last 2 years building a relationship with and you’re a great listener and negotiator..it’s going to come from the seller, not the bank
6. Only The Hearty, The Prepared and The Masters can do this
7. The Hearty: You’ve got to be willing to spend the next 30 days at 24 hour intervals utilizing all of your network or building a certain kind of network to have this happen
8. The Prepared: You’ve done all the work and then some, you’ve educated yourself in some arena that is highly coveted and you’ve been doing it for years
9. The Masters: They are Hearty, They are Prepared and The Banks already loves them

This definitely would have taken a lot of time learning about the industry and being in the weeds long enough to get your bearings. I’ve spent years getting to know these connections and they’re amazing.

While you were getting your bearings some of the Shams of MHP Lending you’ve probably seen or heard were:

• Sham #1: Pre Approval Letters
• Sham #2: 90% LTV for anyone
• Sham #3: Only certain brokers have certain relationships with Five Star Bank

Hopefully, the sirens went off. If not:

1. This is Public Announcement: There is no such thing as a Pre Approval Letter
2. If you’re on the phone with someone who says they will give you a preapproval letter on a MHP, hang up immediately
3. You’re dealing with an amateur, they are most likely unrehearsed in CRE, and most definitely MHPs
4. You’re dealing with someone who is after financial information and it most likely will not be protected
5. You’re dealing with an expert marketer who has used your ignorance to call and that will be leveraged against you every step of the deal
6. If you see a post like this in my FB group, The Mobile Home Park Investors, contact me. I will ban them expediently.
7. 90% LTV is feasible for RV Parks run as a business utilizing SBA, not MHP Not long term tenancy RV Parks
8. I read this one on a very prominent forum and it made me laugh. That’s Sham #3.Lenders want a good deal. They’re investors like you or me.

I’ve already shown a lot of the Truth about MHP Lending. And here’s more:

1. Most lenders do not know MHPs. Most appraisers do not know MHPs. That’s why you need a broker who’s willing to educate them in this asset class.
2. Lenders and appraisers are very risk averse, you should be too.
3. Case studies rock. If you can prove you can do the impossible because you did it 5 times, please tell me and make it pretty!! It goes straight to point 2. You’re so risk averse, your proforma was actionable and executed.
4. You sold yourself to the seller, you sold yourself to me…don’t stop!! Sell yourself to the lender too!! Buzzwords: Affordable housing, CLEAN communities. I coach my clients before their lender calls. I let them know what to emphasize and what to avoid.
5. Know when you’re talking to the underwriter, know when you’re talking to the loan officer. Don’t treat them the same because they are not.
6. Your best bet with small deals ($1MM and under) is a local bank
7. Lenders like teams
8. There’s so many moving parts a team member per gear is highly preferred
9. They like great management
10. They like a partner who puts it on the line ie the ability to show liquidity
11. You should have a highly responsive back office. I’m in constant touch with the back office. It’s imperative we’re both doing this.
12. You should be highly responsive. Time loses deals
13. Markets dry up due to lender overflow
14. Markets get hot because lenders don’t have enough deal flow. It’s highly beneficial to have someone who understands where the tides have turned.

Okay, if you haven’t been on your MHP trek for long, dive into MHParks.com and it's time to start making those calls! It’s the best way to learn besides getting the funding you need through me.

If you’re a veteran reading this article and you’re struggling to find funding, let’s talk and figure out why that is!

Emma Norman

enorman@easternunion.com

https://easternunion.com/mhp

330-314-4878