This is my first time to apply a commercial mortgage to buy a mobile home park (7 rental houses, 5 rental mobiles and 10 lots for mobile rental). My broker said a few lenders declined and one intersted after two weeks. I got the commitment today. The lender is Interbay Funding Corp. The interest rate is 10.99%(5yr closed period) and 240 Loan term. I also need to pay 1% commitment fee, and the administration and appraisal fee, and environment insurance fee. There are a lot of conditions in the comitment, one of them is Personal guarantee, for full liability. I am wondering if the mortgage is reasonable. I have two weeks left before removing finacial condition. Your expertise will be highly appreciated. Thanks.
Commercial Mortgage
- Thread starter Andy
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fees are very reasonable, personal guarantee for full amount is normal too ..
Does this broker specialize in mobile home parks ?
rate seems high .. but is a reflection of risk ! What is the loan-to-value ? over 50% ?
when can you pay out ? in a year ? in 5 years ? what are the penalties if you wish to sell and discharge the mortgage ?
Are you sure you wish to personally guarantee such a high interest rate for potentially 20 years ? Do you understand that mobile home park business ?
Does this broker specialize in mobile home parks ?
rate seems high .. but is a reflection of risk ! What is the loan-to-value ? over 50% ?
when can you pay out ? in a year ? in 5 years ? what are the penalties if you wish to sell and discharge the mortgage ?
Are you sure you wish to personally guarantee such a high interest rate for potentially 20 years ? Do you understand that mobile home park business ?
QUOTE (thomasbeyer2000 @ Feb 23 2008, 11:34 AM) fees are very reasonable, personal guarantee for full amount is normal too ..
Does this broker specialize in mobile home parks ?
rate seems high .. but is a reflection of risk ! What is the loan-to-value ? over 50% ?
when can you pay out ? in a year ? in 5 years ? what are the penalties if you wish to sell and discharge the mortgage ?
Are you sure you wish to personally guarantee such a high interest rate for potentially 20 years ? Do you understand that mobile home park business ?
Hi Thomas, thank you very much for your information.
It is my first time to work with this broker who recommended by my residential broker, so I don`t know him well. LTV is 70%, he is applying higher for me.
I am new in real estate investment. Could you let me know what`s the risk of the mobile home park business？ The property has city water and lagoon type disposal system. Any problem for that? Thanks again.
Does this broker specialize in mobile home parks ?
rate seems high .. but is a reflection of risk ! What is the loan-to-value ? over 50% ?
when can you pay out ? in a year ? in 5 years ? what are the penalties if you wish to sell and discharge the mortgage ?
Are you sure you wish to personally guarantee such a high interest rate for potentially 20 years ? Do you understand that mobile home park business ?
Hi Thomas, thank you very much for your information.
It is my first time to work with this broker who recommended by my residential broker, so I don`t know him well. LTV is 70%, he is applying higher for me.
I am new in real estate investment. Could you let me know what`s the risk of the mobile home park business？ The property has city water and lagoon type disposal system. Any problem for that? Thanks again.
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I have no personal experience with mobile home parks. I know it is more risky than an apartment building due to its class of tenants. LTV of 70% sounds acceptable to me, likely you will NOT be getting more.
Get to know someone who has done it before. Who will manage it ?
VERY HIGH RISK if not properly managed ! Plus a personal guarantee .. you could lose more than you invest .. namely your initial investment plus loans, your health and your marriage and your credit score .. so learn to swim please before jumping in the water.
Could be a great investment IF managed properly !
Get to know someone who has done it before. Who will manage it ?
VERY HIGH RISK if not properly managed ! Plus a personal guarantee .. you could lose more than you invest .. namely your initial investment plus loans, your health and your marriage and your credit score .. so learn to swim please before jumping in the water.
Could be a great investment IF managed properly !
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Hi Andy,
To say it plainly, if this is your first real estate investment then don`t do it. Start small, even if you have millions, you still have to learn real estate, commercial real estate and ultimately you will have to learn how to run a trailer park.
Hope this helps.
To say it plainly, if this is your first real estate investment then don`t do it. Start small, even if you have millions, you still have to learn real estate, commercial real estate and ultimately you will have to learn how to run a trailer park.
Hope this helps.
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Here are some more questions to ask:
Why is the current owner selling?
How many times has this trailer park changed hands?
Have you looked at their books?
Do the 5 trailers in the park depreciate like a regular trailer would, and unlike a home?
I am assuming this is a seasonal business. Do you have a plan to pay the mortgage during the off season?
How long are you planning to hold this property?
And,....... I agree, If you don`t know anything about running a trailer park, don`t do it. There are way more dimentions to running a park than you probably think.
Why is the current owner selling?
How many times has this trailer park changed hands?
Have you looked at their books?
Do the 5 trailers in the park depreciate like a regular trailer would, and unlike a home?
I am assuming this is a seasonal business. Do you have a plan to pay the mortgage during the off season?
How long are you planning to hold this property?
And,....... I agree, If you don`t know anything about running a trailer park, don`t do it. There are way more dimentions to running a park than you probably think.
Thomas and Godfried, Thank you very much for your comments.
I am living in Calgary. I have bought more than 10 single houses in SK last year. But I　ｔｈｉｎｋ　Ｉ　ｓｔｉｌｌ　ｖｅｒｙ　ｎｅｗ　ｉｎ　ｔｈｅ　ｒｅａｌ　ｅｓｔａｔｅ　ｉｎｖｅｓｔｍｅｎｔ．　
The property is on prime land bording city limit in Estevan. I think the city has strong rental market noe and in the future. The CAP is 19%, and it can be increase to higher potentially. That is why I want to buy it. But I didn`t expect the mortgage rate is so high. There are 7 houses in the park. Does the property type still belong to Mobile Home Park?
I am living in Calgary. I have bought more than 10 single houses in SK last year. But I　ｔｈｉｎｋ　Ｉ　ｓｔｉｌｌ　ｖｅｒｙ　ｎｅｗ　ｉｎ　ｔｈｅ　ｒｅａｌ　ｅｓｔａｔｅ　ｉｎｖｅｓｔｍｅｎｔ．　
The property is on prime land bording city limit in Estevan. I think the city has strong rental market noe and in the future. The CAP is 19%, and it can be increase to higher potentially. That is why I want to buy it. But I didn`t expect the mortgage rate is so high. There are 7 houses in the park. Does the property type still belong to Mobile Home Park?
QUOTE (RebeccaBryan @ Feb 24 2008, 05:31 PM) Here are some more questions to ask:
Why is the current owner selling? 　Ｈｅ　ｗａｎｔ　ｔｏ　ｒｅｔｉｒｅ．Ｂｕｔ　Ｉ　ｄｏｎ＇ｔ　ｋｎｏｗ　ｗｈｙ　ｈｅ　ｄｏｎ＇ｔ　ｌｅａｖｅ　ｉｔ　ｔｏ　ｈｉｓ　ｓｏｎ．
How many times has this trailer park changed hands?　Ｉ　ｄｏｎ＇ｔ　ｋｎｏｗ，　ｂｕｔ　ｔｈｅ　ｏｗｎｅｒ　ｈａｓ　ｏｗｎｅｄ　ｆｏｒ　ａ　ｌｏｎｇ　ｔｉｍｅ．
Have you looked at their books? 　I haven`t looked at their books. I just saw the current financing statement.
Do the 5 trailers in the park depreciate like a regular trailer would, and unlike a home? Ｔｈｅ　5　ｔｒａｉｌｅｒｓ　ｉｓ　ｌｏｏｋ　ｌｉｋｅ　ｈｏｕｓｅ．
I am assuming this is a seasonal business. Do you have a plan to pay the mortgage during the off season? 　Ｉ　ｔｈｉｎｋ　ｉｔ　ｉｓ　ｎｏｔ　ａ　ｓｅａｓｏｎａｌ　ｂｕｓｉｎｅｓｓ　ｂｅｃａｕｓｅ　ｔｈｅ　ｔｅｎａｎｔｓ　ｉｓ　ｈａｒｄ　ｔｏ　ｆｉｎｄ　ａ　ｐｌａｃｅ　ｔｏ　ｌｉｖｅ　ｉｎ　ｔｈｅ　ｃｉｔｙ．
How long are you planning to hold this property? Ａｔ　ｌｅａｓｅ　ｆｉｖｅ　ｙｅａｒｓ．　Ａｎｙ　ｓｕｇｇｅｓｔｉｏｎｓ？
And,....... I agree, If you don`t know anything about running a trailer park, don`t do it. There are way more dimentions to running a park than you probably think.　
Ｒｅｂｅｃｃａ，　See my answers in the quote.
Ｔｈａｎｋ　ｙｏｕ　ｖｅｒｙ　ｍｕｃｈ　ｆｏｒ　ｙｏｕｒ　ｃｏｍｍｅｎｔｓ．
Why is the current owner selling? 　Ｈｅ　ｗａｎｔ　ｔｏ　ｒｅｔｉｒｅ．Ｂｕｔ　Ｉ　ｄｏｎ＇ｔ　ｋｎｏｗ　ｗｈｙ　ｈｅ　ｄｏｎ＇ｔ　ｌｅａｖｅ　ｉｔ　ｔｏ　ｈｉｓ　ｓｏｎ．
How many times has this trailer park changed hands?　Ｉ　ｄｏｎ＇ｔ　ｋｎｏｗ，　ｂｕｔ　ｔｈｅ　ｏｗｎｅｒ　ｈａｓ　ｏｗｎｅｄ　ｆｏｒ　ａ　ｌｏｎｇ　ｔｉｍｅ．
Have you looked at their books? 　I haven`t looked at their books. I just saw the current financing statement.
Do the 5 trailers in the park depreciate like a regular trailer would, and unlike a home? Ｔｈｅ　5　ｔｒａｉｌｅｒｓ　ｉｓ　ｌｏｏｋ　ｌｉｋｅ　ｈｏｕｓｅ．
I am assuming this is a seasonal business. Do you have a plan to pay the mortgage during the off season? 　Ｉ　ｔｈｉｎｋ　ｉｔ　ｉｓ　ｎｏｔ　ａ　ｓｅａｓｏｎａｌ　ｂｕｓｉｎｅｓｓ　ｂｅｃａｕｓｅ　ｔｈｅ　ｔｅｎａｎｔｓ　ｉｓ　ｈａｒｄ　ｔｏ　ｆｉｎｄ　ａ　ｐｌａｃｅ　ｔｏ　ｌｉｖｅ　ｉｎ　ｔｈｅ　ｃｉｔｙ．
How long are you planning to hold this property? Ａｔ　ｌｅａｓｅ　ｆｉｖｅ　ｙｅａｒｓ．　Ａｎｙ　ｓｕｇｇｅｓｔｉｏｎｓ？
And,....... I agree, If you don`t know anything about running a trailer park, don`t do it. There are way more dimentions to running a park than you probably think.　
Ｒｅｂｅｃｃａ，　See my answers in the quote.
Ｔｈａｎｋ　ｙｏｕ　ｖｅｒｙ　ｍｕｃｈ　ｆｏｒ　ｙｏｕｒ　ｃｏｍｍｅｎｔｓ．
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- 13,879
the KEY question is: HOW WILL MANAGE IT FOR YOU ?
You live in Calgary, the property is in SK. You need someone local you can trust, who is reliable and who knows what he/she is doing. If you have that person, then with a 19% CAP you have room for vacancies, seasonal fluctuations, the occasional theft and the cost for a GOOD property manager.
Does the 19% CAP include all cost or are some ommitted like: property management, vacancies .. or does it assume you live onsite and work for free and REPAIR FROZEN PIPES FOR FREE 4x/month ?
Write an offer, look at their books, find a property manager .. then decide if you wish to waive the final condition or not.
If you have 10 houses in SK .. and it works .. DO NOT CHANGE IT .. buy 10 (or better 30) more !! Any new business has its quirks and it takes a while to learn them all ...
You live in Calgary, the property is in SK. You need someone local you can trust, who is reliable and who knows what he/she is doing. If you have that person, then with a 19% CAP you have room for vacancies, seasonal fluctuations, the occasional theft and the cost for a GOOD property manager.
Does the 19% CAP include all cost or are some ommitted like: property management, vacancies .. or does it assume you live onsite and work for free and REPAIR FROZEN PIPES FOR FREE 4x/month ?
Write an offer, look at their books, find a property manager .. then decide if you wish to waive the final condition or not.
If you have 10 houses in SK .. and it works .. DO NOT CHANGE IT .. buy 10 (or better 30) more !! Any new business has its quirks and it takes a while to learn them all ...
QUOTE (thomasbeyer2000 @ Feb 24 2008, 05:57 PM) the KEY question is: HOW WILL MANAGE IT FOR YOU ?
You live in Calgary, the property is in SK. You need someone local you can trust, who is reliable and who knows what he/she is doing. If you have that person, then with a 19% CAP you have room for vacancies, seasonal fluctuations, the occasional theft and the cost for a GOOD property manager.
Does the 19% CAP include all cost or are some ommitted like: property management, vacancies .. or does it assume you live onsite and work for free and REPAIR FROZEN PIPES FOR FREE 4x/month ?
Write an offer, look at their books, find a property manager .. then decide if you wish to waive the final condition or not.
If you have 10 houses in SK .. and it works .. DO NOT CHANGE IT .. buy 10 (or better 30) more !! Any new business has its quirks and it takes a while to learn them all ...
There are no property managering companies there. I am still looking for a manager. The realtor recommend a guy to me, but not make a final decision. I didn`t consider the vacancies and repair and the innormal situation when I said 19% CAP. If consider that, maybe 12%.　Ｙｅｓ，Ｉｎｅｅｄ　ｔｏ　ｄｏ　ｍｏｒｅ　ｒｅｓｅｒｃｈ． Ｔｈａｎｋｓ　ａｇａｉｎ．
You live in Calgary, the property is in SK. You need someone local you can trust, who is reliable and who knows what he/she is doing. If you have that person, then with a 19% CAP you have room for vacancies, seasonal fluctuations, the occasional theft and the cost for a GOOD property manager.
Does the 19% CAP include all cost or are some ommitted like: property management, vacancies .. or does it assume you live onsite and work for free and REPAIR FROZEN PIPES FOR FREE 4x/month ?
Write an offer, look at their books, find a property manager .. then decide if you wish to waive the final condition or not.
If you have 10 houses in SK .. and it works .. DO NOT CHANGE IT .. buy 10 (or better 30) more !! Any new business has its quirks and it takes a while to learn them all ...
There are no property managering companies there. I am still looking for a manager. The realtor recommend a guy to me, but not make a final decision. I didn`t consider the vacancies and repair and the innormal situation when I said 19% CAP. If consider that, maybe 12%.　Ｙｅｓ，Ｉｎｅｅｄ　ｔｏ　ｄｏ　ｍｏｒｅ　ｒｅｓｅｒｃｈ． Ｔｈａｎｋｓ　ａｇａｉｎ．
- Joined
- Aug 29, 2007
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Andy:
Go to www.creanline.com
There are plenty of articles to help in addition to the forum.
Go to:
Community,
mobile homes,
search archives,
Type in "mhp"
you will get hunhreds of hits that should answer all your questions.
Go to www.creanline.com
There are plenty of articles to help in addition to the forum.
Go to:
Community,
mobile homes,
search archives,
Type in "mhp"
you will get hunhreds of hits that should answer all your questions.
My broker gave me another option: another alternative is for example : 2 yr @ 9.875,(closed period 5 yrs) payments , however committment fee is 2.5%. additional .25% for 25 yr amortization or .50% for 30 yr.risk on this deal is high because of income generation is based on leases. It seems the finaning expense is still high.
Today I jioned in REIN. I hope to meet you in the next event. Thank you very much!
Today I jioned in REIN. I hope to meet you in the next event. Thank you very much!