Resident Group Financial Programs
Resident Group Financial Programs
One major requirement in achieving success for resident groups purchasing their manufactured home parks are the various sources of financing available.
Generally, resident groups need equity (that’s cash money) to buy their share, financing for their share when they don’t have enough cash, and a first mortgage loan secured by the park real estate itself. Sometimes it is possible to get funds from Federal or municipal sources but don’t count on it.
Most of the money to buy the park comes in the form of a first mortgage loan. The larger the first mortgage loan the smaller the amount of equity needed by each resident.
We include in this section Term Sheets with the details of several loan programs that have worked for groups recently. Every group and every park is different, so compiling a package of financing to fund the project can be very complex.
CONDUIT LOANS
Conduit loans are made by private lenders who place the loans with investors. This market has been very difficult lately but is improving.
FHA 207M LOANS
FHA loans are made by a private lender but are guaranteed by HUD/FHA under various multifamily housing programs. If your project qualifies, the key to this loan is negotiating enough time with the seller to obtain the FHA guarantee.
SHARE LOANS
Most residents in park have some money, but many need financing to purchase their share. These loans must be available to low income residents, many with poor credit, in order to have enough participants to complete the project.
FEDERAL & MUNICIPAL FUNDING
Many resident groups are hopeful that funding will be available from the Federal Government or from local (state, county or municipal) entities to accomplish their purchase. The truth is that such moneys are very limited, hard to get, and will typically not cover all the financing needs. In addition, all the sources of money have to coordinate together in order to be successful and sometimes they fail. Finally, such funds come with strings that restrict the activities of borrowers.
Look under every rock to find potential piles of funds.
Just don’t count on finding any.