Deals On Wheels

Deals on Wheels
Since the economic downturn of 2008, a record number of homeowners have traded in their overpriced, upside down, stick built homes for a taste of the simple life in a mobile home... yes, I said mobile home. Now wait a minute, don't turn the page just yet, this is just when it starts to get interesting and lucrative... 
That former homeowner takes what's left from their less than stellar (if any) remaining equity and oftentimes can pay cash for a state of the art, amenity filled home with no payments. Couple that with a lot rent of less than $500.00 a month, no grass to mow and you have one happy camper... well not really a 'camper' more often than not, a double wide with permanent brick skirting! Imagine a park filled with these lovely units, virtually maintenance free with a price tag of $1.5mm and up... now do I have your attention?

A number of years ago, I was talking to one of my wholesale AE's about diversifying our revenue streams since the multi-family market was maxing out. He mentioned a few programs that were available to the mobile home community market and images of Sanford and Son went through my mind. Well, I must have chuckled a bit because the next thing out of his mouth was, 'no seriously'. As he went on to explain how many he was closing and what 'cash cows' they really are, I was all ears.

Mobile home communities offer deceptively lucrative revenue streams, not only for those brokers who understand their quirks in operation but who see beyond the often misconstrued public opinion of the property type itself. Mobile home communities are often preferred by many of the occupants over the only alternative, an apartment building. A mobile home provides them with independence, a driveway, a yard and most importantly, a sense of pride of ownership one never has in an apartment complex. That same pride of ownership is a win-win for the park owner who wants to maintain a certain level of quality for his property. When tenants own their units, they usually keep them in good condition and likewise the park they are renting space in.

Now to be clear, I'm not talking about the mobile home parks you've seen on TV with old shopping carts littering the dirt roads lining the way for their fine array of 1952 and older single wide trailers decorated with only the finest 'coat hanger' satellite TV service antennas.

Far from it... today's' quality mobile home park communities are tree lined, amenity filled and rival some of the best HOA properties out there. The homes are professionally decorated and custom designed. The communities are security gated, professionally managed and beautifully landscaped. They offer clubhouses, gyms, pools, and even concierge service at the senior only parks. They tout price tags well above the 1.5mm minimum of most banks, some larger communities are even in the $10,000,000.00 and above range. Best of all, with the current state of the economy, most are at maximum occupancy with a waiting list which makes most lenders really sit up and take notice.

The key to financing these properties is the cash flow structure. Since some communities take in a great deal of cash, it can be difficult to document the DSCR. When you get above the $2mm mark, most properties show the cash flow and are well documented but when it is under that amount, it can become a bit of a challenge. I've found that getting connected with the realtors in your area that specialize in this property type is the foundation to success. I have one realtor in particular that I've worked with for so long that he practically prequalifies the property himself. If he gets a call to purchase one of his listed parks, he marches the client through a series of 4 or 5 basic questions, if the answers don't add up, he's done.

What makes for a good prospective transaction?

To start with, is the park a single or double wide community? There can be a mixture of both or predominance of one or the other. Banks prefer doublewides all day long but there are alternate sources for those parks that have great cash flow, but are covered up in single wide trailers.

Secondly, is your loan size over 1.5mm? There are less than a handful of small balance lenders who will entertain the smaller parks so it's best not to invest marketing dollars into the end of the market. The majority of lenders have a 1-2mm minimum on mobile home communities.

Park owned vs. tenant owned... This is a two edged sword because both types of property make for great cash flow but 99% of the time, a conventional product won't accommodate but a very small percentage of park owned units. They want the community owner focused on 'pad' revenue not maintaining an aging home that requires work.

Photos are very important to the longevity of a package on the underwriter's slush pile. Make sure the park is photographed in its best light. Would you buy it? That's what I always ask myself when I'm sending in photos of any property type. If the answer is no, have the client send in better photos.

Lastly, location, location, location! If the property is located in outer Slombovia, chances are the bank won't be interested but a credit union may be. Always check out the area population density and drivers prior to sending in the package. I want my underwriters to want their mother to move there... that's the quality they're looking for.

With the past four years in the rearview, it's time to forge ahead with optimism and explore new opportunities for increased revenue and viable closings. Mobile home communities are the next big alternative housing option and offer a new frontier for your business.

Anita Huedepoh 
lLiberty Funding 
615.417.4710

Anita Huedepohl
615.417.4710

Discovering The Finest Deal In The Commercial Loan Market

When it comes to navigating the commercial loan market, it is important to know the basic facts and figures required for obtaining a loan and how the process works. Organisations that provide loans for commercial property sanction loans for new or existing commercial properties. Every commercial property is different and can require varying levels of structuring depending on the commercial type. A straight forward loan would be required for commercial real estate investors and owner occupiers. Whereas highly leveraged structured commercial finance can be needed for a variety of reasons such as refinancing, non recourse, specialised real estate and high LVR solutions. The terms of the loan can be fixed or variable and are given the option of being long term or short term.

In order to successfully obtain a loan there is a certain level of documentation that is required to prove the borrower can sufficiently service the loan. There are four levels of documentation options which can be carried out; full doc, lite doc, low doc and no doc, also known as an asset lend. Full doc commercial loans are for borrowers that can provide all the documents required to prove they can successfully repay the loan. Lite doc commercial are for borrowers that don't make the full doc criteria but can provide documents such as interim financials and rental income to repay the loan. Low doc commercial are for borrowers that cannot provide any of the above traditional documents but can obtain an accountants letter confirming they can repay the loan. A no doc loan is also known as an asset lend where the borrower has no documentation to repay the loan making the loan an asset lend against the property.

When deciding on a commercial loan broker to facilitate your loan it is helpful to look out for a few key services which will make your process as smooth as possible. Fast turnaround times and tailor made solutions can be extremely beneficial if you require your loan to be approved in a timely and specific manner. If you don't meet any of the high documentation levels required to prove you can repay the loan, an organisation that has access to non bank private lenders with a commercial view on loans would be most appropriate.

If you require some wriggle room within your loan then an organisation that caters for commercial loans with flexible servicing criteria, terms and conditions, and LVR's would be advantageous for your situation. If money is tight and you require your loan to be based on the valuation of the property as opposed to the purchase price a loan facilitator with access to this as well as commercial loans with no annual reviews would suit your needs.

Ultimately, when deciding on a loan broker it is essential to find the people and organisation that you feel comfortable with and that suits you and your commercial loan needs best.

Breakthrough Growth Capital

Growth Capital is fuel that drives a company's engine. It is needed for all companies to move forward. Breakthrough growth capital is high octane rocket fuel. It launches a company into an orbit of new markets, products and customers. Breakthrough growth capital allows a company to do something very big, instead of something incremental. 90% of companies manage their business in an incremental fashion. Even when presented with a huge opportunity in the market, most companies lack the Capital funding to fully exploit the opening.

To break through, companies need the force or momentum to carry them beyond their regular speed. This force is found in the types of funding usually available to large public companies, usually in an M&A context. The common strand to all these Growth Capital funding types is that they see the value of the company in a growth context where revenues increase, profits accelerate and cash flow increases.

Two of the most common but least understood forms of capital are cash flow loans and mezzanine loans. These are unsecured loans against the equity or cash flow value of a company. These loans have little to no collateral to secure them and are often under any bank loan on a company's balance sheet. The money from these types of loans can be used in different ways. Most companies use these loans to acquire other businesses or to develop new products.

Breakthrough growth capital in the form of mezzanine loans allows a company to hold off on paying the principal down. Usually, mezzanine lenders let a company go for two to three years before a principal payment is due. Also, companies with low assets usually qualify for much larger mezzanine loan facilities than bank loans. Mezzanine lenders will provide growth capital for ongoing acquisitions, helping increase the scale and profitability of your business.

Mezzanine Financing is a hybrid form of capital with characteristics of debt and equity. A mezzanine deal often involves senior and subordinated debt. It is a flexible form of Capital Funding, used in a leveraged buy-out or growth financing to attain a desired risk/return profile for business owners and investors alike.

Breakthrough growth capital can also come in the form of a unitranche debt facility or a one stop debt facility. With these loan structures, lenders are essentially lending against the intangible equity value of the Company. This allows them to provide much larger checks than a bank would and allows them to accelerate a company's growth trajectory.

Attract Capital is a financial advisory firm dedicated to the growth of mid-sized companies throughout the United States and Europe. Built upon a foundation of corporate finance expertise, practical experience and legendary customer service, Attract Capital's consulting services and solutions are aimed at increasing the efficiency of capital raising for mid-sized companies.