Hello! Thanks as always for joining me! I’m back with more on corporate MHP downsides. If my years in this industry have taught me anything, it’s that there’s always nuance to every deal. Whether you’re independent, or institutional, there will always be headaches to contend with.
Financing a Corporate MHP
But let’s focus on corporate. Take the aspect of funding. Depending on the type of park your buying, you’re likely boxed in here. A lot of institutions will only buy parks that can be agency financed. This restricts your resources to agencies like Fannie Mae and Freddie Mac. This also means you’ll pass up some great parks that don’t fit this specific criteria.
Sure, a mom and pop may not be able to secure such funding. But, this also means they can be more flexible about the returns they’re getting. Putting more into the front end guarantees a bigger payoff on the other side of the deal. Things are more restrictive for a Corporate MHP, as they are much more beholden to investors. Even if they go out and raise money, it’s still hampered by their debt to investors.
Institutional MHP Reporting
More Corporate MHP downsides include the reporting they require. In a Mom and Pop, all you have to do is keep records adequate enough for the owner to follow. This allows them more creativity in the approach, also minimizing stressors. In an institutional structure, they’re giving you and expecting both reports by month and quarter. These are far more detailed and tedious, as they live by more cumbersome regulations.
This brings us to the sale of the park. Again, your flexibility here is shot. The stakes are simply higher in a public institution. Every deal contributes to the credibility of the agency. So if it turns out to be a bad deal, that not only affects them in a monetary sense; it’s a stain on their record. This could put a strain on future business; most companies aren’t willing to chance it.
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