Owner Financing Your MHP Sale

If you’re an MHP owner looking to sell, you might want to consider how the financing is going to work on the deal. We’ve previously discussed how keeping pristine books and records helps when seeking financing from banks and buyers. But if you really want to maximize your pricing and reduce taxes, owner financing is a great option.
This is especially the case if you have no plans on reinvesting that money into another real estate transaction through a 1031. Owner financing gives you a substantial amount of downpayment and monthly revenue. And, you’re also in the position to take the park back in case the buyer defaults and doesn’t make their debt payments to you. In this event, you would keep the down payment and any other debt payments made and then can put your park back up for sale. This is much rarer when dealing with institutions, where you’re more likely to lose the park when things go south.

Being The Note Holder For Your Property

If you’re going to hold a note, you’ll want to consider what the structure of the note will be like, i.e., how long of a term you’re willing to offer. Of course, you should have your attorney assisting with the legal language of the note and to make sure it is in compliance with any laws. Some of the basic terms of a note include, debt amount, interest rate, term of note, a personal guarantee from the buyer, and any special conditions that are relevant. Planning ahead here allows you to get more aggressive with the buyer down the line on pricing, even in a down market.

Still, you’ll want to consider how long you’re willing to stick around as the note holder. This includes any municipal hurdles that come along with it. If you’re in a place that has notification requirements, the tenants may have the right of first refusal to buy your park. The state or municipality may require a park owner to provide a three to six month notification before attempting to sell, and even longer if it’s to a developer.

The MHP Expert

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