In last week’s blog, we discussed how many with aspirations of being a park owner are at risk of being scammed. Breaking into any new industry can be tough. Even if you’ve been at it for a while, it can take a while before you find that winning team and formula to follow. Not to mention, you have to be wary of debt.
As you continue to find your way in the MHP space, keep an eye out for potential risk factors. The last thing you want is to think you’ve found your stride only to have the wind taken out of your sails by a bad deal. Below, we’ll look into some further potential risks to help you steer clear of them.
Short Term Debt
Let’s say you’re staring down an intimidating price on a park you really. There are options like bridge loans that assist in making the burden a little less to bear on the front end. But be VERY cautious against these. While they may seem like a quick bailout, remember that prices are pretty high right now.
This means there’s a chance interest rates could see an uptick soon. This would cause you to lose some of your cash flow, which often pits you against the clock on timing. Debt is very hard, and the pressure of a contract deadline can lead to less than stellar decisions when financing a park.
Should You Take A Loan For An MHP?
There are a number of different loans available. Recourse, Non-recourse, Full Tilt, 80/20, 60/40, and more! If you’re going to take any of these, be sure that there’s a rhyme and reason for the funds. This includes a legitimate, outlined plan for eliminating the debt in a timely manner.
Without these, it’s best that you just don’t take the deal. It will save you a lot of time, money, and failure. It’s better to have no park than to buy one that’s destined to fail. This doesn’t mean that debt is an all around bad thing. If the market payout is strong enough, incurring debt may work in the short term.
Why Some Banks Are Bad For Business
Some banks are the picture perfect collaborator when it comes to working with MHPs. But there are others that will prove to be the bane of your existence if you aren’t careful. For example, some banks aren’t known lenders in our field, and thus lack the corresponding experience.
Of course, they won’t come out and say that. Instead, they’ll string you along, and by the deadline, you can be sure they’ll have a convenient excuse for denying you. Now, you’ve wasted time you can’t get back, and you don’t have an opportunity to secure a back up plan.
The MHP Expert
To avoid these risks, only partner with qualified, credentialed people. Their resumes and work ethic will speak for itself. And remember, if it sounds too good to be true, it likely is! Contact The MHP Expert today if you have any more questions!