CMBS Loans

Get Flexible CMBS Financing for Mobile Home Parks and Manufactured Housing Communities

As of 2020, nearly 22 million people across the United States live in mobile home parks or manufactured housing communities, and that number is only growing. In some states, like Nebraska, the number of individuals living in mobile home parks has skyrocketed by more than 900% in the last decade. Due to lower rents than conventional housing, mobile home parks are one way that developers are helping to address America’s growing housing affordability crisis. 

All of this means that investing in mobile home and manufactured housing communities is becoming increasingly popular-- and, if you’re looking to finance one of these communities, a CMBS loan could be a great way to do it. CMBS loans offer fixed-rate, low-interest, non-recourse loan terms up to 10 years, making them highly attractive when compared to banks, private lenders, and other forms of conventional real estate financing. 

Common Uses for CMBS Mobile Home Park Loans

Property acquisitions: If you want to purchase a mobile home park or manufactured housing community, a CMBS loan could be the ideal solution. In general, loans for property acquisitions require that a property has more than 50 pad sites and that residents do not have the opportunity to purchase pad sites from the owner, as this could interfere with the underlying financials of the property. 

Portfolio expansions or renovations: Due to the strict nature of CMBS loan covenants, it may be difficult to make renovations or property improvements to your mobile home park community itself. However, if you have built-up equity in your property, a CMBS cash-out refinance could provide you the funds to put a downpayment on your next mobile home park property, increasing the size of your portfolio. In addition, if you have other mobile home parks in your portfolio currently financed with non-CMBS debt, you can use cash-out refinancing funds in order to make property improvements or even to buy adjoining land to expand the number of pad sites in your community, increasing potential profits. 

Rate or term refinancing: If you’re currently stuck with a high-interest or variable-rate bank or hard money loan, a fixed-rate CMBS loan could be a great way to refinance it, as CMBS loans offer some of the most competitive rates on the market today. In addition, if your current loan is coming to maturity and you need to make a balloon payment, conduit financing could also be a great choice.

Prospective Terms for CMBS Mobile Home Park and Manufactured Housing Loans

Unlike bank loans or life insurance company loans for commercial properties, or Fannie Mae, Freddie Mac, and HUD multifamily financing for apartment properties, CMBS loans have relatively lenient borrower requirements.

CMBS terms and requirements typically include: 

• Loan Size: $2 million+, no maximum loan amount

• Loan Terms: 5, 7, and 10-year fixed-rate terms, interest-only (I/O) financing available for well-qualified borrowers 

• Amortization: Generally 25-30 years 

• DSCR/LTV: 1.25x -1.35x, 75% LTV

  Eligible Properties:

  • Generally need to have 50+ pad sites 

  • Maximum of 10% homes owned by the mobile home park itself 

  • Properties must be average or above average in quality 

  • Areas must need to have a high demand for affordable housing 

  • Maximum of 10% RV pad sites typically allowed 

  • Tenants must generally not be able to purchase their pad sites

• Loan Pricing: Pricing based on current swap rate or relevant U.S. Treasury rate, LTV and DSCR, as well as asset quality, rate buydowns available in some situations 

• Loan Assumption: Fully assumable pursuant to master servicer approval and a fee, generally 1% 

• Prepayment: Yield maintenance or defeasance 

• Recourse: Generally non-recourse with standard bad-boy carve-outs for issues like fraud, embezzlement, or international bankruptcy 

• Third-Party Reports: Third-party reports are paid for by the borrower, and typically include: 

  • Full appraisal 

  • Phase 1 ESA (Environmental Assessment)

  • Property Condition Assessment (PCA) is often required  

• Rate locks: Available at loan commitment, 30-day rate locks may also be available with lender approval 

• Replacement Reserves: Typically required and paid for by borrower on a per-year basis, may be waived or reduced in some situations, particularly for Class A assets 

• Lender Legal Fees: Generally $15,000 for smaller loans, larger for larger loans 

• Origination Fees: Generally 1%, can be higher in some scenarios