How to Get a Loan for a RV Park

How to Get a Loan for a RV Park

No matter where you live, you are bound to see a Recreational Vehicle (RV), a Fifth Wheel, or some type of mobile home traveling across America’s highways. Mobile home parks serve as a home base for mobile homes, both temporary and permanent residences. In this post, we will explore the various challenges RV and Mobile Home parks face when it comes to financing, as well as the potential investment opportunities for RV Park real estate investors.

Financing Challenges for RV and Mobile Home Parks

One of the biggest challenges RV’s and Mobile Home Parks face in regards to obtaining financing include the frequency of their use and location. With the exception of areas with mild year round climates (such as the California Coast), most RV and Mobile Home Parks are for vacation purposed and therefore are used seasonally.

In addition, the location of RV parks is a major challenge when it comes to its financial viability or ability to be financed. RV Parks within a short drive of stores, shops, and major highways generally have a better chance of success compared to RV Parks that are in more remote areas. RV Parks with a short season or located in rural areas, are often viewed as high-risk investments. As a result, commercial lenders can require steep down payments, upwards of 30%. Luckily, there are some other ways to finance RV and Mobile Home Parks.

RV/Mobile Home Parks and SBA 504 Loans

The Small Business Association offers a specific type of loan for financing land and commercial real estate, known as a 504 Loans. These loans are overseen by a Certified Development Company, with the purpose of improving economic development within a community.

There are several advantages to SBA Loans. They offer low fixed-rate interest, covering up to 90% of the total project cost, with longer amortization compared to other commercial loans. The downside, however, is that these loans typically require a firm to create at least one new job for every $65,000. Since Mobile Home and RV Parks require little in development, this can be a tricky aspect to maneuver.

Additionally, large firms won’t be able to utilize an SBA Loan. If the SBA 504 Loan isn’t an option for you, there are other options available.

Conventional Loans for RV and Mobile Home Parks

While conventional loans are an option for RV and Mobile Park owners and investors, they are often the most difficult to navigate. In most cases, a conventional lender will only provide up to 65% of the property’s value, which may require the borrower to choose between holding reserves for the lean season or only focus on property improvements.

With additional collateral, a higher LTV can be achieved, but the long application and approval process that is standard for any conventional loan is tough for RV borrowers to overcome. Since a conventional loan can take between 30-45 days, distressed RV and Mobile Home Park owners and investors can find themselves facing foreclosure before the closing process is complete.

Private Loans for RV and Mobile Home Parks

Private lenders are by far the best option for short-term bridge loans that get you the capital you need to not only keep your RV and Mobile Home Park solvent, but allow it to thrive as well. With iBorrow, you can obtain adequate funding with flexible options that meet your needs.

Our underwriting process is quick and our streamlined process makes it simple to get your loan approved in just two weeks. While other private lenders utilize lines of credit to provide funding to their clients, our capital does not require access to leverage, which enables us to act quickly.