Protecting property by shifting equity

You must be logged in to reply to this topic.

Viewing 5 posts - 1 through 5 (of 5 total)
  • Posts
  • I would like to protect a mobile home park that is 50% leveraged by putting a loan on a smaller mobile home park (which is free and clear but has half the income of the leveraged park) to pay off the larger park.
    I contacted my bank and which was less than excited about putting a loan on the free and clear park.
    Should I sell the free and clear park to another entity to provide the cash to pay off the larger park?
    Or? Any suggestions?
    Thank You!

    How long have you owned the smaller MHP? Will it trigger a high tax event due to shorter term of ownership than 365 days?
    I am not an expert on 1031 exchanges, but will you be able to roll your money from the sale of the smaller park into the park you actually want to hold?

    What are the cost benefits of refinancing the smaller MHP to pay off the larger MHP?. Will the cash flow of the smaller MHP support the refinancing? Can you sell some of the units in the MHP to the tenants to raise capital to pay off the larger MHP’s debt ?


    Sorry, I don’t understand how putting a loan on a free and clear park will help you protect a park that is 50% leveraged. Then you’d end up with two mobile home parks with debt versus one park at least that is free and clear.

    If you need an infusion of cash, would it make more sense to bring in a “financial friend” ( private lender) for a piece of the pie?

    Hello Jackie,
    Thank you for your response.
    I would prefer to have the larger park paid off instead of having the smaller park paid off (twice the income).
    The thought was to fully leverage the small park (that currently has no mortgage) to pay off the larger park. That way, if I did lose the smaller park, the larger park is free and clear, and my income would not be impacted as much.

    The “financial friend” may be the simpler solution in the event that rents are not getting paid (due to the virus impact). When times get rough, hopefully those “financial friends” will not be too scarce.

    Hello Ayesha,
    Thank you for your response!
    I have owned the smaller mobile home park for 18 years. I have depreciated it through the years, so it would taxed upon selling.
    I have owned the larger mobile home park for 8 years.
    As far as I know, the 1031 exchange is only for acquiring a new property, unless I am mistaken.
    The cost benefit of putting the mortgage on the smaller park would only be that the interest rate would drop by slightly over 1%.
    Selling park owned homes is a good idea…And will be a good strategy as I near retirement and don’t need the cash flow and PITA factor.
    There are not enough park owned homes to currently pay off the mortgage.
    Good thoughts…Thank you Ayesha!

Viewing 5 posts - 1 through 5 (of 5 total)

You must be logged in to reply to this topic.