Mobile home park finance is one of the most popular types of commercial real estate financing at the moment. Manufactured housing communities (MHCs), commonly known as mobile home parks (MHPs), have become increasingly popular among investors looking for steady cash flow and reliable occupancy. Determining whether to employ private capital (hard-money lenders, private equity funds, seller financing) or bank/agency loans (regional and national banks, Fannie Mae/Freddie Mac programs) is a strategic decision that will affect price point, speed leverage, and long-term returns.
Here is a guide to thinking through the trade-offs, based on what we know.
Why Mobile Home Park Finance Matters in 2024?
Manufactured housing still makes up a significant portion of the American housing stock: about 7.2 million occupied manufactured homes exist in the U.S., and there are some 44,000 manufactured home communities, which means it is a hard asset class providing stability for investors looking to meet demand for affordable housing needs. Those macro numbers create investor enthusiasm and dictate what lenders are willing to provide.
Bank & Agency Lending: The Conservative, Low-Cost Path
What they are: Traditional banks and government-sponsored sources (like Fannie Mae and Freddie Mac’s levers for manufactured-housing communities) would provide longer amortization schedules (some up to 30 years), fixed-term options, lower interest rates, and more certainty for existing operators. Fannie Mae offers a Manufactured Housing Communities term sheet and product matrix that provides a competitive loan-to-value LTV ratio and long amortizations for qualified parks. In addition to conventional MHC loans, Freddie Mac finances resident-owned communities and offers flexible fixed-rate loan terms. This scheme often involves higher levels of evidence, and park quality is more stringent, normally 4 & 5-star parks, and loan amounts are generally higher. The more conventional mobile home park financing available with such lenders is often an excellent match for stable communities with solid occupancy and receivables.
Pros
- Lower rates and long amortizations lead to lower debt service and a higher cash-on-cash return.
- Consistent underwriting and regulatory oversight add up to certainty at close.
- Non-recourse structures are occasionally provided (e.g., Freddie Mac MHROC product characteristics).
Cons
- Slower underwriting and tighter eligibility (property condition, market, minimum loan size).
- Leverage limits and a higher minimum on credit/experience.
- Less of a fit for value-add plays that need fast capital or significant repositioning
When banks/agency lending is the right fit: stabilized, income-producing parks with as close to institutional-quality underwriting as possible, and acquisitions for which certainty and low cost of capital are important.
Private Capital: Speed and Flexibility
What it is: Private capital consists of hard-money loans, private equity firms, bridge loans, and seller carry financing. These sources are motivated by speed and flexibility of deals, even if it means diluting the most competitive interest rates available. For a value-add investor looking for a quick close and flexible underwriting, private money for mobile home park loans in particular is extremely beneficial. Hard-money and private equity sources of financing, which are more flexible than banks in terms of underwriting considerations and credit risk tolerance, tend to be more tolerant of leverage and conditions. They can also support rehab work, or even upzoning projects, that most traditional bank lenders shy away from.
Pros
- Quick closings (days to weeks), which help you win competitive deals.
- Flexible underwriting: have the ability to finance underperforming parks or ones that require heavy repositioning.
- Creative platforms (interest only, mezzanine, equity joint ventures) to align investor strategy.
Cons
- Higher interest rates and fees (points, exit fees) reduce returns unless value is added rapidly.
- Shorter lengths of time — frequently 1–5 years — to refinance or sell.
- Greater operational oversight or covenants in some transactions.
When is Private Capital the Right Fit?
Value-add acquisition that needs to close quickly; you need a mezzanine piece and don’t want an institutional partner with decision-making power; opportunistic plays the buyer plans to renovate, raise rents, or redevelop; or when the sponsor doesn’t meet certain agency track record requirements. In these situations, mobile home park finance through private capital becomes a strategic tool to win deals that would be impossible under a traditional lending timeline.
Pricing (Cap Rates) and Market Context
Recent market figures tell us that manufactured housing community (MHC) cap rates finally moved after the interest-rate climate changed: Institutional sources in 2024–2025 note an average seasoned cap rate around the mid-5% range, but smaller, secondary parks and distressed assets can trade at materially higher yields. The movement of the cap rate will determine how much leverage lenders will underwrite and whether bank vs private money is attractive.
Decision Framework: Selecting the Right Funding
- Timeline: Need speed? Use private capital. Looking for a 25–30 year long-hold? Target agency or bank loans.
- Property Condition: Stabilized, institutional parks → banks/Fannie/Freddie. Value-add or otherwise very deferred maintenance → private capital.
- Cost vs Control: Cheaper bank loans often do not offer as much operating control (hand-offs to lenders). Private money is more expensive but less restrictive as to covenants.
- Exit Strategy: Oftentimes, refinancing into agency loans after once stabilized; use private capital bridge financing, then refinance into a Fannie/Freddie product if the park is eligible.
Real-World Due Diligence Checklist for Mobile Home Park Finance Investors
- Get Market Data: Confirm local occupancy, lot rent growth, and comparable sales. CoStar, local brokers, and agency market reports are all great resources.
- Run Pro Forma with Both Debt Scenarios: Private (higher interest, shorter term) vs bank/agency (lower rates, longer amortization).
- Validate Eligibility Early: If aiming at Fannie/Freddie, make sure the property and sponsor are eligible before accepting offers.
- Plan for the Refinance: if utilizing bridge private capital, spell out how the deal can be refinanced, list improvements made, stabilization timeline, and estimated required appraised value.
Bottom Line
Mobile home park finance is not a “one-size-fits-all” business. The appropriate source depends on the quality of your assets, how soon you want money, and what kind of strategy you have in mind. If speed and flexibility are technically mission-critical in pursuit of a major strategic objective, deploy private capital. If you need low-cost long-term debt and control an institutional-quality asset, shop for bank or agency financing. More savvy investors do both: bridge with private capital and then refinance into a Fannie Mae or Freddie Mac product after the property has stabilized and meets their tougher underwriting standards. Regardless of which route you take, sound underwriting, valid market data, and a realistic stabilization plan are what will make the difference between that financing working to leverage returns or becoming an expensive crutch. Ready to explore further mobile home park finance options? Check out more information on Loanlocker.