How To Understand The Power Of Leverage When Investing In Mobile Home Parks (1)

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How To Understand The Power Of Leverage When
Investing In Mobile Home Parks
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How to appreciate and harness the power of good
leverage in investing

• Leverage remains the most misunderstood and most
  underutilized ally for investors today.
• But it also remains the most powerful tool
  available to savvy investors who get how to use
  it efficiently and wisely.
• There are several types of leverage available to
  investors and a number of them come into play for
  mobile home parks investors whether they realize
  it or not.

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• This includes leveraging other people, and the
  market.
• Then there is financial leverage. Some fear it
  like the plague, some abuse it and go broke.
• Others continue to use it as dynamic force for
  hacking wealth and income, in a sound and
  sustainable way.
• So how much does leverage really matter? What
  types of financial leverage are available to
  mobile home park investors today?
• How are sophisticated investors using leverage
  differently?
• What is the right balance of leverage for you
  right now?

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Leverage vs. No Leverage

• We are all very aware that too much leverage,
  used in an unsustainable way can be risky.
• Its no secret that there is a sizable percentage
  of the population which hasnt been taught to use
  financing well.
• They are constantly sold on financing deals which
  end up being more costly and
• counterproductive.
• However, there is undeniably a distinct
  difference between good and bad leverage.

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• Even the most adamant anti-debt gurus like Dave
  Ramsey continue to promote real estate financing
  as the one exception to the rule, and a sound
  financial move.
• The bottom line is that financing is just like
  money. In itself it is not good or bad.
• It is how you use it.

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Ways to Leverage Your Mobile Home Park
Investments

• There are multiple ways to leverage mobile home
  park investments including
• Bank loans
• Commercial mortgage lenders
• Seller financing
• Investor partnerships
• Friends and family
• Real estate crowd funding
• Hybrid combinations of the above

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Among these leverage options there are many
creative ways to structure deals

• Among these leverage options there are many
  creative ways to structure deals
• Lease options
• Wrap around mortgages
• Cross-collateralization and blanket mortgages
• Bridge loans
• Lines of credit
• Balloon mortgages

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• Whatever your personal credit and financial
  situation, and belief about debt versus equity
  there are ways to structure mobile home park
  deals and gain leverage in a sound and flexible
  way.
• If you dont like debt, even non-recourse loans,
  then use equity funding. If you dont like having
  partners or splitting the pie, then use debt
  financing. Or mix it up with the two of them.

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The Pros and Cons of Full Leverage vs. No
Leverage

• Full leverage might conjure up mental images of
  125, subprime mortgage loans, but thats not
  what we are talking about here. Investors are
  absolutely wise to build up equity over time, and
  preserve their flexibility to sell and
  restructure financing in the future, while
  increasing net cash flow.

Put simply a plan to achieve full leverage can
ultimately provide the best combination of high
returns and low risk.
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