Interview with Loan Broker Scott Modelski of Black Bear Capital

Listen on Apple Podcast here:


Welcome back to the Passive Mobile Home Park Investing Podcast, hosted by Andrew Keel. In this episode of the Passive Mobile Home Park Investing Podcast our host Andrew Keel interviews Loan Broker Scott Modelski, Managing Partner at Black Bear Capital Partners.

Are you looking to invest in mobile home parks but unsure how to navigate the loan process? Scott Modelski can help guide you through it.

With over 15 years of experience in commercial real estate, Scott Modelski is a seasoned loan broker who has worked with both institutional and entrepreneurial sponsors across various asset classes. He began his career at Wells Fargo Bank’s Commercial Real Estate Group, handling transactions exceeding $1 billion. Now, as Managing Partner at Black Bear Capital, Scott specializes in sourcing and executing structured debt and equity transactions.

In this episode, Andrew Keel and Scott Modelski explore the complexities of banking dynamics and the intricacies of navigating Fannie Mae and Freddie Mac deals. They dive into crucial topics for Limited Partners (LPs), including insights on the 10-year treasury, strategies for restructuring capital in the case of excessive debt, and the current banking cycle’s nuances. Scott shares invaluable tips on distressed commercial real estate deal situations and essential pre-loan preparation with how mobile home park operators or sponsors can best position themselves for securing a cash-out refi loan.

Join Andrew Keel and Scott Modelski as they provide a comprehensive guide to securing financing from banks, uncover why mobile home parks are a standout asset class, and offer expert advice to help you secure the financing for your manufactured housing community investments.

Tune in for a deep dive into the world of real estate financing and mobile home park investing with Andrew Keel and Scott Modelski.

***Andrew Keel and Keel Team Real Estate Investments (Keel Team, LLC) do not endorse any interviewee. This interview is for informational purposes only and should not be depended upon for investment purposes. ***

Andrew Keel is the owner of Keel Team, LLC, a Top 100 Owner of Manufactured Housing Communities with over 3,000 lots under management. His team currently manages over 40 manufactured housing communities across more than 10 states. His expertise is in turning around under-managed manufactured housing communities by utilizing proven systems to maximize the occupancy while reducing operating costs. He specializes in bringing in homes to fill vacant lots, implementing utility bill back programs, and improving overall management and operating efficiencies, all of which significantly boost the asset value and net operating income of the communities. Check out to learn more.

Andrew has been featured on some of the Top Podcasts in the manufactured housing space, click here to listen to his most recent interviews: In order to successfully implement his management strategy, Andrew’s team usually moves on location during the first several months of ownership. Find out more about Andrew’s story at

Are you getting value out of this show? If so, please head over to iTunes and leave the show a quick review. I have a goal of hitting over 500 total 5-star reviews, and it would mean the absolute world to me if you could help contribute to that. Thanks ahead of time for making my day with your review of the show.

Would you like to see value-add mobile home park projects in progress? If so, follow us on Instagram: @passivemhpinvesting for photos and awesome videos from our recent mobile home park acquisitions.

Talking Points:

00:21 – Welcome to the Passive Mobile Home Park Investing Podcast

01:30 – Scott Modelski’s history in commercial real estate and working with Andrew Keel when financing Mobile Home Park investments

05:00 – Three ideal solutions for the lender during a recession

10:44 – The nuances of the current banking cycle

15:18 – Restructuring capital if you took on too much debt

17:25 – Distress in the Mobile Home Park market

19:07 – The good thing about using a mobile home park loan broker and typical terms offered

23:34 – Younger investors in the mobile home park asset class

25:37 – Investing with a mobile home park operator as a Limited Partner (LP)

29:50 – Mobile Home Parks usually allow investors the opportunity to add value quickly to their investment

34:09 – Fannie Mae and Freddie Mac have a give-and-take investor relationship

41:21 – What Limited Partners (LPs) need to know about the 10-year treasury

43:37 – Investors looking to refinance: short-term loans versus long-term loans

45:46 – The perfect mobile home park from a debt perspective

47:20 – Tips on how a mobile home park operator or sponsor can best prepare for a Mobile Home Park financing event

49:00 – Reaching out to Scott Modelski

50:09 – Conclusion


Links & Mentions from This Episode:

Black Bear Capital Partners:

Scott Modelski’s cell number: (312) 217-4511

Scott’s email address:

Keel Team’s official website: 

Andrew Keel’s official website:  

Andrew Keel LinkedIn: 

Andrew Keel Facebook page:

Andrew Keel Instagram page:

Twitter: @MHPinvestors


Andrew:  Welcome to the Passive Mobile Home Park Investing podcast. This is your host, Andrew Keel. Today we have a very special guest, Mr. Scott Modelski, Managing Director at Black Bear Capital Partners.

Before we dive in, I want to cut a deal with you. If this episode adds more than a hundred dollars of value, would you please take 30 seconds to leave a review? This helps us get more listeners, and it lights me up when I see a new review. Thank you for taking the time to do that. All right, let’s dive in.

Scott Modelski is a loan broker with over 15 years of commercial real estate experience, working with institutional and entrepreneurial sponsors across a variety of asset classes. Scott started out his career as a member of the Wells Fargo bank commercial real estate group, where he worked on over 1 billion in transactions. He helps with the sourcing and execution of structured debt and equity transactions. Welcome to the show, Scott.

Scott: Absolutely. Hey, Andrew, how are you? Thanks for the invite. Excited to be here.

Andrew: Yeah. Would you mind starting out by sharing your story with our listeners and how you ultimately got into sourcing debt for manufactured housing communities for sponsors like myself?

Scott: Yeah, sure. I guess I had a little bit more of a typical path in the real estate space. I actually went to school for real estate in Wisconsin, which I kind of fell into. Went to Wisconsin, really looking to do finance. Double majored in finance, took a couple of real estate classes, found out their program was one of the top programs in the country and really enjoyed it.

I ended up getting an internship at Wells out of school and then joined their team on the construction lending side back in 2007. Things were still good in 2007. I quickly found myself doing more special assets work in 2008. I was there in special assets for quite some time, from 2008 to 2012, doing loan workouts, owned real estate, and things like that.

When things healed, got back on the origination side of the bank, did that for a few years. Back in 2018, I left to do something a little bit more entrepreneurial, which was Lumber, which the bank was great. I learned a ton, got a lot of exposure to all different apps and classes, lots of different things that probably wouldn’t be available to me on my own. I wanted to do something entrepreneurial and left in 2018 to join a boutique brokerage shop in Chicago called Alpha Capital. I was there for a couple of years and then joined Black Bear in 2020.

Really, the story about how I got into the MH space is through Mike McClellan, who introduced me to you. Mike’s a good friend of mine. He was a coworker of mine over at Morgan Stanley, and he got into the space. You guys ended up partnering on a deal. He approached me once those deals were ready for refinance and helped you guys execute on a CNBS deal back. Was that 2020 or 2021, a few years back?

Andrew: I feel like that was before Covid, so I want to say 2019.

Scott: It would have been right after because I was at Black Bear when I joined in 2020. I think it must’ve been in 2020 that we did that.

Andrew: Okay. Yeah.

Scott: That’s how I ended up finding my way into the space and working with you guys. From you, we’re able to meet some of the colleagues that you’ve introduced me to and then some other folks through MHI and other means. I dove into the space.

It’s interesting. Especially right now, it’s one of the most active spaces in theory right now. I think a lot of other asset classes, especially multifamily and definitely office, have really hit the skids. Mobile homes, RV parks, it seems like things are still full speed ahead.

I think the deals are structured a little bit differently. A lot of the clients are buying with seller finance and a little bit more creative financing on the front end, but there’s still an active market for perm finance, either through the agencies or CMBS. We’re still seeing a lot of that business come through.

Andrew: That’s interesting though. Back to your story if you don’t mind. 2008-2010, the great recession workouts, what did you learn during that time that maybe you carry with you, working on some of these CRE loans that obviously were distressed? What don’t we know about that time that we should know about banks? What is a workout? What were the type of deals you were cutting that are possible, that maybe we don’t know about?

Scott: It was really interesting because I was at the very beginning of my career. I guess I had a little bit of a different perspective because when I started, I really only caught the tail end of a “good market”, and really came in fresh and just saw all the things that could go wrong. I guess to your question, to me, and it’s always been in the back of my mind since then in the business is like things can turn.

Everything from 2001 to 2008 was blowing and going, values were coming up. All of a sudden, the music stops. You look at some of these deals that were made, and sometimes it was a head scratcher because that was coming in at the end when things already were sideways. I think the mentality was that the music’s never going to stop. The values just go up.

Andrew: I think we know that, but you were working out loans with borrowers that were in default.

Scott: Right. Correct, yeah.

Andrew: Tell us about that. I guess at Wells Fargo, they probably don’t want these assets. They’re not trying to take the assets back. They’re trying to just restructure the debt. Is that what you were doing most of the time? What is that?

Scott: I’d say there’s probably three ideal solution sets for the lender. Number one is a restructure. Like you just said, you hit the nail on the head. The bank really isn’t in the business of taking title to commercial real estate. They want to lend money and they want to get repaid.

Most of the deals we were working on had some level of recourse. We use that as effectively a bargaining chip. Almost never did we pursue someone for their full guarantee. That’s maybe just a Wells Fargo thing. But in that era, we were really using that as a bargaining chip to say, hey, Mr. Borrower, you owe us X. We understand that we are underwater. Maybe you’re up 120% LTV, true us up to 90% or 95%. In exchange, we’ll give you another year or 18 months, 24 months, and then we’ll reevaluate that.

Basically, if the borrower was playing nice in the sandbox with us, the mentality at that time was, let’s continue to work with the borrower. Let’s find a solution that as long as they can work with us and help bring some additional capital to the table, let’s try to find a solution.

There were definitely situations where we took other actions. There were times where either the borrower just threw their hands up and said, I don’t have any more capacity to put any more money in or I don’t want to. In those situations, there were a couple different remedies.

Probably the thing that we did the most was no sales. We would go out and sell our debt, our position, through one of the major brokerage houses out in the market. Primarily, the buyers were looking to get the title. They would look at the underlying value of the collateral, and then probably take a little bit of a discount because they were buying the deck because they needed to go through the foreclosure process. There was a little bit more of a legal hoop to jump through to get to the title.

We would also take title. We would foreclose on certain assets, where we thought there was more value in the future than there would be today if we went through a no tail. While it was a little unique, the team that I worked for was primarily working through the deck from the Wachovia side, it was actually separate like two different sides of the house right at that merger. That’s ancient history now, but Wells bought Wachovia bank. It’s like a large east coast bank at the time.

Wachovia, right before they went under, actually hired a developer to run their own real estate team. They had a little bit of a different perspective on taking title than a lot of our peers. We had folks, and I ended up working on that team for a few years, where we felt like we could manage, hold real estate, maximize the value, and then go through a disposition a couple of years later if the circumstances were right.

In certain deals where the borrower just capitulated and didn’t really have the wherewithal or the ability to continue on, this is where we took title and worked through the deals. Those ranged all over. There were a lot of home builder deals. We don’t get a lot of golf courses on the east coast. We’re selling lots to home builders. We had some unique structures, where they might have no idea what these lots are.

We were like, all right, we’ll sell you the lot for a dollar, and then we want to get shrewd up 20% of the value of the house once you sell it. There were some creative stuff, we did that. We took a lot of retail where we ended up leasing it up over time.

The multifamily back then was selling. We never really took title of that because there were such high demand for those, but some of the other more asset classes like a home built, single family lot development, retail center, or office, a lot of times those were the deals that we took back because we just thought the market was too weak to sell into.

It’s interesting. Like you, I still have a lot of colleagues in that arena today, and it’s been slow. The banks right now are not really taking a lot of action. I have a pretty interesting seat because obviously I sat in that chair at Wells in the past, so I know a lot of folks on that team. We know debt bonds all across the spectrum, so I talked to those guys a lot.

It’s interesting what you hear. Back in 2008-2009, the FDIC, the regulators came in and basically told the banks, clean up your balance sheets. Start moving this. I think the exact opposite has been delivered to them in this go around. It’s more, let’s play nice in the sandbox with your borrowers trying to find a solution. Don’t get too aggressive.

That’s where the banks are right now. Unless there are certain deals, it means a lot of office project and major CBDs across the country, there’s just nothing left. But even still, you’re seeing more like this payoffs, where the borrowers are just selling in the market today, and the banks are just taking a bit of a haircut on their note just to move it, or they might actually be doing some seller finance to do it on their own just to make sure that the deal gets consummated.

You’re not really seeing full sale action taken against borrowers. I think the banks are really trying to help their borrowers through this time, which is good. I think a lot of this is outside their control with interest rates rising, and I think the regulators understand that. I think there’s also a sense that maybe this is a point in time. There’s definitely a lot of rhetoric out there around rates coming back down. I don’t think that will solve everyone’s problem, but it solves a good amount of people’s problems if rates come back to a more normalized environment.

The other thing, the debt funds too, they don’t really want to take time on this stuff, too. You talk to them and they’re like, well, we have distressed deals in our balance sheet. It hurts our funding from our equity investors and our bank line. They’re trying to do everything too to help their borrowers get to a better place without really taking aggressive action

It’s interesting, every cycle is a little bit different. This cycle is definitely different from that regard, where in 2008-2009, it was clear the decks. I think that’s why we’re in this slow slot, where activities down 80% year over year. Everyone feels like there’s just no deals out there because there really aren’t. The lenders aren’t really forcing the issue. It’s hard if you’ve got a deal that’s a little bit upside down to really do anything right now. You’re better off just working out with your existing lender and hoping for a better day.

Andrew: Yeah, that’s really good feedback there. Thank you for sharing that. Just to recap, the workouts and your time during the Great Recession, you said those three options. Wells was, number one, restructure the loan. Hey, Mr. Sponsor, come to the table, your loan to value is 120%, bring some capital to the table and get us down to 90% to 95%, and we’ll extend your loan, something like that. The other one would be the sale of the loan. Option two would be, okay, we would sell the non performing note to another bank that would come in and try to either restructure again or do something like that.

Scott: It’s really necessarily wouldn’t be to another bank. It’d really be to an operator. A lot of the people that were buying the notes were other real estate investors that were looking to get to the simple title. Basically, it was just a quicker way for the bank to sell the real estate without having to go through the foreclosure process and let somebody else go through it.

I don’t think all of those deals ended up getting foreclosed. I think a lot of times, the borrower ended up finding somebody else to refi them out, or they were able to keep the note current. But a lot of those note sales, the goal of the purchaser was to go ahead and try to get to the underlying real estate.

Andrew: Got you. That’s good to know. Right now, as we record this in April 2024, it’s an interesting time in CRE. If you Google commercial real estate, you’ll see all these articles talking about how it’s underwater. There’s all these properties that are going down. But really from my research, it’s really just a small cohort. You mentioned some office and then some multifamily that had some, I would say, creative debt structures with very high loan to values and some variable rates that are getting into trouble. But what blood are you seeing in the streets as we record this?

Scott: Not as much as you think. Like I mentioned, all the distress that I’ve seen right now is in the office arena. A lot of those deals, I think they’re really hard to figure out. You guys all know this. I haven’t seen folks come back to work like they were pre-Covid. They’re just very difficult to value right now. I think that’s where a lot of the concern is. It’s just the uncertainty. Maybe if that market bounces back.

I’m not one of those people that thinks there’s the death of the office. I really think at the end of the day, we’re social animals. The companies that have people back in the office I think are going to do better than the folks that are around working at home. But that’s just my opinion.

For the next foreseeable future, I think there’s going to be a lot of issues with the office space just because there’s just too much uncertainty. Like you said on the multiside, it’s really groups that are over leveraged. I think the properties are performing. Rents are still high, the fundamentals are good. In one place where people are getting a little bit of trouble or some of their expenses are increasing, especially in insurance. If you’re in the southeast gulf coast market, particularly your insurance costs have gone up a lot, but all around the country people are experiencing increases in their expenses, primarily insurance.

If you are moderately leveraged, that’s still hurting your bottom line, but it’s not tipping you over the edge. I think it’s really just the folks that took too much debt, overpaid during the boom tide in 2021-2022. At the end of the day, once properties are fine, their capital just needs to be restructured.

Andrew: Yeah, that’s good feedback there. Let’s talk about mobile home parks. What have you seen there? Have you seen some operators come to you and say, hey, we need to do a restructure of our capital, we have some issues here, or we need to do something creative? Have you ever seen some distress or operators that have interesting scenarios there with their debt needs?

Scott: I really haven’t seen the distress really come through on the MH front yet. I think the last few years has been such a boom for that market. Rents have gone up significantly There’s a lot of new entrants into the market too that brought in a lot of fresh capital in these projects. I really haven’t seen anyone come to me on the mobile home front and have that scenario.

I have heard through the grapevine that there are selectively some deals that are troubled. I know a few clients of mine have been bidding on some deals where that’s the situation, but it’s not anything that you paint the entire market with a broad brush and say, the mobile home space has experienced some distress. There’s always some level of distress in the marketplace, even in a really strong upmarket, but I don’t really think there’s a significant level of distress in the MH space right now, at least from what I’ve seen in my career.

Andrew: No, I don’t either. Like you said, there’s some stuff going on where there was some interesting financing done from what I’ve heard from some other operators. Similar to multifamily, they were needing to buy rate caps and things like that, but I think the assets are performing. I think that’s one thing that we can see.

I was reading the Marcus & Millichap. They have like a manufactured housing review that they send out. The asset class is performing really well. For you, Scott, as a loan broker, sourcing debt for mobile home park operators, what should our listeners know and myself know that we don’t know about that job, about that task?

Scott: I think what you should know that you don’t know, I think the good thing about using a broker is that we can really cover the entire market. I know everyone has their lender relationships, which they should, You should always have your go-to relationship lenders.

Having been in a relationship lender, I totally understand the benefit of that for both sides of the party. Especially in a market like this where there are capital disruptions, I think what visibility we see in the marketplace is there’s this whole subsector of non bank lenders, the debt funds of the world, that can have a very different perspective on the market. With the banks pulling back, we’ve really seen those non bank lenders step into the void and provide capital for a lot of projects that are great projects, but the banks just aren’t really there for them right now.

Andrew: I’m assuming these are heavy either development or heavy value add projects, and operators are using these debt funds as a bridge facility to get the deal done, to stabilization? Is that right?

Scott: Yeah, thanks for asking that because I should clarify. Yeah. The debt ones are primarily shorter term loan vehicles, two to three years. They’re primarily beneficial from when you’re doing a value add, because they can provide some pretty aggressive capital on the front end for the acquisition. Oftentimes, they can bring in a facility for a hundred percent of your capex.

MH is a little bit different because the homes themselves are chattel or not real property, but there are a few lenders out there that can provide a line for the homes, the installation, and that type of capex. Primarily, what they’d love to finance is improvement to the infrastructure, the roads, the water, the sewer, any water treatment plants, the “real estate” versus the chattel.

For groups that are maybe a little bit less well-capitalized on the equity front, it’s a really great opportunity to get into one of these loans because they can help bridge that gap on the equity front and provide a higher leverage transaction, especially when there’s a lot of upside in the deal.

Andrew: Yeah. What are the typical terms for a deal like this on a mobile home park? If you had a value add deal, are they willing to take a second position behind a primary lender? Is that possible?

Scott: Yeah. We’ve definitely had relationships with mezzanine and preferred equity lenders. The one thing about the mobile home space is that the property values are a little bit lower than in some of the other asset classes. For most of those mezzanine prep lenders, they want to see $3-$5 million plus of a check size. For mobile homes, typically the deal sizes are large enough to really make sense that I measure prep.

Typically, you’ll get a bridge lender that’s a stretch senior, if you will. It’s one facility, and they’re basically acting as both the senior and the management wrapping it all into one and pricing it as one. Historically, you can get up to 80%-85% of the cost.

In today’s market, what they’re doing is they’re trying to look at, okay, once you’re done with your value add, what type of exit is there from either an agency or CNBS loan, and what’s our payoff? They’re backing into their initial leverage based on that. Where rates are today, they’re really constraining your backend takeout. Realistically, I’d say the top end is really probably 75% loaner costs in today’s market plus that capex dollars that you’ll spend primarily on infrastructure.

Andrew: We don’t need to go down a whole rabbit hole because it kind of seems like it’s not applicable as much to MH as it is to other asset classes. Let’s circle back because I know you’ve worked with several different mobile home park operators, to source debt. What have you learned about mobile home park sponsors? Maybe you can touch on their risk appetite, their different deal structures and strategies. I think that would be important to talk about, something cool to talk about.

Scott: I think the one interesting thing about the MH space is you have this group of younger investors. I’d say early to late 30s, there’s this larger group of individuals who’ve taken this on and really stepped into this asset class. I think previously, it was like a mom and pop. People have owned these properties for 30-40 plus years. There really wasn’t a lot of activity in the MH space.

Now, it seems like this is the new asset class, and people are really excited about it. Compared to the other asset classes, I think there are a lot more established groups, guys who have been in the game for a long time. There’s definitely your upstarts groups in the multifamily space too, but I feel like the groups that are focused on MH tend to be very much go-getters. They’re out there trying to really make their mark in a really quick fashion.

I don’t necessarily think they’re more aggressive than folks in other asset classes. I think everybody who’s in the real estate market has cut from the same cloth. They’re entrepreneurial. They’re definitely high risk tolerant, but I think that folks in the mobile home space maybe look at things a little bit differently.

Historically, the asset class hasn’t really been viewed that favorably. You’re fighting an uphill battle sometimes with some lenders around the perspective of the asset class. I think there’s just a lot of optimism in the investment community and the MH space, because they’re looking at something that historically hasn’t really been that appealing, digging into it, and really finding a needle in a haystack.

Andrew: With the operators that you’ve dealt with, what makes one different from the next? Do they all fit into this mold? Would you say that they have unique business models and strategies? As an LP, if you’re looking to invest with an operator, what should they look at from not only the financing they’re taking and how they’re structuring their capital stack, but also just them and their strategy and business model?

Scott: Yeah, that’s a great question. I’ll take the first part of that question first. I think there’s definitely a wide range of both personalities, market outlooks, and the way people put together deals. I don’t think it’s uniform.

Andrew: One size fits all.

Scott: Yeah, perspective on the market. I really think everybody likes a little bit of a different geography. Everybody likes a little bit of a different deal. Some guys like the really hairy deals where they can go in and add a lot of value. Some guys want more established, more closer to stabilized transaction. Some people are looking at on-market deals, some people are only looking at off-market deal. I think there’s a huge range of perspective on the market and what people are trying to do.

To your question about LPs, to me, I really think it’s track record. If you’re looking at different LPs, I think you really want to understand their experience in this space. For instance, a group like you. You guys have been active in this space for a number of years, have a real strong track record that you can point to around being able to execute in this space.

MH, more than anything, the operator can drive a ton of value. If you don’t really have the expertise on how to source and bring in homes, how to structure the sale of homes, how to vet the tenant roster, how to manage the assets, I think you can miss a lot of the opportunity, or you don’t necessarily want to figure it out along with your GP.

Andrew: Yeah, pay for an education of your GP.

Scott: Exactly. For me, if I were an LP or as an LP, I definitely want to make sure that the mousetrap’s already been built by my GP. I don’t need to worry about, can they actually pull this off? I want to make sure that my group is somebody that I know, has expertise in the space, and has a track record. Not every deal is going to be a whole run, but you want to at least know that the group that you’re working with, if they do run into problems, they know how to solve them.

Andrew: That’s the key. Yeah. What mistakes have they made and learned from, I think, is important. Thank you for the compliment, Scott. I appreciate that.

Scott: Absolutely.

Andrew: Earlier today, I was on a due diligence review meeting for our new deal that we’re working on. We’re going granular. We’re going into so many other avenues that when I bought my first mobile home park, we didn’t even scratch the surface of how deep we’re going now with how granular we’re getting to make sure we know what we’re buying with the utility infrastructure, our inspections that we’re paying for, and all of that. There definitely is something to be said about track record, for sure.

Scott: From my perspective, I feel like of all the asset classes, mobile homes are the most nuanced. There’s so many more nuances to investing in mobile homes versus other assets that if you don’t have that track record, you can really find yourself in a messy situation. I didn’t mean to cut you off, but that’s something I really wanted to make sure of. It’s a different animal than your other traditional asset classes that people invest in.

Andrew: Definitely. I wanted to talk about this, because I know we’ve worked on some hairy deals together. With mobile home parks, there’s the opportunity to add value and a lot of value really fast. Maybe you can talk about that, just because I think as LPs looking in, they may not know all the nuances of going from a regional lender to an agency lender and what’s all involved in that. We’ve had oil and gas leases that we’ve come across. We’ve had underground gas lines that were under homes. What was the one in Michigan that we just got held up with?

Scott: The licensing.

Andrew: Yeah, it was licensed for a less number of lots than we had in the park.

Scott: It was because the RV component wasn’t licensed as an MH, but it was grandfathered in. It just wasn’t papered right by the prior owner. 

Andrew: There’s a lot of just nuances to it. On a good operator that you’re looking at the refinance value, what do LPs need to know about how they’ve added value, how the income has seasoned, and things like that, if you don’t mind touching on that?

Scott: To your point, being relatively newer to the space by working on it for the last three or four years versus about 15 years of my career, it was really eye opening to see how quickly you can add value. I think the interesting opportunity for mobile homes is you’ve got a lot of parks that have been sitting, that are 60% or 70% occupied, that cash flow well, the existing ownership isn’t really concerned about they may not even have any debt. For them, this is stabilized.

If you can come in with a fresh set of eyes, fresh capital, and bring the community up to date, bring in new homes, you can add tremendous value by increasing that occupancy for 60% or 70% up to 90%, 95%, or even a hundred percent. You can do that in a significant amount of time. Now, take multifamily, how many multifamily deals have been sitting at 60% occupied for the last 10-20 years? It just doesn’t exist.

Andrew: It doesn’t exist.

Scott: Maybe in retail, you can do that, but you’re taking on a lot of risks. Typically, those retail projects that are sitting at that level of occupancy, there’s a reason for it. For mobile homes, the reason is just more or less momentum. It’s been fine. I don’t really need to deal with it. Maybe my dad bought this and I inherited it. I just think it’s fine to just click my coupon because I don’t have to worry about it.

The opportunity to add significant value in a short amount of time is really unprecedented. I don’t see that in other asset classes. That’s really the big driver in value. For me, when I started working with you, I think the one thing that really was shocking was just, we were within 18, 24, 36 months doing a refinance off of your existing loan and not only paying off the existing loan, but paying back all of your equity plus some.

We were doing 140% cash out over and above the original investment. That, I just don’t see. That takes you 10, 15, 20 years of multifamily. It’s from compounding rent growth. You just don’t see those cash out.

The other thing that’s a little bit challenging about that is sometimes the value add is so significant. We really have to push on the lenders to get them to accept the cash out, because they get a little bit concerned around how much money they’re cashing out in such a short amount of time. But that’s a good problem to have. That just means you’ve got significant cashflow coming out. Luckily, we’ve found some great lenders to work with that have been accommodating us and helping to make that happen.

You just don’t see that in other asset classes, unless there’s some like unique opportunity where you hit a whole run and, but you can’t underwrite that. In the mobile home space, from what I’ve seen you guys do, and I’ll give you some kudos on your ability to find these opportunities because they’re not just in your face. I know you and your team are sifting through tons and tons of opportunities to find the right ones. They’ve worked out incredibly well for you and your investors.

Andrew: Thank you, and thank you for your help. Sourcing that agency debt has been huge for us. Maybe you can touch on that briefly and talk about what the agencies are doing in the MHP space, what their terms are looking like right now, spreads and so forth. And what’s their appetite?

Scott: For folks who don’t know, the agencies are Fannie Mae, Freddie Mac. They’re the two pseudo government agencies that really are there to provide capital for housing. Historically, they’ve provided a lot of capital to the multifamily space. Over the last 10 years or so, they’ve really taken a deeper look at the mobile home communities. That opened up a lot of opportunity to get non recourse financing on five or 10-year term and really pull out a lot of equity on some of these value add deals.

Where they are today, I think historically, all the deals have been 10-year deals. Yields are the five-year treasury to 10-year treasury. Most investors want five-year money. I think at the beginning of this cycle, when rates really rose, the five-year was pricing much wider than the 10, just because there wasn’t a lot of bond buyer interest in that. But that’s changed.

Five-year pricing really isn’t that much different than the 10-year right now. We’re seeing a lot of interest in the five-year pricing. Right now, just for an example, it’s somewhere like mid to high 6% up to 7%. It’s your all in fixed rate. The terms, the rates are fixed for either five or 10 years.

Typically, we’ve been able to get interest only for the term. That’s really at 65% low to value and below. Above that, they’re going to want to see some level of amortization, typically 30 years. The terms are really predicated on the leverage you take. Even though we’ve been doing some significant cash out together, the interesting thing is there’s still significant value left in these properties. It helps us with the Keel team get interest only for five or 10 years and really drive additional cash flow from that perspective as well.

The agencies are active, but their job is to provide capital for housing across the country, particularly what they call workforce housing, which is lower income type communities that are either not necessarily right controlled. Some of them are, but a lot of them are just not what they call naturally affordable. Mobile homes definitely falls into that category.

Andrew: Definitely, and I think that’s important to note. It’s a win win. What I’ve noticed from the agency lenders is they’re really working hard to provide the best in asset class, financing terms. They come with some strings attached.

The properties have to meet a certain level of quality. They’re going to have an engineer come through and check the whole property, tell you trees need to be trimmed, streets need to be repaired, and sidewalks need to be releveled if there’s roots popping them up. There are some additional repairs that are going to be needed, hitches need to be removed, and skirting needs to be in place.

It has to be no deferred maintenance basically to get one of these loans, which is a win for the community, for the tenants that live there, because the property is going to be maintained better. It’s a win for the investors, because they’re getting great terms, the best in asset class terms for these properties.

They also recently came out with the tenant protections that if you get an agency loan, maybe you could touch on that briefly with just some of those requirements of what the agency lenders are looking for by an operator getting one of these loans. They’re asking that you give certain tenant rights that they need to be aware of.

Scott: Right. Yeah, and that’s a good point. I’m glad you brought that up. Really, the reason that the agencies are able to provide the best in market financing terms is because they are definitely there to make sure that these properties are up to stuff with what they expect for the tenant roster. They’re not looking to finance projects where the landlord isn’t taking care of the asset. You definitely need to be on top of your property and have it in tip top shape in order to get qualified for an agency of finance. I’m glad you brought that up.

Typically, just to give a clarification, they’ll have an inspector come out and determine immediate repairs, long term repairs. You’re going to have to reserve capital from the loan over time to make those repairs. There’s been somebody out every year to make sure that you’re agreeing to what they originally said on the front end.

On your tenant site protection, that’s something that the agency’s put in about a year or year and a half ago. It’s another layer of protection for the tenants in these mobile home communities.

Andrew: It’s not unreasonable, right? It’s not like you can’t raise rents on them or something like that. I just remember thinking, it’s more like providing them consistent rules and regulations, an annual lease, and things like that.

Scott: Yeah, it’s really setting a framework. I can’t recall all the guidelines, but the one thing that’s the main driver is that they want to have an established rules and regulations for the park that everyone from a tenancy perspective kind of agreed to on the front end, and I think that’s for their benefit and also for their neighbor’s benefit. I think if everyone’s got the same set of rules, they understand what is expected for them to live in this kind of quality community.

There are simple things like the initial lease needs to be annual. It needs to be able to rolled over in a month to month. There are some restrictions around, like you said, how much and how quickly you can raise rent and the notification period that’s needed in order to raise rents. I don’t really like putting a limit on it. It’s more or less just putting a framework around like how they need to be notified.

Andrew: The notice time period. I think that was a big one. Yeah. You need to give them at least 60 days before rent increases, where maybe some states only require 30 days. I think there are some benefit to it if we’re looking at it like, hey, we’re providing housing. This not strictly commercial retail type of tenants. This is housing. This is a fragile tenant base in some aspects.

Scott: Yeah, absolutely. They want to make sure that those folks are protected, which I think from your shoes, my shoes, everyone’s shoes, everyone wants to do that. I think it’s good to have a base framework to work off of. I know when they were originally putting that together, I know a lot of the larger, more institutional type ownership groups in those meetings and helping craft that language. I think the good thing is they were open to and really listened to the investor community on how best to put this together.

Andrew: Totally. What should a passive investor or limited partner know about the 10-year treasury? What influences the 10-year treasury?

Scott: Yeah, that’s a great question. Really, everything in finance. It’s more or less revolves around the 10-year treasury. It’s a lot of what the longer term loans, the 10-year loans are priced off of. To make it very simple, the benchmark rate, if you will, is the 10 year treasury. Typically, when you’re pricing a loan, you add a spread. It’s for the risk premium. You’ve got to look at the 10-year like if you’re taking no risk, this is the return you’re going to get.

If you’re going to buy these loans, you want to have a spread over and above the 10-year because there’s some risk involved. There’s another party, not just the US government that needs to perform to  make these loan payments. Typically, that’s why they have a spread. The spread ranges depending on the asset class and where we are in the market, somewhere between 200-300 basis points or in layman’s term, 2%-3% over what the 10-year treasury is.

Right now, the 10-year moved up a bit. It’s around 4.3. To add that 2%-3%, you’re talking about 6.3 to 7.3 is where your loans are typically structured or priced for a 10-year term depending on a variety of factors including like the strength of the sponsorship and the strength of the asset.

That’s been moving around a ton. I think last year, it got up to 5%. Before that, it got down to a low of 3.9%. There’s a lot of volatility in the market. It’s an interesting time. Typically it’s a little bit more slow and steady movements in the 10-year, but we’ve seen some wild swings in the last year and a half, just as people are trying to digest. Is the Fed cutting rates? Is the Fed increasing rates? Are they keeping steady? There’s just a lot of unknowns out there, which is causing the market to jump around a bit.

Andrew: Yeah, that makes sense. It seems that most investors are expecting the Fed to start cutting rates right in June of 2024, which is just a few months away. What advice do you have for maybe sponsors, investors, or owners that maybe you’re looking to sell out there, or maybe looking to refinance? Would now be a good time, or should they wait once those rates potentially go down in six to 12 months, if they can?

Scott: It’s interesting because the rate decreases or increases are really on the short end. The Fed controls that overnight lending rate, which is the shortest term, and that’s what the Fed lends the bank. That doesn’t always necessarily translate to the longer term notes, which are more traded on the marketplace and open to more supply and demand type movement.

Essentially, there’s an article in the Wall Street Journal the other week. They were saying, hey, even if they decrease rates 75-100 basis points like expected, the expectation is a long term 10-year, Treasury stays pretty constant.

Right now, it’s already break that in because if you look at the short term rates, one month Treasury is 5.5%, and the 10-year right now it’s 4.3%. There’s already this expectation that’s built into that pricing of the rate coming down. The simplest way to look at it is the 10-year is priced based on the forecast of what all the short term rates are going to be expected over the next 10 years, so it’s already priced in.

I know I’ve spoken to a lot of folks that have said, hey, I want to wait because I think rates are coming down. I think that’s really mostly true for short term. If you’re looking for short term bank or bridge loans that are floating, that will come down. But I think the five and the 10-year is already priced in.

Wall Street is smart. They’re not It’s going to get caught off guard by this. The only time they will, if there’s something unexpected. If inflation really comes down in the next couple of months, the readings come down, you might see the 10-year really react to that because that’s unexpected. Right now, if everything stays status quo and the Fed really does start decreasing a quarter point in June, a quarter point in September, and then one in December, it’s really already priced in on the longer end of the curve.

Andrew: That’s good to know. Scott, I would ask, what do you think the perfect mobile home park looks like from a debt perspective? If you want to get the best debt possible, what does that perfect mobile home park need to look like?

Scott: I think you want to have a high quality park. I’m not sure if folks are aware, but there’s a star rating that the agencies utilize to rate their parks. Three-star is in the middle of the row. Everything’s fine, but nothing’s great. Four-star is better, five-star is immaculate. To get the best turns, obviously you want a five-star park. You want to be as occupied as close to a hundred percent as possible with a really stable tenancy.

The longer that your rents have been in place at that level, the more secure the lenders feel, and you continue to be able to collect those rents. I think the lower the leverage, the better pricing you’re going to get. There are some jump ups. Anything below 50% is the best pricing, 50%-65% is the next year after that, and then anything 65%-75% is the higher tier after that. That’s typically how the agency’s price.

In short, highest quality assets, highest occupancy with long term consistent paying tenants. One thing they look at is your collections history. You make sure that you don’t have a lot of delinquent tenants, they’re paying on time. Your collections are stable and a lower leverage deal. That’s how you’d get the best execution on an agency loan.

Andrew: Nice. Any other tips on how an operator or a sponsor can best prepare for a refinance to get the best terms possible, probably getting your financials in order and making sure there’s not like capex costs on your PNLs? Real quickly because I know we’re running out.

Scott: Yeah. I think you just hit the nail on the head. I think a lot of times, something that I do with my sponsors is make sure that the financials are “clean”. I think there’s a way to present financial statements to a lender that don’t necessarily equate to how you want to prepare them for your taxes or how you want to prepare them for maybe even your investors. You want to strip out all these one time capex expenses.

For taxes, you want to keep them in. You want to keep your income low. For a lender, it’s the opposite. You want to make sure that your income looks high and looks steady. We work going through the financials and saying, oh, this plumbing expense, is that going to recur every month, or is that just a one time? No, we need to do a one time thing, so let’s pull that out. Let’s make sure that that’s a capex item.

Hey, did you have to pave your streets every year, or is it once every 10 years? It’s only once, let’s pull that expense out. There are ways to make the financials more presentable for a lender that are a bit unique. That’s where a broker or an advisor like me can come in and help consult you on the best way.

Really, you don’t even have to restate your statements. We just re-spread them and show all the expenses. We just show them below the NOI and show them as more capital expenditures, not ongoing expenses.

Andrew: Awesome. Scott, how can our listeners get a hold of you if they’d like to do so?

Scott: Yeah, sure. You can find my contact information on our website, which is You can find my cell, my email. My cell is 312-217-4511. The email is too long, so you guys can look it up. I’m sure it’ll be included with the podcast. Happy to help anybody who’s looking at any potential acquisitions or refinance opportunities in the mobile home space. We do this all day long. Happy to meet new investors and see if we can help them on their debt needs.

Andrew: I think we’ve worked on over $30 or $40 million.

Scott: It’s $50 million. I just looked it up before the call. It’s just shy of $50 million, and I think it’s 15 deals or so over the last few years. It’s been a significant amount of transactions over the last few years. It’s always exciting to work with you guys and see the execution and how much value you’ve created in such a short amount of time. It’s always impressive. I always get a kick out of seeing how much value you’ve added over such a short period of time.

Andrew: Thank you, Scott. Thanks for coming on the show to help educate our listeners.

Scott: Yeah, absolutely. Very excited to be a part of this, and thanks for including me.

Andrew: That’s it for today, folks. Here’s a quick reminder for you to please leave a review if you got value out of this show. These mean the world to me. Thank you for taking the time to do that. Thank you all so much for tuning in.

Andrew is a passionate commercial real estate investor, husband, father and fitness fanatic. His specialty is in acquiring and operating manufactured housing communities. Visit for more details on Andrew's story.

Keel Team provides unique opportunities for passive investors to enter the mobile home park asset class without having to deal with the headaches of tenants, toilets or trash.


Contacting us does not entitle you to purchase, or to participate in any current or future offering of, securities by us and/or our affiliates. We are not offering to sell you securities by providing you with an opportunity to contact us. All of our and our affiliates’ securities offerings are done through private placements, and participation in those offerings is restricted to persons with whom we have a prior, established business relationship and who meet applicable investor standards.