I'm looking at buying a small campground. My family and I would also be living on the property. I'm not sure how to proceed regarding securing financing. Any advice would be helpful.

Doug:

I think this is one of those questions of where does the house stops and where does the business begins.

In your position, I would look at this as a primary residence loan first, and only in the case of not being able to secure regular residential financing would I go after a commercial loan. The reason behind this is that residential loans are a really cheap source of funding when compared to commercial borrowings.

If that fails, there is the chance that you can have someone look at this as a hybrid that gives you credit for the campground income.

As a last resort, you can have someone take a look at this as a commercial loan, which would require looking at the cash flow of the business as the source of repayment.

The approach will be determined mostly by the amount of the transaction, and whether or not you have an outside source of repayment such as a job.

Good luck

Did you ever hear again from Doug K? Was he able to establish a residence loan for his campground purchase? I am in the same spot as Doug and would be interested in all information available.

ila:

Nope, I did not hear from him.

If you are in the same situation, you ought to go talk to a residential lender and see if they can pull it off. If the first guy says "No" try another one.

If that fails, you need to think commercial loan and cash flow from the business supplemented by personal income {hopefully from a source other than the campground} should be your next choice.

By the way, the problem with posting as a guest is that you never know when someone answers your question, that is probably what happened to Doug.

Thanks for your reply. We will be looking at several campgrounds this fall. They are, of course, not in our home area which means I will have to try to deal with the local banks and try to sell myself. I definitely will try for the residential first!

I found a site yesterday, which collects your information - then submits it to their 'lenders'. These are commercial lenders which if they are interested, gives you a quote for your loan. Would you recommend something like this? Thought I might go ahead and submit the info, just in case the residential thing doesn't work.

Ila:

At this stage, there is nothing to submit. A commercial loan will need to take a look at the particulars of the deal, and you have not even found a suitable location first.

I guess you are looking at this like a pre-qualification, but that is more of a residential lending tool since the source of repayment is your personal income.

I think that the internet is an excellent resource to access non-bank lenders, but with all due respect to the lenders and brokers visiting my site, I would try commercial bank lenders in the area first and go to other lenders as a backup.

Good luck.

Campground financing varies in that they mostly have land value. If you are buying a campground that has proper structures on site i.e comunity halls, offices, restrooms & other facilities...you will have a bigger lender base to choose from. The remoteness of the siet is also considered as the sales comps may be an issue. We lend on campgrounds with a max LTV of 60% with seller 2nds allowed. I highly recommend NOT getting an appraisal untill you have a lender interested. Feel free to email me if u have any questions.

Loanuniverse - thank you and you are very much correct - I am thinking like a home owner in which I was pre-approved. I was thinking more in the lines of trying to speed up the process. I know very well that the property specs have to be found first.

Commercial lender - thank you - seller 2nds - would that be loan to you at 60% (appraised value), and loan payback to seller at 20% with 20% down payment?

Thanks again for all your help.

iLa, U are right, here is how it would work...If the property was lets say appraised at $100,000 and our appraisal review department holds that up you would get max 60% LTV (Given good credit) and then a seller second for 20% and a 20% Down. It is possiable to have a larger seller 2nd if the seller agrees. The 'possiable part' would depend on the debt service. Feel free to email/call me if u have an questions.