SBA 7(a) Manufactured Housing Community Feasibility Study in Texas

Texas manufactured housing communities: twice the national loan

Texas leads every state in 7(a) loans to manufactured housing communities by count, with a rank of 1, but the class stands at 30 of 39 within Texas. The median loan of $890,000 is 2.00x the nationwide figure, and the middle loans fall from $296,425 to $1.3 million. SBA recorded 30 approvals worth $30.0 million. Franchising is 13.3%, which is unusual for a real estate class.

Counties, years and the end of the series

Harris County has 6 loans, Bexar 5, Dallas 4, and Tarrant and Travis 2 each. The page has no lender ranking for this cell. Approvals reached 8 loans and $11.4 million in FY2021 and 7 loans and $5.0 million in FY2020, but the series ends in FY2023, the last three fiscal years holding no approvals at all. We have no explanation for the drop in the data, and a reader should treat it as an observation only.

The cancelled slice of approvals through FY2024 is 13.3% at the least and 16.7% when undisbursed loans are included. Texas shows no charge-off rate, the early funded loans being too sparse, and we do not call that gap zero.

What the code mixes in, and what the study must test

SBA's coding lumps manufactured home sites with other real estate lessors, among them landholders and property investors, so they cannot be told apart. A Texas community under 7(a) is a rental real estate business, so the study should test the property as an income asset: the number of sites and their occupancy, pad rents, and who owns the homes, because a community that rents homes has different cost and risk from one that rents land only. Utility infrastructure, from water and sewer to roads and electrical service, can be costly to repair, so condition must be documented. Local zoning and state rules affect expansion and rent. Coverage should be shown at the current occupancy and at lower occupancy. The appraisal will rest on net operating income and a capitalisation rate, and the study must justify both with evidence of actual rents and expenses.

A 2.00x ratio to the national median means Texas borrowers take loans twice the size of the usual loan for the class. The study should explain what that extra money buys, whether land, improvements, infrastructure or acquisition of homes, and show how rent growth, not just current occupancy, supports the debt.