Loaned against a 31 site park, where a season means something different to a note

The interest reserve funded out of proceeds is the version I'd want too, and it's worth saying out loud that it means the borrower is paying interest on money that's paying his interest. Cheap for the peace of mind, but he'll feel it at payoff. Did he push back on the 62%?

Seasonal businesses don't run out of money in the slow season, they run out in the month before the good season starts, when payroll and repairs and supplies all land at once and nothing's come in since October. March is exactly right. In my service business April is the scariest month of the year and it's the month before our best one.

When you say you ran DSCR on annual NOI, was that how the borrower presented it or how you chose to look at it? I'm asking because I'd probably have accepted an annual number without noticing anything was wrong with it, and I want to know where in the process the better question shows up.

Had to go through this twice. DSCR is debt service coverage ratio, net operating income divided by the debt payments, and tender's point is that a ratio built on a whole year hides the fact that the year isn't evenly shaped. Do people ever just write a note with no payments November through March?

Juniper, that's what tender described as a seasonal payment schedule. I've read about it on agricultural paper where everything hinges on one harvest. The lender's problem is that five silent months mean five months of no information about whether the borrower is still standing.

31 sites in a market with a four month season is a hard business to lend against at any structure. Rural parks near me look great on the July numbers and the July numbers are basically the whole story. What was your value opinion built on, comps or the income?

The other thing a five month off season does is hide deferred maintenance. Nobody's using the water system, so nothing fails, so the borrower reports everything's fine, and then the first hard weekend in May the pump goes and there's no cash. If I were lending I'd want an inspection scheduled in April rather than October.

The 1,800 for having default notices reviewed before sending them seems like the cheapest line in this whole post.

The interest reserve solves for the borrower's savings discipline and it doesn't solve for the thing that actually kills these, which is a bad season. If May through September comes in 25% light, the reserve is gone and you're in the same conversation a year later with less collateral value behind you. I'd want the reserve and a covenant tied to gross revenue by a date certain in the season, something that gives you a look at the numbers in July rather than in March. Whether that's enforceable the way you want depends on how it's drafted and where, so drafting that is attorney work.

I came into this room wanting income without a second job and this thread is a decent argument that the note is the passive version and the park isn't. Even so, tender spent five months worrying and a trip out there, which doesn't sound like nothing.