HML and MFH

[Eddie Starr]

Howdy, BP community.

I've been looking over various MFH in my area, and looking at funding options, and am trying to figure out how to make it happen.

MFH is higher costing, with most being at least $200k, with the higher NOIs being $500K - +$1M.

I was thinking HML would help me make this happen, but the probs I've run into are:

They will only cover a certain percentage of the amount I need to purchase the prop. I initially didn't think it would be too hard, but the problem is, is they all want first position. So, even if I could get seller financing, or somehow a conventional, to cover what the HML wouldn't, there's still the issue of no one seems to want to take 2nd. My thought was, from the property's cash flow, to use the vast majority of that, to pay them both off, simultaneously, but what makes sense to me, and many not in the REI world, won't work.

Then, the terms to pay back the HML. It's generally 1 - 5 years. I've seen a few that offer longer periods, but with much higher interest rates, and more burning hoops to go through. The question I have, is that for HML, how would I even pay it back? I have yet to come across a property, where the NOI would allow me to fully repay the HML, in that time frame. Would, near the end of the term [for those offering at least 3 years?], I be able to go to a conventional commercial lender, and based off the business's credit [D&B, Equifax Business], be able to get a loan to pay off the remainder of the HML, and then, pay on that mortgage?