HUD 221D4 vs Conventional for New Build

[Colton T.]

I've designed a new build apartment project with plans to do HUD 221D4 financing. I'm curious to see if another developer / investor has experienced the different sides of working through a deal with HUD vs Conventional financing. How would you compare your cash flow / resale challenges / bottom line between the two?

Are the benefits of a 221d4's smaller down payment, fix 35 yr assumable and being non-recourse worth it? Or better to pony up the dough and skip the extra red tape / oversight?

[Greg Dickerson]

Originally posted by @Colton T.:

I've designed a new build apartment project with plans to do HUD 221D4 financing. I'm curious to see if another developer / investor has experienced the different sides of working through a deal with HUD vs Conventional financing. How would you compare your cash flow / resale challenges / bottom line between the two?

Are the benefits of a 221d4's smaller down payment, fix 35 yr assumable and being non-recourse worth it? Or better to pony up the dough and skip the extra red tape / oversight?

HUD is a great option for long term holds but they are expensive up front and take forever to get done like 12-18 months in some cases.

If you plan to sell at CO or stabilization short term construction loan is the way to go. Some lenders will do non-recourse development loans for experienced developers.