Seeking an uncommon debt structure: Commercial collateralized vs Residential on SFR

[Evan Smith]

Hello All,

Im looking for an alternative to the standard practice. A debt structure for SFR that's valued by cap rate as opposed to individual appraisal.

Im open to speculative conversations but here is the scenario.

Tenant: 

National tenant, operating 4000 leases nationally on single family homes

willing to pay 1% of gross value and sign a multi year lease. (can be structured as a NNN)

Portfolio:

I want to build to rent 9 houses to meet the value basis. ie: $436k/ build to meet $450k appraisal.

(option to go to 24, but I want the initial project to begin locally.)

Location- Ohio

Market type- Local, within 8 miles to me

Builds- Identical 2700sf, 4 bed, 3 bath , placing the same structure that meets the tenants criteria in 9 locations.

Debt: Seeking a refinancing option  based on a 9% cap rate

The difference ( 450,000 x 9= 4,050,000 vs NOI of $384,261 / 9% = 4,269,576 or $474k/property + tenant)

with our continued rates of appreciation and a standardized tenant/lease structure in place, this should be a win for everyone.

Who has a solution? or please punch some holes in my thinking