Financing for Single Family Home Syndicator

[Joe Donlevy]

I am a commercial loan broker in Charlotte, NC. I had a prospect inquire if he could obtain 70-75% financing for a joint venture that is acquiring Single Family Homes with a purchase prices of $200k - $400k.  He performs light, cosmetic renovations versus extensive renovations and then holds them long term. 

He is 10% owner and GP in the JV. He will provide his full guarantee and has favorable liquidity relative to the debt of the portfolio. However, the LP's(90%) will not obviously not provide any guarantee.

Does anyone know if this type of financing is available(Not Hard Money) given the legal structure, type of asset and size of the deals. 

[Brian Burke]

Originally posted by @Will Gaston:

@Brian Burke any ideas on this? I know you do a lot of syndication. 

It's out there.  I did it a few years ago for four of my single-family rental funds.  For our first loan I had to provide the guarantee.  In subsequent loans I was able to get non-recourse.  All of this was through a local bank.  Not all local banks would do this, however.  I had to do a lot of asking around.

In my case, none of the investors owned more than 20% of the equity.  In the OP's question, if the equity is coming from one investor the answer here might be different than if the equity is coming from 10 investors.  It's likely that any investor over 20% would have to sign the guarantee.  With some banks that might even be 10%.  Or 25%...who knows.  

There is also the option of private money.  There are shops out there that have lending programs for these types of things that are more flexible (and faster) than banks.  Rates are typically in the 7% to 10% range depending on the location, property, and loan scenario.