Multi-family Investor · Marietta, GA · Member since 2011 · 40 posts · 6 votes
Hey guys-
Our company tends to be very creative in the way that we finance the front end of our apartment purchases. So i was wondering if other commercial operators are the same or if they are more traditional.
Our typical deal
50% Cash/50% private for for 6-25 months (1.5%-3.5% interest only)
Stablize the asset
end:
Refinance through HUD 223F (83.5% LTV of stablized value, 30-40 year term, 3.5-3.8% interest, non-recourse)--at this stage, we repay our selves for some of our cash inlay for the purchase and we repay our private note holder (whom held around 50% of our purchase). We then add the asset to our long-term portfolio if it is B- or better in quality.
Our typical deal is:
50+ units (sweet spot-150+ units)
southeast
value-add /mismanaged -something that we can put some capital into, correct management course and stablize before we refinance it on a long term perm loan through HUD.
But this is how we do our multifamily- What works for everyone else out there in the BP community?
Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
13y
Eric Claxton thank you for the peek behind the curtain. I'm just starting to study these things as I trying to take a step upward. Brian Burke may be able to move the discussion forward.
Multi-family Investor · Marietta, GA · Member since 2011 · 40 posts · 6 votes
13y
One last thing I left out - We buy the LLC that owns the asset, so that we can maintain chain of title (no tax hikes), and back it into HUD 223F as a REFINANCE- as we are refinancing our 50% private note. This takes less time and has alittle less red tape than if we ran it as a purchase we have found.
Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
13y
Eric Claxton thank you for the peek behind the curtain. I'm just starting to study these things as I trying to take a step upward. Brian Burke may be able to move the discussion forward.
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
13y
I think that is a great strategy. I haven't tried the HUD 223F program, mostly because I haven't worked with anyone that could educate me on the advantages. I'm using a simple syndication model, raising a 25% down payment plus closing costs and capital improvements from investors, and using CMBS financing for the balance of the purchase price. If the circumstances warrant it, I'd use a bridge for the first 12-18 months followed by CMBS or agency financing for the permanent component.
I think your model is great as long as you have the investors for it, sellers that go along with the entity acquisition model, and the lenders to do the 223F. It sounds like you have all of that, and it's working for you...congrats!
Denver, CO · Member since 2012 · 350 posts · 175 votes
13y
Love this post! We are spending time seeking out master lease opportunities with the same value add component opportunity. Also seeking to break into syndication.
Love the Hud take out strategy. I would also entertain Hud 221 (d)(4) for a substantial rehab program if I can just master patience lol
We also have looked at conduit money. It seems less ticky tacky and perhaps faster to fund.
Multi-family Investor · Marietta, GA · Member since 2011 · 40 posts · 6 votes
13y
Doug, What have you found to be true of the conduit money?
Originally posted by Douglas Dowell:
Love this post! We are spending time seeking out master lease opportunities with the same value add component opportunity. Also seeking to break into syndication.
Love the Hud take out strategy. I would also entertain Hud 221 (d)(4) for a substantial rehab program if I can just master patience lol
We also have looked at conduit money. It seems less ticky tacky and perhaps faster to fund.