Commercial Multi-Family Loans for Domestic / Foreign Investors

With the demand in the local market for new market rate apartments, we have put together a Construction to Permanent Loan with one of our preferred lenders in the area.  The easy part of the real estate and development side is formulating a plan.  The hard part is convincing a bank to lend spec building funds, including the development of in Florida.  Go ask a bank today for spec funds and you’ll get laughed out the door.  Not here in SW Florida where more and more lenders see the demand and have performed their own due diligence.  Although some lenders are still holding their money close, some lenders are pioneering the new area of new development.  Investors are approved on a “project basis” and we currently have 5 smaller projects lined up ranging from $500,000 to $750,000 for investors.

Our building contractor is a local heavyweight who does a respectable amount of work for the county including construction of new schools, additions on government buildings, and smaller residential development.  Construction oversight is taken seriously by the builder and more importantly, the bank does their own due diligence on your behalf.  If you are out of town and are wondering what’s going on, not only do you get full reports with pictures on a weekly basis, but the bank has their own division where they send inspectors to the property several times, verifying work done and holding builders to their cost breakdown.  If the builder wants a draw from the bank, the bank will inspect to make sure the work for the previous draw is complete and has passed inspection.

In regards to the Financing, this will be set up as a One Time Closing.  The loan will be Construction to Permanent, two separate loans where the loan would automatically kick over to the pre-established end-loan at a certain point right after construction completion.

The bank is offering 70-75% Financing on a 20 year amortization schedule and 5-10 year term.  Due to our projects having Debt Coverage Ratios exceeding 1.50 the 20 year amortized schedule allows you a shorter term loan with a significant amount of surplus cash flow AFTER debt service and Operating Expenses.

Rates during construction will be approximately Prime +1% and end-loans with todays’ rates are somewhere in the mid 4?s for investment property.  The determining factor between 70-75% loan to cost will vary based on the borrower’s financial strength.

This program is available for Foreign Nationals as well.  The difference is that the bank, an FDIC regulated bank, will require you to deposit 12-18 months of principal payment reserves with them, which would tie up about another $50,000 of your cash in an interest bearing account.  The 12-18 months depends on the strength of your financials.

Currently, our preconstruction projects have been looked over by our research department and the bank and offers investors approximately 9% first year Capitalization Rate on projected pro forma.  The 9% is nearly 1.5% better then what existing properties are trading for in this particular area.

Be sure to check out all of our Apartment Complex for sale FL