All Forum Posts by: Kevin Owens

@Michinori Kaneko It’s a whole different beast. Loans must be $1MM + to $5MM, then the programs go conventional for deals past that. Most deals that transact in conventional are around $25MM

The Small Balance Loan program is for loans $1MM to $5MM. Net worth must equal the loan amount and liquidity must equal 9 months of debt service. All deals must underwrite to at least a 1.25x.

There are so many ways a deal can go, it really is case-by-case, along with all elements outside of the numbers. Fannie / Freddie provide non-recourse loans in the MF space, with the exception of bad-boy carve outs (no willful neglect, maintain your O&Ms, repair as needed, don't mix your SPE with other assets, etc). Other elements are at the deal level. They like to see in general (this purely across the board and does not take into account market, expenses offset elsewhere in the line items, etc...) $650 to $900 per unit in repair and maintenance, $1,000 per unit in payroll and $350 in general and administrative, along with management fees, replacement reserves, etc. This is of course how the deal is underwritten, not how is required to b operated. Individuals like myself negotiate these line items on a borrower's behalf.

To encompass the agency programs into one post, would take a very long time. There are many deal elements like prepay, reserve funding, crime mitigation plans (if needed), the green program (which is essentially defunct), affordability thresholds, buy-sell transfers, etc...

Fannie / Freddie do not lend direct in the MF space. They have short list of licensed banking shops, like Berkadia, that facilitate the process. This direct relationship means that for those who are licensed, the ability to problem solve is exceptional, especially with a high volume shop. Firms outside of those who are licensed are brokering to firms that are licensed. As a borrower, you want to steer away from this, as it means a clunker process and potentially a higher rate. Always go direct when able. It pays in the end. Not all licensed firms are created equal. Most borrowers prefer a private company that is not a "bank". Firms that are publicly traded or have traditional banking practices in place, treat deals differently. 

Ideally, if anyone has questions about the programs, reach out. Each deal is different. Maybe you're curious about what third party reports are needed or net worth and liquidity requirements. The space I operate in is $1MM debt placement with my average deal size around $25MM and includes asset classes outside of MF, like office, retail, industrial. 

If anyone has a question, reach out. I'm an open resource and very much a phone person. 

Hi Scott, we should talk. This deal may qualify for Freddie / Fannie financing, pending it makes the hurdles. 

If you are navigating an MF purchase or refi of $1.5MM or more, please reach out with any questions. I have closed on $2.5BN of agency business. Maybe you'd like to know how agencies look at expenses or to know what the closing speed looks like....Ask me anything, I'm well versed in the agency space.

Hi Anan,

Looking forward to connecting on the phone. To provide guidance on the debt side. Pittsburgh is a market where Fannie/Freddie will lend 80% on properties with a 1.25x cover, naturally non-recourse. In your pursuit, keep this in mind. Bridge money is usually available for deals $1,000,000 +. If you have any questions about agency financing, please reach out. My background, as you’ll see on LinkedIn, is thorough. Kindly know, Berkadia is directly licensed by Fannie/Freddie and we are high-volume agency bankers.

Hi David,

Looking forward to connecting over the phone.

Below is specific to Freddie/Fannie Agency…

I’ve done many deals north of Orlando, Jacksonville, Pensacola, Miami, St. Petersburg, Tampa, Fort Lauderdale and the Space Coast.

From a deal perspective, most of these markets finance on similar terms. I am speaking from an agency platform. Deal size by value plays a role in how these markets are determined, of course along with sponsor requirements, underwriting, etc.

Finding a killer deal is great, financing a killer deal is sometimes challenging.

An example my comment regarding deal size dictating terms. Through the SBL programs 75% on an acquisition in Pensacola is usually achievable. Going pure conventional at 75% is challenging and even more so if the sponsor does not have any experience. This has to do with risk appetite and how the SBL and Conventional programs are structured.

Depending on how you’re structuring your deals. Markets that lend themselves to 80% financing (pending an underwrite) are markets like Jacksonville, Tampa, Orlando and Miami. This assumes the SBL program, which is far more “check-the-box” and move on versus conventional, where more eyes are on a deal.

Prepay is a whole conversation and will depend on exit, who your investors, length of hold, cash-flow management, desired interest-only period, appetite for locking down knowns versus unknowns, etc..

Florida is a great market and it’s wise to shop markets with an idea of what is achievable from a debt placement perspective.

Of course, bridge money is also good route depending on how the property is operating and the plans for re-positioning.

I specialize in agency financing and worked for Freddie for several years. TapCap is new to the game but has roots at Greystone, which is not a high volume agency lender. Berkadia, CBRE and Walker are high-volume agency shops that can deliver quality terms and most importantly, problem solve quickly. Some shops are better than others, especially from a relationship perspective with their GSE account coverage.