All Forum Posts by: Matt Weiler

Sounds like this would be a good fit for either a Freddie SBL loan or a standard bank / balance sheet loan depending on the location.  Many balance sheet banks have a need to put money out on low income housing to get CRA credits.  Feel free to reach out with any questions.  

@Jeff Bousquet multi-family buildings / properties over 5 units are considered commercial, so yes you will need a commercial loan.  Lenders like Arbor (which is strictly an Agency - Fannie / Freddie - shop), will not touch any loan below $1MM.  

With regards to what's a standard down-payment or equity requirement depends on how the deal underwrites. Investors here about 75% or 80% loans, which are available, BUT the deal has to underwrite in order for the deal support to that type of leverage. For instance, some lenders require a 1.20 dscr and some require a 1.30 dscr (debt service coverage ratio), etc. That being said, if a lender says they will do 75% LTV with a 1.25 dscr or a 1.30 dscr requirement, the deal has to underwrite in order for it to support a 75% loan amount.

With regards to reserve requirements, some lenders require them and some don't.  Most if not all lenders, will definitely underwrite for them at $250 p/unit, however, again some may collect them and some may not. 

I would also suggest to reach out to and build a relationship with an aggressive commercial mortgage broker, who can arrange financing throughout the country and is not tied to one specific geographic region.  That broker will know which lender / financing products are available wherever your deal is and can be an invaluable source for you. He / she will also be able to underwrite and analyze your deals and advise you towards a sound investment.  Feel free to PM me with any questions or if you need recommendations .  

@Todd Dexheimerun unfortunately, not any of your 3 solutions are practical and legit IF you want to make your property a competitive option to nearby students.

1. Only offering 1 or 2 yr lease options in a college town is impractical and not catering to your clientele

2. If you're unit houses 2 or 3 students, good luck getting 2 or 3 parents to guarantee the lease

3. Only renting to juniors, seinors, and grad students is ridiculous.

@Tony Castronovo the service has been very minimal, if any. I think in the last 5 years, I've maybe had 2 or 3 minor issues, which my general maintence guy was able to handle. Two of the issues I've had were from people over stuffing the washer, and since than I've posted signs clearly stating not to overstuff and no comforters allowed in the machines and ever since, I've had virtually zero issues.

The place I've purchased my machines is called Caleco and they are in the West Chester, Pennsylvania area. I don't think they are nationwide and stick to tri-state region (DE, PA, NJ).

I buy coin operated machines and for a set it cost's me exactly $1700.00.  I can typically make my money back in less than 10 months.  Additionally, depending on how "by the book" you are, it's a nice way to make tax free money! 

Benefits

1. you can charge higher than typical market rents

2. instead of renting out the unit in whole, you can rent each unit by the bedroom (which allows you to get higher rents)

3. you make the parents guarantee the rents 

You're concerns should be the following:

1. only getting approximately 8 months of rent during the school year (unless you make 1 year leases mandatory)

2. excessive wear and tear inside of each unit

3. risk becoming a "nuisance property" with the local authorities - depending on how many times cops are called for parties, noise, etc. 

Hope this helps.

@Rebecca Shoniber what kind of deal are you looking for a portfolio lender on?

@Jeremy McAlee haha, very true. In this day and age and with the current political climate, you have to tread lightly.

@Steven Greenspan Jacksonville is Florida's last frontier where you can find multifamily deals that somewhat make sense. Most of the big players in Southern and Central Florida have been and continue flock to Jax for this reason. This sounds basic and kind of stupid, but do a quick google search of the demographic makeup of that specific zip code and if meets your standards, go for it. I personally like to do deals in infill locations, by a university, or by the beach. I try to stay away from ghetto areas, albeit you make better returns, but you have to work harder for your money.

@Tyler Derickson being in the commercial mortgage banking world for over 14 years, I can tell you, with a degree of certainty, most, if not all, conventional lenders will not allow seller seconds. The easiest way around this is to not have the seller record the second mortgage as an official "second" lien on the property. To find a seller who would be ok with this is almost impossible, since they would not have the physical asset as collateral. Instead, you can try structuring some sort of equity position with seller or pledging a certain percentage of the monthly cash flow to him/her.