All Forum Posts by: Michael Le

Lenders will be looking for experience, first and foremost. So either you or someone on your team will need to have some ground-up development experience in multifamily. And the debt market is really tough right now so likely you'll be around 50% LTC, so you'll need around $5M in equity.

It will likely be a community or regional relationship bank. They will look at your balance sheet financials and also your experience at developing these type of projects. If you don't have it then you will need partners who do.

Be careful as there are probably more deals falling out of contract nowadays than deals that actually close. The debt market is really wild and if the GP doesn't have any skin in the game, getting retraded a few million by the bank near the end will mean an easy decision to walk away.

There's a decent amount of meetups around town, including mine. You can meet plenty of operators at those.

I think you're mixing up a few things. The term length of the loan is not a function of your capex. 

I think you're asking if when buying a stabilized property with an agency loan, would you be able to include the capex dollars in that loan? And the answer is... it depends. Freddie Mac doesn't include capex in it's loans so the answer is no for that. Fannie Mae can include capex but the financials have to be strong enough to support. Five years back and you could find plenty of deals that would get a full 80% LTV loan and also have left over for capex. So you'd bring 20% to the table and nothing for the capex. Nowadays most properties probably qualify for only 60% LTV so there is no money in the loan proceeds for capex. So now you'd have to bring 40% just to close and then also bring the capex dollars separately.

With a bridge loans, the lenders have more flexibility in what they underwrite to and how they project the exit of the loan. Even so, in this current market you'd still be hard pressed in getting it all covered just from the loan.

I'm not sure how location specific it is but I priced out a road for Houston recently and it's roughly $30 PSF. So assuming a lane each direction and 12' each side then you have 24 ft wide x 700 yards x 3 feet x $30 PSF = $1.5M

Is $50k enough to get the property updated? Have you confirmed some of the potential big ticket items like roof, plumbing, electrical, etc? What's the vintage and condition on those things? You say it's a D property and they haven't managed it well, so expect some really massive deferred maintenance. I don't think you have enough of a buffer. Please with a HELOC, with current housing valuations, be careful that your bank doesn't shut that down if your house value starts slipping.

GCs are going to be your best bet. Are you calculating all-in costs or just hard costs? And of course it depends on what you're building. I'm currently pricing out around $170 PSF for garden style multifamily, which is about 30% higher than my previous project.

What do you mean you are looking for some starters?

Anyway, have you had your civil engineer or architect look at it yet?