All Forum Posts by: Darryl Dahlen

Thanks for all the replies. Jon actually pointed me towards North American Savings Bank, and you are correct Brian, the LTV is 65%.
Too bad the borrower found the lender right after I did! You win some, you loose some.

Most lenders are still using 1.2-1.25 on multi-family. HUD uses 1.17

I love this show!

I actually like the recycled chopstick idea and was bummed when nobody made an offer.

Too bad about the guitar guy. It's a good idea and he'd be on his way to being rich if his pride/greed didn't get in the way. Funny how people are often their own worst enemy when it comes to money.

Jon's reply is full of wisdom and great advice.

His points are spot on about your experience, realistic LTVs that are out there, and associated costs.

The number one issue will be the low occupancy, the second will be your lack of experience, and the third may be the cash to close this deal.

You could be looking at hundreds of thousands to close this deal. That being said, I don't know why anyone would JV a deal like this when there's plenty of stabilized projects to pick from right now. As Jon stated, even if you found one, they're going to take most of the profit. To the point where it probably won't be worth your time/effort.

I'm not trying to come down on you, but as a broker, I'd pass on this one and suggest you do the same.

Without knowing any numbers (purchase price, how many units are rented, LTV, amount of work left, etc.) it's hard to discuss this project intelligently.
That being said, you most likely have two options.
1. HUD 221d(4). This program allows for significant rehab work and goes to high LTVs (90%) on a 40 year loan. The upfront costs are fairly steep (MIP, replacement reserves, phase 1, HUD application fee, etc), BUT no one else will give you a 40 year loan at rates in the 6s.
2. A short term bridge loan that will allow you to draw the funds to repair the building out of escrow and then get the building rented out and stabilized. Rates could be anywhere from 9-15% and 4-7 points. You would have to come up with significant funds for this option since the LTVs cap out in the 50-65% range.

Most commercial lenders (banks) won't touch a rehab project if you don't already own it and have significant equity. Most won't touch it if you do, but again, it's hard to say given the lack of information.

Thanks for the reply. I can use the purchase price if need be so that issue is OK.
I'm trying to use my portfolio lender since they like high-end homes, but they're not too crazy about the non-recourse aspect so I'm trying to explore all my options.
I'll check with First Bank and post the results. Thanks again.

This is a new one for me so I'm looking for some advice. I have a client with a high-end SFR that was bought this year through a SDIRA.
It's an investment property that has a zero balance on it. My client would like to take a loan against the property (through their IRA) as a cash-out refinance, but the few lenders I've talked to don't know much about the holding entity so are skittish.
My question is are there lenders that specialize in these types of loans??

You'd be surprised how urban the area can be and still qualify for a USDA loan.

Here is a map from the website for PA showing the eligible areas.

http://eligibility.sc.egov.usda.gov/eligibility/eligibilityAction.do?pageAction=countyMapList&st=pa&state_name=Pennsylvania&st_cd=42&map_region=0

Valerie would be able to offer more insight than I can on this, but you may want to look into a USDA loan too.

There aren't any unit restrictions as they are more focused on the loan amount. It varies by lender since it's their money on the line, but most have a loan minimum of 1.5-2M, and cap out around 17M or so.

Here is some information taken directly from my lender's program sheet to give you some more details.

Eligible Projects:
Existing multifamily projects more than three years old. Three years is calculated from the date of issuance of the final certificate of occupancy to the date the Firm Commitment application is submitted for FHA mortgage insurance.
Minor repairs and replacements are allowed and are payable from mortgage proceeds. Such repairs cannot exceed 15% of the project’s replacement cost after repairs or $6,500 times the applicable high cost factor on a per unit basis. Additionally, no more than one major building system may be replaced, i.e., roof structures, HVAC systems, elevators, etc. Appliances and life-safety systems and equipment are exempt from these limits.

Commercial Space:
Commercial space is limited to 20% of the net rentable area of the project and 20% of the total effective gross project income.

Acquisitions: The mortgage amount is limited to the lowest of:
1)85% of appraised value
2)85% of certifiable transaction cost.
3)85% of net income capitalized by loan constant (minimum 1.17 debt service coverage)
4)Statutory per unit loan limits established by HUD

Refinancing: The mortgage amount is limited to the lowest of:
1)85% of appraised value
2)The greater of:
a) 100% of certifiable transaction costs
b) 80% of appraised value
3)85% of net income capitalized by loan constant
4)Statutory per unit loan limits established by HUD