Holly Bray's Blog

With many lenders on hold the topic of the day has been FHA.

The FHA multifamily loan programs have been in place for over thirty years.  They continue to be used regularly and have closed as much as $8 billion a year in new business.  With commercial lenders on hold there has been renewed interest in these valuable programs.  The following summarizes the 223(f) program.

The 223(f) program provides high-leverage long-term permanent debt to refinance, purchase, or moderately renovate existing apartment communities on a fixed-rate, non-recourse, assumable basis.  The loan size is relatively unlimited and the properties can be located in any state, Puerto Rico, Guam, and the US Virgin Islands.

Tips to make your lender happy....

Tips to make your lender happy....real estate taxes and utility bills.   to continue with the information you need to send your lender to refinance or acquire a multifamily property it is time to talk about real estate taxes and utility bills.

Real Estate Taxes

Tips to make your lender happy....insurance and payroll.  To continue with the information you need to send your lender to refinance or acquire a multifamily property I wanted to talk about two big ticket items on the operating statements:  insurance and payroll.

Insurance

Whether buying or refinancing a property the lender is going to look at the cost of hazard insurance for the previous three years.  Take a close look at those numbers before you send the information to the lender.  If you think the number is too high go out and get a bid from another insurance company and send it along.  Most lenders will underwrite to the new bid when it is lower than the previous costs.  This is particularly important with acquisitions where the previous owner of the property may not have the best insurance rates. 

Tips on how to make your lender happy when applying for a multifamily loan.....

There are several key documents that a lender is going to look at to size your loan request.  If the documents are in order up front you will both impress your lender and save time.  Here are tips on two of the documents. 

First, and most obviously,  you need to supply a current rent roll.  Ideally, the rent roll will show the unit number, tenant name, type/size of unit, lease sign date, lease expiration date, the market rent, the actual rent, and the deposit.   For most of us this is a no-brainer however, within the past six months I received a loan request for a 190 unit property with a hand written rent roll that only included the tenant name, the unit number, and the rent.  It did not show the vacant units, street rents, lease starts or expirations, or deposits.  The delay cost the borrower valuable time getting his property refinanced.