apartment Loan Closings

Kendall Realty Advisors close four apartment loans using bank financing.

Kendall arranged a commitment on eight apartment buildings and the first phase closed.

The loans were for apartments and mixed use buildings. One of the buildings contains the office of a US Congressman. The borrower requested a five year fixed rate loan and low prepayments.

Kendall was able to arrange five year fixed rate loans at 5.25% with one property at 0% prepayment and the rest with a half of one percent prepayment.

In coming weeks I will be presenting Chicago FHA a workforce housing 221(d)(4) new development, adjacent to a Metro Line Station with local TIF support.

Last month we arranged a $2,1mil loan on the Glenlake Apartment Chicago for a distressed borrower with MB Bank. They required a yield maintenance prepayment penalty on a three years loan. This is not what most my borrowers want on a bank loan, but according to the client they where the only game in town for him since Mr. Riahi claims he is broke.

Apartment New Construction

FHA rates are very low even for new construction. High demand locations and affordable housing transactions are being approved.

FHA 221(d) 4 new construction rates are fixed for 40 years plus construction in the low 5% range currently.

FHA 221(d(4 New Construction

FHA 221(d)4 New construction loans are being funded by FHA but the total amount of new construction funding is much smaller than the 223(f) refinance funding. Rates at about 1.25 percent higher than 223(f) rates which are about 5% currently.

The cost of qualifying for a FHA new construction loan exceeds most other financing programs since the developer must pay for working drawings, about $30,000 in lender required reports and an FHA exam fee of $3 per $1,000 of mortgage request. The contractor must be able to bond a fixed construction price using Davis Bacon Prevailing local wages.

The typical FHA borrower that use the FHA 221(d)4 program ofter is a repeat client and the transactions are normally in excess of $5,000,000 due to the costs of preparing for closing of the loan.

FHA allows a maximum loan of 83.33% of cost for market rate properties and slightly higher for affordable rental housing. They also require an operating deficit fund and a 4% working capital letter of credit or cash deposit. Basically the equity requirement even after net out BSPRA (Deferred Developer Profit) equals or exceeds 20% at this time.

FHA 221 d4 Loans are for New Construction and Rehab of Apartments

FHA is currently offering the only program with an apartment development loan of 90% of the cost. The FHA program has been used for apartment development for over 40 years and its terms are still very favorable to developers. The debt service coverage is 1.11 to 1 and the loan term is 40 years plus amortization.

We are currently processing several FHA 221 D4 loans and our pipeline is growing. If you are looking for an apartment development or rehab loan call Scott Kendall at (847) 903-7578 for a quote.