Refinancing Multifamily Land Contracts Into Perm Financing

4 Replies

Hey BP family,

I wanted to know if any of you guys have done this, and if so- what has been your experience? We have done it repeatedly, but we have only met a handful of investors that do it our way.

* Buy a VALUE-ADD multifamily asset (40 units +), using cash (private capital) or control the site using short term land contract. These assets normally are in need of a capital improvement campaign and/or a serious management turnaround.

*Using investor capital, we will capX the site, and stabilize the site with new management and using connections with various charities to get the property to 85%-90% occupancy.

*Once asset has been at stabilized occupancy for 6 months, we will either refinance or resale the development via online auction. - which earns our investors a 12%-20% return on their investment.

Here is the question for the BP family, - Has anyone in the BP family successfully refinanced a multifamily land contract into a new commercial loan, if so- where did you get the best terms, time frame, out of pocket, requirements, etc.. We are looking for a new perm refi- financing home for our multi deals. Most of our deals are here in the Southeast.

Thanks everyone!

@

Charlie Claxton

Have you looked at agency debt (Fannie, Freddie), life insurance, or CMBS for long-term debt after the property is stabilized (need 90% occupancy for 90 days for Fannie)? I'm assuming the land contract will be gone once the new debt is put on the property. These will get you max loan dollars (75-80% LTV), 30 yr amortization and low interest rates.

Hi Guys- sorry for slow reply. My schedule has been nutts lately.

to answer james question- yes we have used HUD before (HUD 223F), but the average property that we do will have a hard time on the PCNA report for the HUD loan, as these are much older assets and we are usually focused on stabilizing & filling them. We typically focus on making sure major systems are up, and then begin unit upgrades on a rolling basis.

And thanks for the suggestion guys- I have emailed Sean. I look forward to having the conversation with him.

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