Purchasing a HUD apartment complex

[Eric Bilderback]

There is a HUD apartment for sale that has great numbers. The reason the numbers are so great is because the HUD program is only in contract to pay 60% or so of tenets rent for another year or so. That means the bank doesn't want anything to do with it.

1. If I buy this with cash somehow can I then refi the property with bank financing?  I will ask the banker but this  is in a remote place I was hoping you guys might have some insight.

2. From what I understand it is somewhat automatic 95% say that the HUD will re-up the contract. Has this been your experience or is this overly optimistic?

[Vitaly Lunev]

That is when it becomes on case by case basis, where you or your lender needs to talk to HUD and figure out if they'd be willing to renew. In terms of financing assuming the loan is over a million or two, you would be able to use FHA financing and while renewing the HAP contract simultaneously and underwriting to the increased rents. Alternatively, if the loan amount is several million you can also use Agency Financing (Fannie/Freddie) where you can finance it based on the rents in place now along with a restabilization reserve as a 7-6 arm. This will allow you to exit in a year with only a 1% penalty and refinance based on the new rent level. All these programs have various experience, net worth and liquidity requirements that need a more in depth conversation than this forum allows. You are welcome to PM me or call me if you want to discuss further.