Creative Financing for $60M Student Housing Deal – Making $6M Down Plausible?

[Daniel Sehy]

Hey BP community,

I’m underwriting a $60M student housing acquisition in a Tier-2 university market. The deal pencils with strong occupancy, 3-5% rent growth, and a solid management structure. Here’s the challenge:

• Lenders are targeting 1.5 DSCR.
• At today's terms (~7% interest, 20–25% down, 10% management), I'm landing closer to 1.25 DSCR.
• I’d like to keep equity in check, ideally around $6M down (≈10%) - while still making this bankable.

My question:
Has anyone here successfully structured a deal of this size using creative financing to bridge the DSCR gap without throwing in another $6–8M of equity?

Some strategies I’m exploring:

• Seller carry / second position notes
• Preferred equity / mezz debt layers
• Master leases to guarantee income floor
• Using entitlements or land value (25 acres attached) to sweeten the financing package
• Rent bumps modeled into refinance terms

I’ve seen other capital groups putting 5-10% down on $60M+ acquisitions and making the numbers work. Curious to hear from anyone who’s done something similar, what structures made it plausible with the banks/investors?

Appreciate any insights or examples. I’m looking to learn from those who’ve been creative at scale.

[Marshall Wells]

Hi Daniel,

In any case, seller note is often the best option for minimizing your down on these types of transactions. Should the seller not be open to carrying a note, the most attractive rate/LTV matrix would be through an agency loan such as Fannie Mae & Freddie Mac as they both allow intercreditor agreements for the mezz.

Freddie Mac DSCR Requirements attached
Fixed-Rate Conventional Loans: Generally 1.25x, but can be as low as 1.20x for select 10-year+ fixed-rate deals with a maximum LTV of 70%
Floating-Rate Conventional Loans: A minimum of 1.15x is required at the maximum capped interest rate

You'll need strong projections to secure the mezz financing on this one since the DSCR is already tight, and you'll be at 10%+ for your mezz note. The entitlements & land value will be negligible based on what you shared for this transaction.

Come ready with a heavily data backed pitch deck on the projected income of this project + your history in the space. In pref/mezz the man behind the deal matters as much as the numbers itself.