All Forum Posts by: Eric Schleif

Have you given any thought to reaching out to a commercial mortgage broker?

@Thomas Ince You can get 30 year money, just not sure it's readily available for the asset you are analyzing.  I just received a pretty decent quote on a 30 year term for a large multi-family building (300+ units) acquisition.  The larger deals tend to have more financing options.

Sounds about right. Most banks will offer terms of 5, 7, or 10 years on commercial multi-family loans. You may also be able to get banks willing to offer rollover options or ARMs. An example would be a 5 year loan that will renew every 5 years at a set rate above the then current treasury or benchmark. You would have the option to be able to opt out of the renewal. Some lenders will do 15 year terms and there are some programs like HUD that will go up to 40 years. I'd imagine you'd somewhat limited with the lenders/programs that offer longer terms because of the size of the asset you're thinking of acquiring.

Good read Darryl. Freddie's SBL program has been great on deals under $5 million. You doing much CMBS lending these days? We're shying away from it a bit with spreads being where they are and also fear the client getting re-traded.

Wow, I almost took a similar position at a Wells branch back in 2003 when I graduated college. Best of luck. 

Nick,

What do you mean by " home mortgage consultant"? I'm assuming you mean working in large bank's local branch arranging home loans for bank clients. 

I would suggest narrowing your search to banks that lend on their balance sheet and service their own loans. You will have the opportunity to be exposed to much of more of lending and asset management side of the business. I started as an entry level loan administrator in a bank like this and was able to move around to other departments and really gained an understanding of the whole business.

I would start with the NYC Human Resource Administration as they are the ones who manage the program. You can also google not-for-profits that specialize in this and call them. Also, I'm sure you father-in-law is a good source of knowledge since he's actively using the program. I just haven't seen it too often in my deals. Last time was about 5-6 years ago and I can't recall much about it.

My main concern in your original post, other than the income assumptions, was the $7,700 per month management and utility fee. It's completely out of touch with the outer borough markets. It drives your expense ratio up to 76% and you should be somewhere in the mid 40% to 50% range for a small multi-family in the Bronx.

Best of luck.

I have limited knowledge on HASA and their rent regulations. I know it normally involves a single tenant and a 2 year lease, making the program ideal for 1-bedroom units. My understanding is that the city will not lump several people into a multi-bedroom apartment. Also, the tenant is responsible to pay rent equal to 30% of their income and the city program will pay the portion of rent that is above this percentage. I'd also imagine that the city has AMI limits on rent based on unit size. I can't see you getting the rents described in your post. I could certainly be wrong and suggest calling the NYC Human Resource Administration for more detailed info on their regulations. 

As far as your underwriting is concerned, make sure you lookup the real estate taxes and water charges on the city's website. Water is a killer in NYC and I don't see it in your expense schedule. I'm a little confused with your management/utility/maintenance setup. Seems high as we normally assume 3%-5% of effective gross income for management, $550 per unit for R&M, $325 per room for gas/heat, and $150 per room for electric. I calculate that to a total of $18,150 vs. $92,400. This a quick ballpark but that is a huge swing in the numbers.

I would suggest calling a couple of credit unions, local banks, and regional/national banks. See what products and requirements they have to get an idea of your options. Most lenders would look at 5+ unit asset as a multi-family deal.

Without knowing much about the subject property, I would imagine you are looking at general/ballpark terms of 70% to 80% LTV, 25 year amortization, with a rate between 4% and 5%. I work mainly in major markets and can tell you that the larger banks on large multi-family deals like to see at least 2 years seasoning before they will offer a cash-out refi. I wouldn't be surprised to hear a credit union or local bank is more flexible in this respect.

You also say the "rent pays mortgage". Just to be clear you will have to have adequate debt service coverage, usually 1.25 times the net operating income (not the rent) of the subject property. So you would need roughly $6,275 of NOI assuming a $75K loan with 25yr amortization at 4.5%.

Hope this helps.

You have to pay 2.5 points in and out? Plus additional fees if you use an alternate take-out? I'm assuming this is a for a small hard money loan on single-family home rehabs and far from my area of expertise, but I would think you can find better terms for hard money. Once you factor in those additional fees, I would think your rate is not too competitive.