This loan is for the Purchase of Property where the vacancy percentage is above market and the income is suffering resulting in a Debt Service Ratio unacceptable for conventional or bank financing. Often this is a direct result of mismanagement and deferred maintenance resulting in units not being in conditon to rent or units that are below standards for the market therefore experiencing higher than normal vacancy. This loan enables an experienced operator to capture a property selling below market and having capital to return the units to market. This loan is not for a property in a sub market where demand does not exist and would not debt service at 1.20 after purchase and improvements are complete. This is a unique program not readily available. Non performing properties present a difficult challenge which most lenders will not accept with loan amounts below 5 million.
LOAN AMOUNT - 1 Million Minimum Loan Amount and the lessor of
75% Loan to Cost or 85% Subject to Repairs/Improvement Value
TERMS - 24 - 36 Months, Interest Only
RATES - 70% Loan to Value = Prime + 1%
75% Loan to Value = Prime + 1.5%
80% Loan to Value = Prime + 2%
Example: Sale Price $1,300,000 (Loan Amount Based on Cost = $1,040,000)
Rehab Budget $350,000
Subject to Value $1,700,000 (Loan Amount Based on Subject to Value = $1,275,000)
Loan Calculation: = $1,040,000 Disbursed at Closing, Interest Reserve = $235,000 released back to borrower upon completion of rehabilitation and improvements
