HUD-insured multifamily construction loans offer terrific terms: 40 year amortization, high loan-to-cost ratios, low debt service coverage ratios and non-recourse provisions.
However, HUD programs can be complicated in terms of process, application stages, basic eligibility, underwriting and credit analysis. Getting the deal screened up front is critical to success and will avoid surprises later. When we have answers to the following questions up front, we can make an accurate – and early – assessment of the deal and the prospects of success with HUD.
- Describe the project in general terms, i.e., total number of units, unit types, number of buildings, and unit and project amenities.
- What is the target market and forecasted rents? What is the competition charging?
- Does the site have access to amenities, transportation, shopping, healthcare, schools, etc.?
- Is there a development budget, pro-forma income and expense forecast and a lease-up schedule?
- Are there any environmental issues known to date?
- What is the status of site control, zoning, site plan approvals, etc.?
- What is your experience in developing multifamily rental housing?
- What types of capital has your organization used to finance its multifamily developments? How does your organization raise equity?
- Does your organization manage the properties it develops, and does it manage for others?
- Has a general contractor been selected? If so, has the contractor built multifamily projects that have used HUD-insured financing?
When conventional construction lending sources are inactive or only offer very conservative terms when they are lending, HUD’s multifamily construction financing is always available – in good times and bad – and with attractive terms.
Contact us if you want your construction deal screened for HUD-insured financing accurately, quickly and professionally!