Commercial lender needed

My partner and I are putting together a plan to by apartments and will possibly require 100% financing based on the deal and built in equity. I need a bit of educating on large commercial loans.

An example of what we are looking at:
41 units range from 1240 SF to 1680 SF with rents for the 156 bedrooms from $555 to $850. This is a historical preservation tax credit with the city of Richmond, Virginia which currently provides $70.1k/year and is further detailed in the propectus. With projected Effective Gross Revenue for 2008-2009 of $1,150,261, Net Operating Expenses of $463,310 and Net Operating Income of $686,951 the property is offered at $11, 500, 000.
These 4 BD units with dining room, living room, decks and internal parking
provide student housing and are fully occupied.

Can anyone comment on rates, closing costs, debt load, etc.
FICO score of 719 if that matters.


The type of loan will be more able to tell you the terms and the like

Are you loking for hard money or what ?

And 100 % funding could be very hard to find

If you could your fees and the like could be very high due to the risk the lender is taking >> as money rules at this point are very very tight

I know of may be one or two whom may do this for you >>> but i know the cost could be very high as far as fees

I can save you a lot of time…
There are no 100% Financing programs for Apartment Buildings by any lender in the country including Hard money. No lender will take on 100% of the financial risk for an investment property where your only investment is that you found the property. Lenders all know that the more money an investor has in a property the less likely he will walk away when times get tough. Also of note: Be afraid (be very afraid) of a property that cash flows with 100% financing. It is being sold well below market and there usually is a reason. It is tough to convince any underwriter that you got such a good deal because the seller no longer likes money.
You can find some amazing deals that are owned by banks. I am a commercial RE broker for these types of properties and have found some good ones.

Remember no lender wants to take on a problem.

Otherwise, find a partner with liquidity to round out your team.

you should be able to get 90/95% ltv financing with the sort of credit listed. Will not be banks though. The finance market is strong for such properties…ie income producing. Plz…dont need to goin for hard money…you’ll destroy the business ure trying to get into. Anyway…u will never get 100 % hard money! max 65/70%

Yes…conventional financing…90/95%

Given your numbers, that’s only a 5.9 Cap and you aren’t including a vacancy rate in which the bank is going to want to see.

I think the real question that should be asked is do you have any experience buying, managing, etc. real estate and specifically student housing properties? My portfolio is 100% student housing and no matter what anyone else tells you it is NOT the same as other types of residential rental properties.

Here’s the problem with your idea. If you don’t have any experience in this business unfortunately noone is going to loan you upwards of $8mil on any deal, no matter how good it looks, sorry. If you do have experience, first you shouldn’t be asking us these questions and second you should know that property is overpriced by about $3mil.

I love student housing, it doesn’t rely on the same variables that affect other forms of REI, but it does mimick the others in the fact that it still has to be a good deal! Let me give you a little bit of insight as to what’s going on in the student housing business. Big time Wall St. firms have started investing HEAVILY in student housing over the last 4–6 years constructing these mega student housing communities all over the country. When a new community comes online they are almost always at 100% occupancy because they are the new thing in town and have ammenities the others have not thought about offering yet. They are also cheapy constructed and after a year or two of students the signs start to show. After a year or so of 100% occupany these properties go up for sale and they look like a steal because of the high occupancy, seems ok right? Wrong, when other firms see these levels the first thing they do is build there also which also brings down the occupancy of your newly acquired property.

Clearly you’re going to do what you want but I would highly advise that you look just beyond the potential property to properly evaluate this deal. Specifically look at the barriers to entry for other properties of this size. If this property is located a block from campus and land is scarce that’s good. If it’s out of city limits, maybe a mile or 2 from campus, watch out. It starts with 1 or 2 of these Wall St. funded communities then quickly balloons to 5 or 6 and they can build fast!

If you do decide to move forward let me know and I can point you in the direction of some firms in your area that have financing products for student housing deals. Good luck.

I did a quick bit of math just so you could see.

$11,500,000 @ 5% (prime) over 20 yrs is: $910,740
Your projected NOI is: $686,951
Annual LOSS!!! $223,789