Affordable Community Opens in Atlanta
The 182-unit affordable community broke ground in 2019, backed by Low-Income Housing Tax Credits and financial support from several affordable housing advocacy organizations.Start Your Application and Unlock the Power of Choice$5.6M offered by a Bank$1.2M offered by a Bank$2M offered by an Agency$1.4M offered by a Credit UnionClick Here to Get Quotes!
Image by Joey Kyber from Unsplash.
Prestwick Development Co. and Atlanta BeltLine Inc. have opened Parkside, a 182-unit, fully affordable multifamily property on Atlanta’s Westside. The asset is already nearly fully leased.
The developer broke ground on the project in 2019. Public records show that Bank OZK provided the lion’s share of financing for the asset through a $24.7 million construction loan.
The property, at 1314 Donald Lee Hollowell Parkway in the BeltLine Tax Allocation District, also benefited from $3 million in tax-exempt financing from Invest Atlanta, a $2 million contribution from BeltLine Affordable Housing Trust Fund, and Low-Income Housing Tax Credits from the Georgia Department of Community Affairs. The community also received equity from Enterprise Community Partners, Sugar Creek Capital, and Bellwether Enterprise.
The community, located a block from the Bankhead MARTA station, has a mix of one-, two-, and three-bedroom units. Fifty-seven apartments are reserved for households earning 50% or less of Area Median Income, with 96 and 29 units held for those earning 60% and 70% of AMI. On-site amenities include a wellness and fitness center, bicycle storage, a business center, and retail space on the ground floor.
Atlanta is no stranger to affordability issues. A report from the Atlanta Fed based on data from the end of May listed the metro as unaffordable for homeowners. In March, the Atlanta Regional Housing Forum posited that almost 60,000 affordable units were lost in the five years leading up to the pandemic.
A second-quarter outlook from Marcus & Millichap highlights how Atlanta’s tremendous employment growth is set to continue this year, with some 75,000 jobs created by year-end. While this speaks to the metro’s strong economy, multifamily development is not keeping pace. Around 11,000 units are expected to deliver this year, but absorption will be even higher, tightening vacancies and putting upward pressure on rental rates across the metro.
What are the benefits of HUD multifamily loans?
HUD multifamily loans offer many benefits, including 35-year fixed rate terms, full amortization, and leverage up to 83.3% for market-rate apartment buildings or 87% for rental assistance properties. HUD loans also have few restrictions on borrower experience, unless you’re getting a construction loan, and their liquidity and net worth borrower requirements are far more flexible compared to even agency loans. Additionally, HUD multifamily loans include specific benefits for affordable properties, such as increased LTV allowances, reduced DSCR requirements, and lower mortgage insurance premiums, or MIPs. HUD multifamily loans also fit well with the Low-Income Housing Tax Credit (LIHTC) program https://www.hud.loans/hud-loans-blog/lihtc-program-hud-multifamily-loans and the Rental Assistance Demonstration (RAD) program https://www.hud.loans/hud-loans-blog/rental-assistance-demonstration.
What are the requirements for HUD multifamily loans?
HUD multifamily loans require longer than many other loan types to be approved and may require significant documentation. Investors/borrowers likely need one or more professional advisors to guide them through the entire process. While experience is always a plus, it's not generally a hard requirement for HUD financing. The minimum credit score for most programs is just 620, and there are options for borrowers with even lower scores.
What are the advantages of investing in affordable housing communities?
Investing in affordable housing communities has many advantages. It can help reduce homelessness, improve job growth, and reduce evictions. It can also lead to increased consumer spending, improved job growth, and reduced evictions. Additionally, it can have a positive economic impact, such as increased job opportunities and increased local consumer spending.
For more information, please see the following sources:
What are the eligibility criteria for HUD multifamily loans?
HUD multifamily loans are available to borrowers of all experience levels, with a minimum credit score of 620. Eligible properties must already be encumbered by HUD-insured loans. For more information, please see 5 Myths about HUD-Insured Multifamily Loans and HUD 241(a) Supplemental Financing for HUD Multifamily Loans.
What are the different types of HUD multifamily loans?
HUD multifamily loans come in many different forms, including the HUD 223(f) loan and the HUD 221(d)(4) program. The HUD 223(f) loan is a purchase loan with loan-to-value (LTV) ratios up to 85% and debt service coverage ratios (DSCRs) as low as 1.18x for market-rate properties, with higher LTVs and lower DSCRs for affordable properties. The HUD 221(d)(4) program is a loan for apartment construction and substantial rehabilitation, but they can be significantly more risky. All HUD Apartment loans are non-recourse, fixed-rate, and fully amortizing over 35+ years.
For more information, please see the following sources:
How can HUD multifamily loans help finance the development of affordable housing communities?
HUD multifamily loans can help finance the development of affordable housing communities by providing increased Loan-to-Value (LTV) allowances, reduced Debt Service Coverage Ratio (DSCR) requirements, and lower Mortgage Insurance Premiums (MIPs). Additionally, HUD multifamily loans can be combined with the Low-Income Housing Tax Credit (LIHTC) program, which offers investors a dollar-for-dollar federal tax credit in order to encourage investment in affordable properties. These loans also fit well with the Rental Assistance Demonstration (RAD) program, which allows properties using certain HUD legacy housing assistance programs to convert their properties to long-term Section 8 HAP (Housing Assistance Payment) contracts. Source 1 and Source 2.