Miami Affordable Housing Grabs $20M HUD Loan
The 216-unit multifamily asset’s 35-year, non-recourse loan retires $11.2 million in previous debtStart 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!
Country Club Villas I. Image courtesy of Greystone.
Centennial Management has taken a $20 million FHA 223(f) loan from originator Greystone for the refinance of Country Club Villas I, a 216-unit affordable housing asset in Hialeah, Fla. The 35-year non-recourse loan has a low, fixed interest rate and met HUD’s qualifications for a lower mortgage insurance premium due to its affordability restrictions.
According to public records, the new loan paid down $11.2 million in financing taken in October 2014.
Located at 18231 NW 73 Ave., the community was built in 2002 and has a mix of one-, two- and three-bedroom apartments from 584 to 989 square feet. On-site amenities include an outdoor swimming pool, a fitness center, a playground, and laundry facilities. According to Apartmentguide, monthly rents at the property range from $939 to $1,310.
Miami’s Affordability Pains
Although rent growth nationwide has soared in the past year, the problem has been felt more acutely in South Florida than in most other locales. Miami-Dade County Mayor Levine Cava announced in April that rents in the county have jumped by 30% in a one-year period. While the government has earmarked some $13 million in additional funding toward emergency rental assistance, a persistent shortage of units remains, with demand for high-quality, affordable housing higher than ever.
Nonprofit organization Catalyst Miami is advocating for the creation of more housing, particularly those projects which target renters earning at or below 50% of area median income. Broadly, however, more housing is needed at all income levels — and developers have simply been unable to keep up. And as a result, everyone is paying significantly more. In February, Commercial Observer reported that Miami had become the U.S.’s most unaffordable housing market in the nation — significantly worse off than any other metro, including San Francisco and New York City.
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 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 eligibility criteria for HUD multifamily loans in Miami?
The eligibility criteria for HUD multifamily loans in Miami are outlined in the HUD 241(a) Supplemental Financing for HUD Multifamily Loans document. Eligible properties must already be encumbered by HUD-insured loans. Additionally, the minimum credit score for most programs is 620, and there are options for borrowers with even lower scores. Experience is not a hard requirement for HUD financing.
How can I apply for a HUD multifamily loan in Miami?
If you're interested in getting financing to construct or renovate a multifamily residential property in Miami, getting an FHA 221(d)(4) loan can be one of the most cost effective ways to do so. But, to get an FHA/HUD 221(d)(4) loan, you'll need to do significant preparation. First, you'll need to find an FHA licensed lender. It’s important to keep in mind that the FHA/HUD only insures the loan, and is not actually responsible for loaning the borrower any money. Therefore, it's a good idea to discuss your project with multiple FHA licensed lenders in Miami, so you can understand more about process and the benefits and drawbacks of potential lenders. Once you've found a lender, you'll need to get all your documentation and approval from HUD.
What are the advantages of investing in affordable housing in Miami?
Investing in affordable housing in Miami has several advantages. First, affordable housing has the potential for higher profit margins than luxury assets. Second, investors in this space can take advantage of significantly lower-cost loan options, like the HUD 223(f), to finance an acquisition. Third, Miami has become the U.S.'s most unaffordable housing market, making it a great opportunity for investors to capitalize on the need for more affordable housing. Fourth, Miami-Dade County Mayor Levine Cava announced in April that rents in the county have jumped by 30% in a one-year period, making it a great time to invest in affordable housing. Finally, nonprofit organization Catalyst Miami is advocating for the creation of more housing, particularly those projects which target renters earning at or below 50% of area median income.
What are the risks associated with HUD multifamily loans in Miami?
The risks associated with HUD multifamily loans in Miami include the potential for longer approval times and the need for significant documentation. Additionally, investors/borrowers may need one or more professional advisors to guide them through the entire process. For more information, please visit HUD/FHA Multifamily Loans.