70% Loan to Purchase & Rehab for sub-$5,000,000 Multifamily

Transaction Description: Bryan Shaffer successfully placed the acquisition and reposition of a Los Angeles multifamily asset. The institutional lender funded the purchase in less than 30 days. Floating over Prime, the loan is floored at 5.0% for the three year term and does not carry a prepayment penalty or exit fee. Sized to 70% of total costs (purchase plus rehab), there is no amortization for the first year to allow for the reposition, but amortizes over 30 years thereafter.

Challenge: Historically low capitalization rates add a challenge to secure any level of leverage when projects perform below market. Transactions under $5,000,000 are difficult to generate interest from non-private lenders in a market where size does matter.

Solution: Mr. Shaffer identified an institutional capital provider who is actively funding multifamily in this sub-market of Los Angeles and did not require an “education” on the market strengths and metrics. The lender agreed to underwrite in-place cash flow on an interest only basis to secure the leverage needed to fund the acquisition and complete the necessary rehabilitation to generate future cash flow and subsequently improve asset value.