Shahin Yazdi placed the acquisition of a 35 unit multi-family property in a prime West Hollywood location. The seller was embroiled in litigation that impacted title and operations of the subject property. The 75% of purchase loan is fixed for five years at 3.65% and includes the first three years at interest only. There is no balloon as the loan will self-liquidate over the 30 year term.
Challenge:The property litigation prevented access to meaningful financial cash flow history. A 30 day escrow was mandatory without opportunity to extend. Loan guarantor liquidity was limited and threatened the purchase as compounded by a DCR constraint.
Solution:Ample market information was used in underwriting operating expenses. All third party reports were rushed and used to compile an asset credit file. The bank agreed to accept updates post-funding. Investor liquidity was proven to support the transaction despite the lack of a repayment guarantee from this individual. Market strength and Borrower experience further solidified the underwriting process. A below market management fee was underwritten allowing for a more acceptable DCR as the property will be self-managed going forward.
