Comments on: Student Housing Market is a Safe Haven http://southlandcommercial.com/blog/news/2009-student-housing-multifamily-recap?utm_source=rss&utm_medium=rss&utm_campaign=2009-student-housing-multifamily-recap news, advice, and perspective on commercial real estate investment in North Florida Tue, 23 Mar 2010 20:29:52 +0000 hourly 1 http://wordpress.org/?v=3.1.3 By: Carlton Dean http://southlandcommercial.com/blog/news/2009-student-housing-multifamily-recap/comment-page-1#comment-350 Carlton Dean Tue, 23 Mar 2010 20:29:52 +0000 http://southlandcommercial.com/blog/?p=262#comment-350 John-Thanks for the question, its a good one. Lender requirements can actually vary substantially between product types and also can depend on how well a particular product type is performing in a particular region, etc. (for instance, self storage projects are currently not as favorable in the SE due to more over supply than in other areas, primarily associated with the tremendous housing boom). From a Lenders perspective, Most investment deals are based off 2 things. 1.) DCR (Debt Coverage Ratio) and this usually needs to be 1.2-1.5 in depending on product type and Loan to Cost (used to be loan to value and this still has some input but not nearly as much these days). Lenders want to ensure you have 'skin in the game' so they like to lend off 'cost'. They are less concerned with Cap Rates, that is more of a method that a buyer would use to compare alternate investments, or to analyze an investment quickly to determine if it is suitable to meet his investment objectives. Lenders look at it, but only to the extent an appraiser would reference a cap rate to derive a valuation, thus falling back on item #2 above. Hope this helps. if you have a specific product type you are considering, I can give you some ideas from some of the sources I use for financing. I find getting away from the local lenders improves terms substantially. John-Thanks for the question, its a good one.
Lender requirements can actually vary substantially between product types and also can depend on how well a particular product type is performing in a particular region, etc. (for instance, self storage projects are currently not as favorable in the SE due to more over supply than in other areas, primarily associated with the tremendous housing boom).

From a Lenders perspective, Most investment deals are based off 2 things. 1.) DCR (Debt Coverage Ratio) and this usually needs to be 1.2-1.5 in depending on product type and Loan to Cost (used to be loan to value and this still has some input but not nearly as much these days). Lenders want to ensure you have ‘skin in the game’ so they like to lend off ‘cost’.

They are less concerned with Cap Rates, that is more of a method that a buyer would use to compare alternate investments, or to analyze an investment quickly to determine if it is suitable to meet his investment objectives. Lenders look at it, but only to the extent an appraiser would reference a cap rate to derive a valuation, thus falling back on item #2 above.

Hope this helps. if you have a specific product type you are considering, I can give you some ideas from some of the sources I use for financing. I find getting away from the local lenders improves terms substantially.

]]> By: John Coley http://southlandcommercial.com/blog/news/2009-student-housing-multifamily-recap/comment-page-1#comment-323 John Coley Sat, 20 Mar 2010 16:48:24 +0000 http://southlandcommercial.com/blog/?p=262#comment-323 Carlton - are the lender requirements the same for a buyer to do a student housing deal, as compared to say, a small office complex? Do lenders require different amounts down, or are they looking for different cap rates, for example? Thanks... Carlton – are the lender requirements the same for a buyer to do a student housing deal, as compared to say, a small office complex? Do lenders require different amounts down, or are they looking for different cap rates, for example?

Thanks…

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