Apartment Construction Loans For

Every Investment Need! 

ProFunders is excited to announce our new Apartment / Multi-family Construction Loan Program.  We are direct to the lending source, so there is no worry about any middlemen!

Apartment Construction Loans

ProFunders is able to offer truly unique terms for apartment developers. 

Minimum loan amount: $5 million, no maximum

40 Year amortization

40 Year Term (no balloon)

90% LTC (loan to cost)

Low, fixed interest rate, based on market spreads over the 10 yr Treasury yield.

“Developer’s Fee” of 10% of cost allowed to be used towards equity requirement

Non-recourse (No personal liability)

Negotiable pre-payment terms

1:10 Minimum Debt Service Coverage

Loan is assumable

Third-party expenses and loan costs can be rolled into the loan

One closing & one interest rate lock

 

No condo or condo conversion.  Principals only.

The first step of this loan process is to engage a feasibility study to determine marketability, to establish market rents and to determine operating expenses.  Additional items required at this stage include:

• A project description including amenities, preliminary site, building and unit plans.

• Rough, estimated project costs.

• Environmental reports.

At the conclusion of processing the pre-application, we will issue an Invitation Letter.  This letter is a written commitment agreeing that the project is both feasible and setting the NOI to be used for underwriting. This agreement sets the maximum mortgage based on debt service coverage, and helps to finalize borrower equity requirements.

The second step of the loan process is to complete due diligence on the borrower, the property manager and the general contractor.  There is also a thorough review of the final architectural plans, specifications and construction costs.   Additional due diligence items required are:

• Zoning acceptability, site control and other typical commercial loan requirements.

• Cost and Architectural/ Engineering review to determine acceptability of final design and cost estimates.

At the conclusion of Step 2, We will issue a Firm Commitment to finance the project, and the interest rate for both the construction and permanent mortgages may be locked.

The closing is the final step for both the construction and the 40- Year permanent financing. Because the interest rate is locked for both mort- gages, developers do not have to worry about permanent loan interest rate risk. 

Unlike typical bank construction financing, when we issue a commitment, we have finalized and approved all relevant items, including final design approval, cost approval, general contractor approval, etc.  In fact, our closings are also Construction Draw #1, and all borrower pre-paid items (architectural, survey, engineering, etc.) are drawn down at this stage and either credited to borrower equity requirements, or paid to the borrower.

ProFunders New Construction/Substantial Rehabilitation Insured Loan Program offers more favorable terms than traditional two- step construction and permanent financing.  With this program, there is only one closing, and one interest rate lock, which is always lower than traditional bank financing. This program utilizes an interest only (interest is capitalized into the mortgage) construction loan that automatically converts to a 40-Year Permanent fixed rate mortgage upon completion of construction.


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