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Will Interest Rate Cuts = Lower Cap Rates

Wed, 06 Nov 2024 14:50:09 GMT

The good news is yes, interest rate cuts can indeed lead to lower cap rates, however, the relationship isn’t always straightforward. While lower interest rates can lead to lower cap rates, the effect isn’t always immediate. It often takes time for recent sales data to reflect these changes and confirm the new cap rates. If you have had an appraisal completed within the past month and prior to the Feds lowering the interest rates by 50 bps, you might want to update the appraisal as a lower cap rate could increase your value, plus increase your proceeds.

Here’s a brief overview:

1.Interest Rates and Cap Rates: Cap rates, or capitalization rates, are used in real estate to measure the return on investment properties. They are influenced by various factors, including interest rates. When interest rates decrease, borrowing costs for investors also decrease, making real estate investments more attractive. This increased demand can drive property prices up, which in turn can lower cap rates.

2.Market Dynamics: The impact of interest rate cuts on cap rates also depends on broader market dynamics. For instance, if the economy is strong and growing, lower interest rates might lead to more investment in real estate, further pushing cap rates down. Conversely, if the economy is weak, the effect might be less pronounced.

3.Investor Sentiment: Investor sentiment plays a crucial role. If investors believe that lower interest rates will lead to economic growth, they might be more willing to invest in real estate, which can lower cap rates. However, if there’s uncertainty or a lack of confidence in the market, the impact might be muted.

In summary, while lower interest rates often lead to lower cap rates, the extent of this effect can vary based on economic conditions and investor sentiment .

If you’re needing to refinance any of your properties soon, or just want to explore your options, reaching out to Howell Investment Finance in Ames, Iowa could be very beneficial. We can provide you with advice and help you navigate the current market conditions.

We specialize in financing multifamily and senior housing properties in Iowa with non-recourse HUD, Fannie Mae, Freddie Mac, insurance companies, and CMBS mortgages.

Denny Howell
Commercial Mortgage Broker | Howell Investment Finance

Ph: 515.233.8228 or C: 515.291.3632

Federal Reserve Lowers Interest Rates

Mon, 14 Oct 2024 15:15:56 GMT

The Federal Reserve just lowered the interest rates by 50 bps.

Lower interest rates can have several positive impacts on commercial real estate (CRE):

1. Reduced Financing Costs: Lower interest rates decrease the cost of borrowing, making it cheaper for investors to finance new projects, expansions, or acquisitions.

2. Increased Property Values: As borrowing becomes more affordable, demand for real estate often rises, which can drive up property values.

3. Higher Demand: With lower financing costs, more investors and businesses are likely to enter the market, increasing demand for commercial properties.

4. Improved Cash Flow : Lower interest rates can improve cash flow for property owners by reducing their debt service costs.

The interest rates should continue to decline, however, keep in mind, national and global economic conditions can indeed be unpredictable, so locking in a rate that works for you at the time of your refinancing is often a wise move.

If you are you considering refinancing any of your properties soon, or just keeping an eye on the market, please contact Howell Investment Finance located in Ames, Iowa to see what your options are.

We specialize in financing multifamily and senior housing properties in Iowa with non-recourse HUD, Fannie Mae, Freddie Mac, insurance companies, and CMBS mortgages.

Denny Howell
Commercial Mortgage Broker | Howell Investment Finance

Ph: 515.233.8228 or C: 515.291.3632

Leveraging Non-Recourse Mortgages for Succession and Estate Planning

Mon, 14 Oct 2024 15:13:45 GMT

As we navigate through the complexities of real estate investment, particularly those of us with a focus on succession planning and estate management, it becomes crucial to explore innovative financial strategies that can safeguard our assets and ensure a smooth transition for future generations.

The Case for Non-Recourse Mortgage Loans
One such strategy gaining traction among seasoned investors is the use of non-recourse mortgage loans. Unlike traditional bank mortgages, non-recourse loans limit the lender's recourse to the property itself in case of a lawsuit, providing a layer of protection for personal assets. Here’s why this is particularly beneficial for investors planning their estates:

Asset Protection: For investors, protecting personal assets while still leveraging real estate holdings is paramount. Non-recourse loans shield personal wealth from being targeted in the event of a lawsuit, thereby preserving it for heirs or beneficiaries.

Estate Planning Advantages: Incorporating non-recourse loans into estate planning allows for more efficient distribution of assets. By securing financing against the properties themselves, investors can allocate other liquid assets or properties to heirs, ensuring a balanced and strategic estate distribution.

Tax Efficiency: Structuring financing with non-recourse loans can also offer tax advantages, especially in estate planning scenarios. The interest and depreciation deductions associated with the loan could help offset taxable income from other sources, reducing overall tax liabilities for the estate.

Facilitating Succession: Planning for the future involves not only preserving wealth but also facilitating a smooth transfer of real estate assets. Non-recourse loans can simplify this process by ensuring that the properties financed remain as separate entities, easing the administrative burden on heirs or estate executors.

Considerations and Planning Ahead
While non-recourse loans offer significant advantages, they do come with specific requirements and considerations. Typically, lenders may impose stricter eligibility criteria and loan-to-value ratios compared to traditional bank loans. Therefore, it’s essential to work closely with financial advisors who specialize in estate planning and real estate finance to tailor a strategy that aligns with your specific goals and financial situation.

Conclusion
In conclusion, integrating non-recourse mortgage loans into your real estate investment and estate planning strategy can provide invaluable benefits such as asset protection, tax efficiency, and streamlined succession planning. As the landscape of real estate investment continues to evolve, exploring innovative financial tools like non-recourse loans can ensure that your legacy and wealth are preserved for future generations.
If you have any questions or would like to discuss how non-recourse loans can fit into your estate plan, feel free to reach out to Howell Investment Finance . We’re here to help you navigate this important aspect of your financial journey.

Denny Howell
Commercial Mortgage Broker | Howell Investment Finance
www.howellinvestfinance.com |Ph: 515.233.8228 | C: 515.291.3632

HUD Eliminates 3 Year Rule

Tue, 14 Feb 2023 05:50:11 GMT

Previously, multifamily developers had to wait three years after the Certificate of Occupancy was issued before being eligible to refinance with HUD with the 35 year amortization loan program.

The Wait Is Over.

This week, HUD announced the elimination of the three years of waiting. If you have a bank financed construction loan on your multifamily and are needing to look at permanent financing, you need to call Howell Investment Finance now.

Multifamily in Quad Cities

Tue, 17 Jan 2023 08:36:42 GMT

Howell Investment Finance arranged this bridge loan to finance the purchase and extensive improvements.

The improvements increased value and occupancy along with the NOI.

After these enhancements were completed, the Sponsor was then able to refinance with a long term Fannie Mae loan.

Multifamily in Sioux City, IA

Tue, 17 Jan 2023 08:36:41 GMT

Howell Investment Finance arranged a Freddie Mac Small Balance Loan with a 30 year amortization and a 10 year term plus dollars to fund improvements to increase the NOI.

This property had several buildings in the complex of various configurations.

Howell Investment Finance arranged a Freddie Mac Small Balance Loan with a 30 year amortization and a 10 year term plus dollars to fund improvements to increase the NOI.

This property was built in 1922 as the age of a property is not a financing issue as long as the property is well maintained.

Assisted Living and Memory Care in Cedar Rapids, IA

Tue, 17 Jan 2023 08:26:57 GMT

This existing facility was financed with a HUD 232 loan.

With this financing, the Sponsors received a 35 year term and a 35 year amortization plus funds for improvements to the facility which increased the NOI.

This memory care facility was a referral from the Sponsors local bank that knew their client would benefit greatly with a HUD 232 loan with the 35 year term and 35 year amortization plus renovation funds.

This HUD 232 loan has greatly increased the facility's NOI over the previous bank mortgage.

Senior Housing in Marion, IA

Tue, 17 Jan 2023 08:18:27 GMT

This new construction facility was financed with a HUD 232 loan.

It appraised at $29 million and has a 40 year term and a 40 year amortization.

This facility has 104 units and over 89,000 sq ft.

It is the world's first WELL certified Assisted Living.

The WELL concept focuses on seven healthy areas for better care of the residents and staff.

Is the Fed's Interest Rate Increases going to Hurt the CRE Market?

Fri, 11 Feb 2022 11:13:33 GMT

Why is the Federal Reserve Raising Interest Rates Now?

As everyone is seeing with nearly every product purchased, inflation has increased dramatically in a short period of time. The consumer price index for January, which measures the costs of dozens of everyday consumer goods, rose 7.5% compared with a year ago, which is the fastest since February 1982. Many of us will remember mortgage interest rates in the 18% to 20%+ range in the early 1980s. To combat inflation, the Fed increases their rates to slow the money supply down and hopefully reduce the inflation rate back a normal 2% annually.

How Many Rate Hikes will the Fed do in 2022?

Some in the Fed anticipate hiking the interest rates three or four times this year. However, they noted that “every option is on the table” when it comes to the central bank’s battle against inflation. Rate hikes are believed to be 25 bps (0.25 percentage points) each, however, 50 bps increases cannot be ruled out. Major banks are expecting four to six interest rate hikes in 2022 to fight the spike in inflation which is running at the highest level in nearly 40 years. As a note, the Federal Reserve will meet eight times in 2022. There are too many variables that cause the Fed to raise or not to raise rates at each meeting, so it is impossible to predict exactly, however, it is reasonable to predict rates are going up. When the Fed meets in March, some economists are even predicting a 50 bps increase to slow the 7.5% inflation rate reported in the consumer price index report for January.

What do rising interest rates mean for CRE investors?

It means when your multifamily's loan term is up for refinancing, odds are very good you will see a significant increase in your quoted interest rate vs your current interest rate. Much like restaurants increasing their prices for meals due to rising food costs, CRE investors will see their cash flow decrease with higher interest rates, therefore, sponsors will need to increase rents to cover their costs. The question many business owners are asking now is how high can I increase what I charge and still be competitive?

Should I refinance now or wait until my pre-payment penalty ends?

That is the multi-million dollar question. Do you wait and see where the interest rates are going or do you go ahead and pay off the pre-payment penalty? It really depends on when your investment properties' term expires. First, you really need to be checking each of your loans now to see when they expire. Second, check what the pre-payment penalty amount would be. Then run a couple interest rate scenarios at where you think the interest rate will be when your loan term expires vs where the current interest rates are. Next, compute the payment amounts and divide the pre-payment penalty amount to see what the recapture rate will be to see if it makes sense to refinance now and pay the pre-payment penalties.

The U.S. 10 Year Treasury Bills are the index many mortgages follow. As of February 10, 2022, they just topped 2.00% and just two months ago, on December 2, 2021, the 10 Year T-Bills were at 1.34% which equals an increase of 66 bps in just two months. This shows the volatility in the markets currently and while this increase does not mean the rates will continue to rise, which is uncertain and can happen without notice, it does show how the markets are currently moving.

Howell Investment Finance can assist you in your investment property analysis to see if it makes sense to refinance now or wait and see as every property is different as each sponsor's needs vary as well. Howell Investment Finance can help you determine if HUD , Fannie Mae, Freddie Mac, or other CRE mortgages are the right fit for you at this time of rising interest rates.

If you're looking to refinance your multifamily or mixed-use building, call Howell Investment Finance as they have successfully closed over $100 million in loans for investors in Ames, Cedar Rapids, Iowa City, West Des Moines, Sioux City, and the Quad Cities. They can help you find the right HUD, Fannie Mae, Freddie Mac or bridge mortgages and will guide you through the maze of CRE financing so that you can make an informed investing decision. Schedule a consultation by calling (515) 233-8228 today, or learn more about their loans by visiting the website .

Maximize Your HUD Loan to Pay Off Higher CRE Interest Rates

Mon, 17 Jan 2022 11:36:40 GMT

With the Federal Reserve talking about 2-3 interest rate hikes this year, now is the time to look through your CRE (Commercial Real Estate) portfolio to see how you can prepare to hedge off the higher interest rates when it is time for you to refinance.

Maximize a HUD Mortgage

One method sponsors are using is to refinance their multifamily and mixed-use properties with HUD financing. With HUD, you can go as high as 80% LTV and take unrestricted cash out to use as you desire. You could use the cash-out to purchase another multifamily or mixed-use property, do some capital improvements, or with these rising interest rates, pay down or pay off non-HUD eligible property mortgages. Your non-HUD eligible properties will have higher interest rates than a HUD mortgage, so it makes sense to reduce your overall interest rates in your CRE portfolio. For example, if you have a $10 million multifamily property with a $6 million mortgage, you could qualify for an $8 million HUD mortgage and use the $2 million cash-out to pay down or pay off your higher interest rate CRE properties, like an office, retail, or warehouse building. Recently, Howell Investment Finance locked in a HUD mortgage at 2.47% with a 35-year amortization and a 35-year term. Keep in mind that interest rates can change without notice, especially with rates starting to increase. Where do you estimate your interest rate to be when your CRE mortgages are due for refinancing?

HUD is NOT just for Section 8 Housing

Many sponsors think that HUD loans are only for Section 8 tenants. That is not true as there are three types of HUD loans:

Market Rate Housing
Workforce Housing
Affordable (Section 8) Housing

Benefits of HUD Financing

HUD is the only one to offer you the best financing to increase the cash flow on your properties. Some highlights of a HUD mortgage are:

35-year term so you may never need to refinance.
35-year amortization so you will greatly increase your properties cash flow .
HUD mortgages are non-recourse , no global finances needed.
80% LTV with possible unrestricted cash out at closing.
HUD mortgages are assumable, could be valuable when you want to sell with the rising interest rates right now.
HUD will not require deposit accounts, so you can keep those with your current Bank.
Refinancing with a HUD mortgage will open up your lending limit with your current Bank, which could allow you the possibility of purchasing an additional property to your portfolio.

If you're looking to refinance your multifamily or mixed-use building, call Howell Investment Finance . Since 1992, they have provided a range of loan products to real estate investors in Ames, Cedar Rapids, Iowa City, West Des Moines, Sioux City, and the Quad Cities. They can help you find bridge loans, HUD, Fannie Mae, and Freddie Mac mortgages and will guide you through the maze of CRE financing so that you can make an informed investing decision. Schedule a consultation by calling (515) 233-8228 today, or learn more about their loans by visiting the website .

How the Federal Reserve's "Tapering" could affect Interest Rates

Fri, 08 Oct 2021 11:48:13 GMT

What does Tapering mean to you?

Federal Reserve Chairman Jerome Powell said after the Fed meeting in Sept, the central bank will likely begin tapering their economic stimulus this year as the economy continues to recover from the COVID-19 pandemic. Tapering means the process of slowly pulling back the stimulus they’ve provided during the pandemic. For most of the past year and a half, the Federal Reserve has been buying at least $120 billion of Treasury and mortgage securities each month. These purchases have helped keep interest rates low and provided support to the markets that malfunctioned terribly at the start of the pandemic crisis.

What happens when Tapering begins?

Watch the Federal Reserve announcement on tapering at its November 3rd, or December 15th meeting. The Fed will begin buying fewer bonds and put less money into the economy. Once the tapering begins, interest rates should not increase immediately as some financial experts still predict rate increases to be one year off. However, as the pandemic taught us, nothing is certain. Also, watch when the Federal Reserve raises the federal funds rate as that will be another sign of future interest rate increases.

When will Interest Rates rise?

That's the answer no one can answer with any certainty. When the economy slowed down in 2020, the Federal Reserve dropped the federal funds rate to 0% to help stabilize the economy. Currently, the Federal Reserve members are split on whether to enact the first quarter-point hike in mid to late 2022. The Fed officials could see as many as three more interest rate hikes in 2023 and three hikes in 2024, which would bring the Fed’s benchmark borrowing rate to a range between 1.75% and 2%, considerably higher than the current 0.00% to 0.25%. This interest rate increase could affect everything from multifamily mortgages, home mortgages, student loans, personal loans and even credit cards.

As Interest Rates Rise, Your Cash Flow decreases.

Your current multifamily interest rate may be lower now than the current rates, and you also may have a prepayment penalty that's holding you from refinancing. However, you really need to check all of your loan maturity dates to see when your prepayment penalties expire, so you can refinance sooner. Howell Investment Finance has seen several investment properties where it makes sense to pay off the prepayment penalty and lock in an interest rate for the long term. This is advisable when the sponsor feels the interest rate will be higher by waiting for the loan to mature. The prepayment penalty amount can be included in the new mortgage, so you don't need to pay for it out of your operating or reserve accounts. The unknown question is how high will your interest rate be should you wait for your loans to mature vs where they are currently. By refinancing now, you can lock in your interest rate for the next 10 years to 35 years and keep your positive cash flow. Howell Investment Finance can also assist you to see if securing a slightly higher interest rate now makes sense and how long it takes to recapture the loan costs.

The Time to Act is Now or Very Soon

With the Fed talking about raising interest rates as soon as 2022, you don't want to wait too long. After all, you don't want to be the frog that sits in a comfortable pot of cool water too long, only to find out the temperature of the pot was rising, and now you are in very hot water and about to get burned by higher interest rates.

With the central bank ending its stimulus soon, interest rates should begin to rise. If you want to take advantage of the low rates before they start to increase later next year, consider calling Howell Investment Finance regarding your multifamily or senior housing property soon to lock in interest rates for the next 10 to 35 years.

When you need financing for your multifamily, mixed-use, and senior housing properties, Howell Investment Finance will help simplify the process. Howell Investment Finance finances throughout Iowa, from Cedar Rapids to Iowa City to the Quad Cities to Des Moines, to Ames, to Sioux City. They offer a variety of financing options, including HUD, Fannie Mae, Freddie Mac, and construction loans. Visit their website to learn more about their program options. Call (515) 233-8228 to get started today.

Don't be a frog in boiling water, not noticing that you're in trouble until it is too late.

Fri, 27 Aug 2021 11:56:31 GMT

Let's face it, you may not consider refinancing your multifamily and senior housing as a fun time, and Howell Investment Finance understands that. However, with rising interest rates in the future, you also don't want to wait until it's too late to get started only to find out your new interest rate will be quite higher than you thought. Don't be like the frog in a pan of water and relaxing, only to wait too long to find out the water is now boiling, and you're in hot water!

What Should You Consider When Refinancing Commercial Real Estate?

1. Timing

Prepayment penalties are often the reason sponsors wait to refinance, which is very understandable. The first thing to verify is your current loan's maturity date to assist in your refinance timing. Then you need to review your financing strategy with Howell Investment Finance as each loan type has different loan parameters. One of the hardest things is telling a sponsor their property is not ready for refinancing when their loan term is close to coming due. There can be times when paying the prepayment penalty makes sense. You need to factor in what the new interest rate will be, where the interest rate could be if you wait for the prepayment penalty to come down or expire, out-of-pocket costs to refinance to see if it justifies refinancing while you still have a prepayment penalty. Howell Investment Finance has assisted several sponsors in seeing if it is in their best interest to refinance now or to wait.

2. Is your Multifamily or Senior Housing in the best financial position?

To achieve the best loan terms, look to see what your occupancy looks like along with your monthly income and expenses. Howell Investment Finance will review your Rent Rolls, Trailing 12 months financials , and other documents to see how your multifamily or senior housing property is positioned for refinancing. Howell Investment Finance has worked with several sponsors over the years to help them align their properties performance to the current lending guidelines. There has been times when Howell Investment Finance advised the sponsor they need to wait to refinance their multifamily or senior housing project until the numbers improve. This is one of the most important reasons to start early on refinancing vs becoming the frog in the boiling water pot.

3. How do I get started at looking at my options?

What are your goals of refinancing your multifamily properties? Long term hold, maximize cash flow, pay down debt, pull out cash for another investment acquisition are all great ideas. Howell Investment Finance will start with a conversation to understand what you want to accomplish and get to know you better. Then when you're ready to get started, there are documents to be gathered to determine which loan would be your best option.

HUD has a 35-year amortization and 35-year term with the LOWEST interest rate, however, HUD can take 8-10 months (possibly more depending on various factors). HUD loans are non-recourse and fully assumable.

Fannie Mae and Freddie Mac have 30-year amortizations with interest rates locked in for 10-12-year terms and can close in 2-3 months, however, they have slightly higher rates than HUD. Fannie Mae and Freddie Mac loans are also non-recourse and fully assumable.

Why use Howell Investment Finance?

The difference is Howell Investment Finance is an independent commercial mortgage broker and is not locked into any one lender. Therefore, giving you more finance options.
Lenders have different lending programs and options. Working with a Lender with only their programs will limit your options and possibly reduce the chance of maximizing your loan choices.
Howell Investment Finance has several lenders across the country from New York City, Washington, D.C., Chicago, Minneapolis, Dallas, and Denver to find the right fit as every sponsor has different goals.
Howell Investment Finance will be at every appraisal and site visit possible. We feel it is very important to be there and answer any questions from the appraiser on behalf of the sponsor. There have been times when Howell Investment Finance drove 4-6 hours to a site visit for a 30-minute appraisal walk-through, was it worth the time... absolutely. After all, we represent you the sponsor, not the Lender.

When you're ready to finance your multifamily or senior housing project, contact Howell Investment Finance in Ames, IA. Since 1992, they have been serving West Des Moines, Cedar Rapids, the Quad Cities, and Iowa City. They feature comprehensive financing options for investment properties, including construction loans, HUD mortgages, and Fannie Mae and Freddie Mac funding. Call (515) 233-8228 or visit their website to schedule a consultation.

Interest Rates will be Rising, Lock-in Rate NOW for Next 35 Years

Thu, 10 Jun 2021 12:08:36 GMT

It's Time to Refinance with HUD

With the interest rates rising, you might be trying to decide what are your best options. Do you get tired of refinancing every five years and then wondering where the interest rates will be the next time you refinance? Have you ever wondered what would happen should your current lender decide not to refinance your properties when it is time to refinance? Plus keeping track of and then gathering all the needed global finance documents that are needed can be a tireless exercise in futility.

What is the Benefit of refinancing with HUD?

35-year term so you may never need to refinance.
35-year amortization so you will greatly increase your properties cash flow .
HUD mortgages are non-recourse , no global finances needed.
80% LTV with possible unrestricted cash out at closing.
HUD mortgages are assumable, could be valuable when you want to sell with the rising interest rates right now.

Am I Required to Rent to only Section 8 Tenants?

No, not all. HUD finances Market Rate , Workforce Housing and Affordable Housing (Section 8). It is your choice.

What Type of Properties Will HUD Refinance??

Multifamily
Mixed-use
Senior Housing- Assisted Living , Memory Care, Skilled Care, and Cooperatives

What about my current Prepayment Penalty?

You need to review your prepayment penalty and see what the amount is and when your loan term is due. Timing could help as you may find if you wait a month or two, on a Step-Down Prepayment penalty, your prepayment could be reduced by 1% on your loan anniversary date. There are times when it is worth paying the prepayment penalty in order to get a new long term mortgage. You need to calculate what the recapture period is to see if it makes sense. Many decisions need to be made to go this route.

What if you are getting unrestricted cash out to make needed capital improvements or to use the cash-out to acquire another property? These Opportunity Costs need to be reviewed as it may make sense to pay your prepayment penalty now to get that unrestricted cash out.
Where do you think the interest rates will be when you refinance?
Is it better to pay the prepayment penalty now or roll the dice that rates will still be low when it is your refinancing time?

Every loan is different and why you should call Howell Investment Finance to review your loan and see if it makes sense to wait or refinance now.

What do I need to get a loan?

You need to work with a commercial mortgage broker that specializes in HUD financing. Howell Investment Finance specializes in financing multifamily and senior housing properties with HUD, Fannie Mae, Freddie Mac and CMBS. More than likely we have seen the bottom of interest rates with the current rise in inflation, as they will be increasing in the near future. Why worry where your interest rate will be the next time you need to refinance one of your properties. Call Howell Investment Finance now and see about locking in your interest rate for the next 35 years.

With creative solutions and extensive expertise financing multi-family buildings and senior housing, Howell Investment Finance in Ames, IA, is ready to help get your real estate investment refinanced. They’ve successfully closed over $100 million in loans for investors throughout Iowa. Visit their website to learn more about their financing options, get more advice by calling (515) 233-8228 to increase the cash flow of your properties.

HUD Does Market Rate Housing, NOT just Sec 8

Thu, 20 May 2021 12:26:18 GMT

One of the most common comments Howell Investment Finance hears from sponsors is “I don't want to get a HUD loan and have the government tell me who I have to rent to or what limits I have to charge on my rents.” Nothing could be further from the truth about HUD financing for multifamily and senior housing properties.

While it's true, HUD does lend on properties that include Section 8 Housing, what most sponsors don't realize is HUD financing is also for Market Rate and Workforce housing properties.

Howell Investment Finance financed a $30 million HUD project in Eastern Iowa that is 100% Market Rate and HUD had no problems accepting the Market Rate of that property. In fact, HUD has suggested ways to maximize the rents to assist in increasing the rents of the units.

Types of HUD Loans

There are three types of HUD loans.

Market Rate Housing
Workforce Housing
Affordable (Section 8) Housing

Why HUD and not Another Lender?

One of the best reasons to refinance with HUD vs other lenders is because HUD the only one to offer you the best financing to increase the cash flow on your properties. Some highlights are:

35-year term so you may never need to refinance.
35-year amortization so you will greatly increase your properties cash flow .
HUD mortgages are non-recourse , no global finances needed.
80% LTV with possible unrestricted cash out at closing.
HUD mortgages are assumable, could be valuable when you want to sell with the rising interest rates right now.
HUD will not require deposit accounts, so you can keep those with your current Bank.
Refinancing with a HUD mortgage will open up your lending limit with your current Bank, which could allow you the possibility of purchasing an additional property to your portfolio.

If you own a multifamily or mixed use property with a value of $4 million or more, you really need to call Howell Investment Finance and find out how a HUD loan can benefit your property. With interest rates to increase, call Howell Investment Finance today and see if you qualify to increase your cash flow and forget about rising interest rates.

To see if a HUD loan is right for you, contact Howell Investment Finance in Ames, IA. They have been serving the West Des Moines, Ankeny, Cedar Rapids, Ames, Sioux City, Iowa City, and the Quad Cities for several years. They offer a variety of financial solutions, including multifamily, mixed-use, and senior housing financing. Call (515) 233-8228 or visit them online to schedule a consultation.

Guide to Rent Rolls and T-12 (Trailing 12 months)

Sat, 17 Apr 2021 13:14:26 GMT

Do You Want a Smooth or Delayed Refinance?

Even though you are an experienced sponsor, you might want to review these tips to be sure your financials include all of these items as lending requirements do change, especially now in light of the pandemic. There is a helpful tip regarding COVID-19 accounting later in this article. When applying for a mortgage on one of your investment properties , you will need current financial records with the two most important documents being the current Rent Roll and the T-12 (Trailing 12 months of financials). If you are wanting your refinancing to go smoothly and as quick as possible, keep these records up-to-date as it will reduce hassles and frustrations, not to mention maximize your value. This may seem common and normal practices to you to have the Rent Roll and the T-12 updated, however, Howell Investment Finance has seen many sponsors that lack up to date records.

What needs to be on a Rent Roll?

All rental properties must have a rent roll that documents every unit with the current status and occupant information. A rent roll has several components. Using a computer spreadsheet application streamlines the process of establishing a rent roll and makes updating records quick and easy. First, you'll need to review all the leases for the building's current occupants. Below are items that need to be included in your Rent Roll:

List every unit number.
Each apartment needs to include the number of bedrooms, bathrooms, and the square footage.
List both the Current Rent and the Market Rent
If the unit is currently occupied, include the name of the tenant(s), deposit amount, date the lease started, the move-in date, and the lease expiration date.
If the unit is vacant, list it as vacant and note the expected rent, market rent and deposit.
List any additional fees paid by the tenants (parking, etc).

What Needs to be on a T-12?

The Trailing 12 (T-12) is one of the most important documents that you need to be reviewing each month as it shows the ongoing financial strength and weakness of your investment property on the monthly basis. Keep this updated each month showing the previous 12 months of financials.

The T-12 needs to show the total income and expenses broken out by category.

All income is listed with the rental income broken down by residential, commercial, late fees collected, parking, and other incomes such as laundry, etc.
Total all income.
Next, categorize all expenses for quick review.
Maintenance and Repairs such as supplies, maintenance, pest control, elevator services, alarm, HVAC, janitorial, etc.
Administrative Expenses such as office supplies and equipment, etc.
Management fees.
Payroll expenses.
Marketing expenses.
Utilities broken out by electricity, gas, water and sewer, etc.
Fixed expenses such as property taxes and insurance.
Total all expenses.
Show the Net Operating Income (NOI).

A step further, you can include the Non-Operating Expenses, such as depreciation, amortization, and interest expense.

One additional point in light of the pandemic, have you incurred any pandemic related expenses? If so, chart them as a separate line item expense. That way, the lender can extract that expense as we hopefully are putting the pandemic in the rear-view mirror.

Keeping your financials up-to-date will assist you and Howell Investment Finance in getting the best financing available for you. HUD , Fannie Mae, CMBS, and regional banks will all require these and other property documents. To get a better understanding on increasing your properties cash flow , call Howell Investment Finance today.

If you're considering purchasing or refinancing a multifamily, mixed-use property, or senior housing facility and want to improve the cash flow of your properties, you need to contact Howell Investment Finance as they have been serving Cedar Rapids, Iowa City, the Quad Cities, Sioux City, Ames, and West Des Moines areas for several years They offer commercial and multifamily mortgages, construction loans, bridge loans, and other financing options for properties $2 million to over $50 million. Call (515) 233-8228 or visit them online to schedule a consultation.

Tired of Refinancing every 5 years? How about once in 35 years?

Tue, 09 Mar 2021 13:21:05 GMT

Mortgages on investment properties typically have to be refinanced every five years, however, refinancing your multifamily or mixed-use property with HUD financing could possibly allow you to never refinance your property again. The reason is HUD mortgages come with a 35-year term plus a 35-year amortization. Just imagine the additional cash flow a HUD refinance will give to you on all of your properties.

What Are The Benefits of a HUD Mortgage?

Like we mentioned earlier, HUD mortgages come with the 35-year term and 35-year amortization. Here are some other benefits:

HUD mortgages are non-recourse , no global finances needed.
HUD mortgages are assumable, could be valuable when you want to sell with the rising interest rates right now.
HUD will not require deposit accounts, so you can keep those with your current Bank.
Refinancing with a HUD mortgage will open up your lending limit with your current Bank, which could allow you the possibility of purchasing an additional property to your portfolio.

Working With Banks

Howell Investment Finance has worked with many banks to assist their Sponsors around Iowa to refinance their multifamily and mixed-use properties with HUD financing. On one occasion, a local banker called Howell Investment Finance to inquire about a HUD mortgage for one of their bank clients, saying they felt the client might be better served with the longer 35 year amortization that HUD offers. The banker put the Sponsor in touch with Howell Investment Finance , and they were able to refinance the Sponsor's property. That HUD financing allowed the Sponsor to increase their cash flow while not needing to refinance every five years. It also opened up the Sponsor's lending limit with their bank which allowed them to borrow money at their bank for another new project. This also gave the bank the ability to have the deposit accounts from two projects instead of just one. A true win-win situation.

Call Before The Interest Rates go Higher.

With the 10-year Treasuries rising quickly since earlier this year, the time to call is now. Fannie Mae and Freddie Mac follow the 10-year Treasuries very closely, however, HUD doesn't follow the 10-year Treasuries as closely, therefore HUD mortgages haven't been rising as fast and are still sub 3%. Keep in mind, these rates can and do change without notice, call a Commercial Mortgage Broker that has HUD mortgage experience and can guide you through the process. Call Howell Investment Finance now rather than later.

If you’re buying a multifamily building or other investment property in Ames, Cedar Rapids, Iowa City, Quad Cities, or West Des Moines, IA, Howell Investment Finance will help find the ideal financing option for your needs. They specialize in commercial and investment funding, financing multifamily and senior housing facilities. Visit their website to learn more advice and how they can help you purchase or refinance an investment property, or call (515) 233-8228 .

How Low will HUD Interest Rates Go during COVID?

Fri, 30 Oct 2020 13:26:16 GMT

One of the questions Howell Investment Finance gets asked is how low will HUD interest rates go? Currently, this multifamily loan has interest rates in the low 2’s. Now keep in mind, these interest rates can change without notice, however, the Fed has said they could keep interest rates low for one to possibly two years, depending on the economy.

Benefits of HUD Financing

If you own a multifamily or mixed use property with a value of $4 million or more, you really need to call Howell Investment Finance and find out how a HUD loan can benefit your property.

35 year amortization (40 years on new construction)
35 year term (40 years on new construction)
Non-recourse
Assumable mortgage
80% LTV

Is HUD only for Low Income Properties?

No, that’s a common misconception. HUD finances properties that are market rate. While HUD does allow Section 8 housing, HUD finances all types of multifamily properties. HUD finances the following:

Market Rate
Workforce Housing
Affordable Housing

What About COVID-19?

HUD kept lending during the COVID-19 lockdown with minimum changes, especially compared to the other agency lenders.

Due to HUD being the only lending that was fully open during the pandemic lockdowns, many Sponsors chose HUD as their preferred financing choice.

Its best to be calling Howell Investment Finance as soon as possible, even if your pre-payment penalty is a few years off. It is very possible you could benefit now by refinancing with a HUD loan with these low interest rates and pay off that pre-payment penalty. Howell Investment Finance can look at your current loan and tell you if that makes sense for you.

A reliable mortgage broker can help you find the perfect financing option for your needs. Located in Ames, IA, sponsors with commercial property look to Howell Investment Finance when they need financing in Cedar Rapids, Iowa City, West Des Moines, and the Quad Cities. They can help you secure sizable loans for many different types of properties, including multifamily and senior housing. They’re also aggressive in their pursuit of funding on your behalf and won’t stop until you receive a quality loan.

Call (515) 233-8228 to schedule an appointment or visit their website for information on different loan types.

Prescription to Survive COVID-19 could be a WELL Building

Mon, 14 Sep 2020 13:39:44 GMT

What are you talking about in a WELL building

1. What makes a WELL Building

The WELL Building Standard® is a perfomance-based system for measuring, certifying, and monitoring features of the building environment that impact human health and wellbeing, through air, water, nourishment, light, fitness, thermal comfort, sound, materials, mind. community, and innovation.

We spend approximately 90% of our time indoors and our buildings can have a profound impact on our health and well-being. WELL outlines a comprehensive approach to creating healthy spaces, leveraging design strategies, operational protocols, personnel policies and performance thresholds.

2. Are there any WELL Buildings in Iowa?

The recently constructed Views Senior Living of Marion in Marion, Iowa is the first WELL Certified Assisted Living in the USA. This 104 unit senior facility was built to the high WELL standards. Many additional steps were taken during construction, such as specific HVAC systems, low odor resins on flooring adhesives, to certain quality building materials.

3. Why Would I Want a WELL Building?

We need to take an approach to creating healthy spaces because our bodies react to the quality of the air we breathe, the water we drink, the light we see and the sound we hear. WELL enables you to achieve evidence-based strategies that have a positive impact on human health. By improving the quality of the building to the WELL standards, you are improving the quality of life for your residents and employees. With all of the COVID-19 concerns, you want to take all the additional steps you can to minimize health issues in the buildings you own and operate.

4. Owners Statement:

Mik Pietrzak: WELL is not just a certification but a real "movement" in the design, construction and operations of the built environment providing the optimal living and working conditions for the occupants of the building. It encompasses a broad range of elements including air, water, noise, light, nutrition, exercise, brain wellness and others to holistically create an environment that truly supports the wellness of the staff, residents and visitors. We have been very pleased with the results in terms of resident satisfaction and staff retention. As the first Gold Certified WELL assisted living facility we are very proud to be industry leaders in this field.

Howell Investment Finance is also very proud of financing this first in the nation WELL assisted living facility in the USA.

With proper planning and financing you can achieve your investment dreams and goals. Howell Investment Finance in Ames, IA, specializes in structuring mortgages for HUD, CMBS , Fannie Mae, Freddie Mac, Bridge and Construction loans. Howell Investment Finance has secured more than $100 million in commercial mortgages and financed more than $140 million in properties throughout Iowa. They know the local market and can customize your investment loans to meet your unique needs. To get started, call (515) 233-8228 , or visit their website for additional details on lending options.

HUD is Lending During COVID-19

Tue, 02 Jun 2020 13:45:56 GMT

Once the COVID-19 pandemic hit and the Shelter in Place orders were given, many lenders closed their lending on commercial real estate. Investment properties can be a large and stable source of income, however, the uncertainty of the effect had lenders screeching to a halt.

HUD Remained Open For Business

What about the other lenders?

Fannie Mae and Freddie Mac are still lending, however, they have increased their loan requirements, which may knock some sponsors out due to the increased reserve accounts needed at this uncertain time.

CMBS stopped lending totally at the time, however, they are stepping back into the market now. The most likely loans with the least volatile property type is multifamily.

What type of properties will HUD finance?

HUD finances the following types of properties:

Multifamily
Mixed-use
Healthcare

What are HUD’s typical loan parameters?

35 yr term
35 yr amortization
non-recourse
assumable
80% LTV

What about construction loans?

Construction loans paused early on, however, they are also being looked at depending on the market need and the specific property information. HUD’s construction loans could lend up to 85% LTC with 40 year amortization and a 40 year term.

Investment properties can increase your cash flow. To get started, you’ll need the right financing plan. For over 25 years, Howell Investment Finance has helped investors take those necessary steps as they put their clients first with HUD, CMBS, Fannie Mae, and Freddie Mac loans. They're based in Ames, IA and provide commercial real estate mortgages across the entire state of Iowa. To schedule an appointment, call (515) 233-8228 . For a complete list of their financing services for multifamily, senior housing, office buildings, and retail properties, visit their website .

Bridge Loans- Why and When

Sat, 01 Feb 2020 18:52:56 GMT

Real estate investors may require much-needed funds to improve a property for various reasons or to position themselves financially. That financial gap may need to take place over weeks or several months, or longer. A bridge loan is designed to fill that void so that work can continue on your investment properties . The bridge loan is perfect for unstabilized properties. Here are several common questions about how this funding source works.

5 FAQs About Bridge Loans

1. What is a bridge loan?

It is a loan that provides capital for a short period of time while a borrower is waiting to secure long term financing . The bridge loan provides the dollars to assist in improving and stabilizing the investment property.

2. When is a bridge loan needed?

There are various times a bridge loan should be considered. One of the common times a bridge loan is needed is when an investor needs funds to upgrade a tired property to compete with newer investment properties. Often times, it is hard to compete with the shiny and the new properties in the market unless you update your property. There are times a bridge loan is requested when an individual hasn’t sold their current property but is in the process of buying another investment property. Or when an investor finds an investment property to purchase that needs extensive updates prior to financing into a long term mortgage .

3. What is the borrowing time frame?

Bridge loan terms can range from six months to two years. Depending on the loan, a lender may grant an extension for up to an additional 12 months if the borrower needs more time to stabilize the investment property.

4. How much can be borrowed?

The amount an individual is allowed to borrow varies by the lender. However, a rule of thumb is the bridge loan may be up to 70%-75% of the “as complete” value on the appraisal for the property. The loan’s interest rate will also vary but is typically slightly higher than current market rates.

5. What types of property can use a bridge loan?

Property types will vary by lender, however, multifamily, hotels, retail, office buildings and senior housing are typical investment properties. New construction is not allowed unless it can be cross collateralized with another performing property.

Howell Investment Finance in Ames, IA, helps commercial property investors by providing bridge loans. Serving Ames, West Des Moines, Cedar Rapids, Dubuque, the Quad Cities and Iowa City. This real estate firm will find flexible funding options such as longer terms , fixed rates, and non-recourse loans for the property being financed after finding out the goals of the investor. To learn more about bridge loans and other investment property funding, call (515) 233-8228 or visit their website for information on other loan options.

Which Financing Option Should You Choose

Wed, 29 Jan 2020 19:11:52 GMT

So now you see that one of your investment properties loan maturity date will be coming due soon. How do you decide between the different financing options you have?

One decision needs to be made is what your investment goal is. Are you wanting to pay off your property as soon as possible? If so, you may want to consider a shorter amortization. However, as many investors, you may want more Cash Flow from your properties.

If you are wanting more cash flow from your properties, you will want to consider a longer term amortization like 30 years that Fannie Mae, Freddie Mac, and a CMBS mortgage offers. All three are non-recourse loans to greatly reduce your personal liability.

Loan Option Smorgasbord

Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac are two financing options for commercial real estate investors to consider for their refinancing and acquisitions for multifamily properties. While their goals are very similar, the way these two operate differ in a few areas, and it’s important for investors to understand their differences in order to make the best possible choice. As a standard procedure, Howell Investment Finance always sizes your loan with both to see which will offer you the best financing terms.

HUD- also for Market Rate Properties

One of the misconceptions about HUD financing is it is only for low income housing. Nothing can be further from the truth. Yes, HUD multifamily is used for LIHTC, but HUD also finances workforce housing and market rate multifamily projects for up to 35 year term and 35 year amortization. The HUD construction loan offers a 40 year term and 40 year amortization with up to 85% Loan-to-Cost (LTC) on multifamily projects.

CMBS

The CMBS/conduit loans can finance multifamily, offices, hotels, retail, self-storage, manufactured home parks, and industrial. The non-recourse CMBS loans can range from $2 million to $100 million. Would you like to get some of the cash out of your properties to use elsewhere? The CMBS loans allow for unrestricted cash-out on refinances when the new loan amount is greater than the loan balance being paid off.

Do you have a tired property or one that needs to be updated to compete with other newer properties in your market area? The CMBS loans are also a good financing tool for those Value-Added properties.

Allow Enough Time

Its best to always allow enough time for your refinance. While most loans take 60-90 days from application to the closing, it can take some time to gather the needed property information and documents to get you a term sheet. Howell Investment Finance recommends you start looking at new financing 1-2 years prior to your loan’s maturity date to get acquainted with the process, interest rates, and terms to help you make the right loan decision. Besides, many times your pre-payment penalty may drop off 6-12 months prior to your maturity date, so why not get ready now?

If you have questions about the available financing options, Howell Investment Finance has the answers you need. As a trusted commercial mortgage broker, they will work to simplify the complex process by explaining the differences in a clear and concise manner. Let them know what you want to accomplish with your new financing and they will go to work for you to find a solid loan option.

Howell Investment Finance will then assist you from your application all the way through to closing. If you’re looking to finance investment properties in the Des Moines, Cedar Rapids, Iowa City, Quad Cities, Dubuque, and Ames areas in Iowa, you can learn more about the services they offer by visiting them online or you can call (515) 233-8228 today to speak with Denny Howell.

New Year, Check Your Loan Maturity Dates

Sat, 18 Jan 2020 19:17:56 GMT

With the new year starting, now is the time to check all of your investment properties maturity dates to see when the loans need to be refinanced. With interest rates still at all time lows, it is best to see when your loans are due and not get caught off guard and surprised. Depending on the loan type you are wanting, extra time planning will pay off in very good rewards for you.

What You should be Looking For...

1. Check your loan’s maturity date.

Review your loan documents to see when you need to refinance and also look to see when your pre-payment penalty expires. Often the pre-pay is done the last six months of the loan term, some are even done 12 months prior to the end of the loan term. This can save you thousands or even hundreds of thousands of dollars and it is better for those dollars to be in your pocket than your current lender’s pocket. There are times when it is advisable to refinance at the current lower interest rates and pay off the pre-pay and lock in a great interest rate for 10 years and even longer.

2. Check your interest rate.

May sound ridiculous, however, Howell Investment Finance has asked sponsors this question before and they have to check. Depending on the property type, there are more than one refinancing option available to you. Also, interest rates are different based on many factors, Loan-to-Value (LTV) can play a major difference. The lower LTV, the lower risk to the Lender and therefore a lower interest rate. We all know at some point in the future the interest rates will increase, so now is the time to start planning your refinancing.

3. What you need to gather.

Having your financial house in order will pay huge dividends. Howell Investment Finance has seen many types of financial recordkeeping over the years. In order to get the best terms and interest rates, plus a quick loan processing and approval, it is best to use a computer financial software program. Also, have the current Rent Roll, the Trailing Twelve Months financials (T-12), three years of financials on each property, and keep your Personal Financial Statement (PFS) updated. Having these available and updated in an Excel format will help to get you started.

4. What type of a loan do you apply for?

Many sponsors think their only option is to go to a local bank for financing on their investment properties. Depending on the type of investment property, you have various choices. For multifamily, you can finance with Fannie Mae, Freddie Mac, HUD (not just for low income but also for market rate units), and CMBS (conduit loans) . For office, multifamily, hotels and retail properties, the CMBS is a very good option. These loans have 30 year amortizations, or more, to increase your cash flow, plus they are non-recourse loans.

5. Use an Experienced Commercial Mortgage Broker

Securing financing for your investment can be one of the most stressful, challenging aspects of financing investment properties. However, an experienced commercial mortgage broker with a track record of success will have the professional network and expertise to help you find a loan with the best terms available.

If you’re planning to refinance a multifamily building or other investment property, Howell Investment Finance of Ames, IA, will go above and beyond to get the financing you need. Since 1992, they’ve negotiated loans from $1 million to over $30 million, with over $100 million in total lending all over Iowa. Visit their website for an overview of the loan types they offer and call (515) 233-8228 to speak with Denny Howell today.

3 Benefits of Nonrecourse Loans

Sat, 11 Jan 2020 19:32:02 GMT

If you’re looking to invest in commercial or multifamily real estate, finding the funds to purchase or refinance a property will play a significant role in your overall success. Although there are many ways to finance real estate investments, many buyers think that a full recourse loan is their only option. Many investors are not aware of the benefits of a non-recourse mortgage or that they even exist. The non-recourse loan is considered by many investors as their preferred form of financing. As you consider your financing options, here are a few reasons why nonrecourse loans can be the perfect fit for purchasing or refinancing investment property .

3 Reasons to Obtain a Nonrecourse Loan

1. Reduced Collateral Risks

If a borrower defaults on a recourse or nonrecourse loan, their property may be seized by the lender to cover losses. In some cases, however, the collateral used to secure the loan may not carry a value sufficient to cover the debt.

When a real estate investor defaults on a recourse loan, the lender can cover the shortfall by seizing other assets from the borrower—such as other investment properties or personal assets. Under the terms of a nonrecourse loan, lenders can seize only the real estate financed with the loan. If sold at a loss, the lender loses money on the sale.

2. Personal Credit Isn’t a Determining Factor

If you opt to obtain a recourse loan, your credit score may have a significant impact on your approval . For some, this may mean failure to secure a loan or having to pay a higher rate of interest.

Nonrecourse loans, on the other hand, aren’t as dependent on your credit. Instead, the lender will determine if the value of the property is sufficient to secure financing. As a result, those with suboptimal credit may prefer this financing option.

3. No Global Finances Needed

Since the non-recourse loans are based on the property being financed, there is no need for global financials or personal tax returns. This makes getting the desired financing much quicker and easier. Also, with a non-recourse loan, spouses do not need to sign the mortgage documents.

Given the unique benefits of nonrecourse loans, they’re much more challenging to obtain. If you’re looking to purchase investment properties in the Des Moines, Cedar Rapids, Iowa City, Quad Cities, Dubuque, and Ames areas in Iowa, Howell Investment Financing offers various nonrecourse financing. Their financial specialist will introduce you to plans that offer security and predictability at competitive rates. Visit them online to learn more about their products and services, or call (515) 233-8228 to speak with a mortgage broker.

4 Traits to Look for in a Commercial Mortgage Broker

Fri, 30 Aug 2019 19:34:20 GMT

Securing the right commercial property requires expertise to ensure your hard-earned money will be worth the backing. This is when a commercial mortgage broker can be a valuable asset. The key is partnering with one that will have your best interests at heart for creating customized financing for a wide range of investment properties . When deciding between a HUD, Fannie Mae, Freddie Mac, CMBS, or a Bridge loan, the right commercial mortgage broker can guide you to the right mortgage. Here are four traits to look for in these real estate loan specialists.

The Top 4 Attributes of Good Commercial Mortgage Brokers

1. Attuned to the Market

You’ll want to work with a professional who has their finger on the pulse of the market. They are keenly attuned to the current trends, including which areas are booming and whether investment properties have long-term sustainability. With this knowledge, a professional commercial mortgage broker can tailor loan financing to meet your needs.

2. Transparent & Upfront

The best brokers value providing clear and concise information to their clients. Detailed information on rates, terms, and fees on loans are presented upfront. When presented with several financing options, you can make an informed decision. If you have questions or need clarification, your broker should also be glad to go over the details.

3. Accessible

Whether in person, by phone or email, the top commercial mortgage brokers are always available to their clients. After all, they are working on your behalf to find you the best loans for investment properties. If you need to reach them, there should be reasonable follow-ups, including on evenings and weekends.

4. Detail-Oriented

With commercial investment property financing, the fine details make a significant difference. If vital information is not included in the deal, the consequences could be costly to you. An experienced broker is very detail-oriented and makes sure all areas are covered before closing the deal. They will also take the time to go over the loan’s terms with you beforehand.

You work hard for your money. Commercial property requires a unique mindset, particularly when it comes to financing. Howell Investment Finance in Ames, IA, is the area’s premier firm for securing loans for investment properties. They specialize in finding the right financing for you. Give them a call today at (515) 233-8228 to learn about the range of available loan options and request a free quote. To get an idea of the type of projects financed, visit the website . In addition to Ames, the firm proudly serves Des Moines, West Des Moines, Ankeny, Cedar Rapids, Iowa City, Cedar Falls, Dubuque, and the Quad Cities.

Is a CMBS Conduit Loan Right for your Investment Properties?

Fri, 23 Aug 2019 19:42:05 GMT

Understanding a CMBS Conduit Loan

Is a CMBS Conduit Loan Right for Your Investment properties?

Howell Investment Finance is often asked, “What is a CMBS conduit loan and would it be right for me and my commercial property?” First, what is a CMBS conduit loan? The CMBS (Commercial Mortgage-Backed Security) loan is a fixed-rate, first mortgage that is secured by stabilized commercial real estate properties. Once closed, CMBS conduit loans are pooled together by Wall Street investment banks and sold as securities to investors.

Second, properties eligible for a CMBS conduit loan are multifamily, offices, hotels, retail, self-storage, manufactured home parks, and industrial. CMBS loans can range from $2 million to $100 million. You can even save on closing costs by mixing the property types into one larger loan, for example by combining multifamily with office buildings or other property types.

Benefits of CMBS Conduit Loans

All CMBS conduit loans are non-recourse, which means there are no personal guarantees, no tax returns, and no global finances.
CMBS conduit loans allow for unrestricted cash-out on refinances when the new CMBS conduit loan amount is greater than the loan balance being paid off. This cash can be used as you see fit, no restrictions.
Competitive interest rates are fixed for 5, 7, or 10 years.
75-80% LTV with 25-30 amortizations.
45-60 days from application to closing.
Loans are assumable and interest-only payments are possible.

With lenders in Chicago, Minneapolis, New York City, Washington, D.C. and Dallas, Howell Investment Finance can help you find the right CMBS Conduit loan for refinancing or purchasing an investment property, They specialize in financing with Fannie Mae, Freddie Mac, HUD, and CMBS loans . Based in Ames, IA, they offer favorable interest rates and loan terms to investors across Iowa. With more than 25 years of experience, Howell Investment Finance can provide invaluable advice and guidance as you navigate the loan application process. Call (515) 233-8228 to schedule an appointment or visit them online to view the different types of mortgages available.

HUD 232 for Financing an Assisted Living Facility

Fri, 16 Aug 2019 20:03:56 GMT

HUD 232 loans are used to finance existing and new construction of residential care facilities, such as assisted living and memory care facilities. These loans are available through Howell Investment Finance .

What Kind of Properties Are Eligible?

Because the definition of residential care facilities is rather broad, those applying for section 232 loans must meet specific guidelines. The facility must provide continuous care to residents with a minimum of 20 beds per facility. Care homes must also be properly licensed by the appropriate entity. For states with Certificate of Need programs, which are necessary to approve the building of new healthcare facilities, approval must be gained before a HUD 232 loan is provided.

What Are the Features of These Loans?

Section 232 loans can be used for new construction as well as refinancing and the improvement of existing facilities. Borrowers may be approved for a fixed rate loan with terms ranging from 35 years up to 40 years (new construction). Additionally, eligible borrowers could receive as much as 80 Loan to Value (LTV) or up to 90% of the Loan to Cost (LTC) when applying for these loans. As a non-recourse loan, borrowers do not sign personally for the loan and there is no need for tax returns or global finances.

What Can I Expect During the Application Process?

The positive news is that HUD 232 loan terms are not competitive. However, borrowers do need to undergo an exhaustive application process — the first step of which is pre-application. After this process, it will be determined whether the minimum requirements are met. If so, borrowers must complete and submit the total application, along with other documentation. Several factors will be considered, including community resources, whether there is a genuine need for such a facility in a given area, and zoning issues.

With their considerable knowledge, Howell Investment Finance l ocated in Ames, IA, will help you make sense of the many complexities involved with HUD 232 loans. They will also help you secure funding for many other commercial properties, including multifamily structures and hotels. They offer more than two decades of experience and have been integral in negotiating contracts from $1 million to over $30 million. If you need help with financing investment properties, call (515) 233-8228 for assistance. You can also learn more about loan types by visiting them online .

If you like Cash Flow.... you need to finance now.

Fri, 12 Jul 2019 20:06:37 GMT

If you are looking for more Cash Flow from your multifamily properties, now is the time to look at refinancing or purchasing more investment properties. Fannie Mae and Freddie Mac interest rates are tied to the 10 year Treasuries (T-bills). The 10 year T-bills have been dropping consistently over the past few months.

Similar to refinancing your personal residence during dropping interest rates, it also makes sense to review your multifamily mortgages. With the lower interest rates Howell Investment Finance has recently been quoting, sponsors have been gaining more Cash Flow from their multifamily properties.

Lock in a low interest rate for 10 to 12+ years now

With Fannie Mae or Freddie Mac, you can lock in your low interest rate for 10, 12, or even 15 years. Not the typical 5 years you may be used to. At some time in the future, interest rates will go back up and having your interest rate locked in for many years will help to maximize your Cash Flow.

30 Year Amortizations are the normal

To increase your Cash Flow, when financing with Fannie Mae or Freddie Mac their normal is a 30 year amortization. Does your multifamily mortgage have a 20-25 year amortization, if it does and you want to increase your Cash Flow, you need to call Howell Investment Finance now .

Depending on your mortgage balance, it is very possible to refinance with either Fannie or Freddie and receive cash out for whatever purpose you wish. Howell Investment Finance has assisted other sponsors in getting cash out of one property to be used as the down payment for purchasing another multifamily property.

Also the loans are assumable, so when you decide to sell in the future, your investment property could be worth more than a competing property since your property would have the lower interest rate that could be assumed.

A Pre-Payment Penalty may not be a problem

If your current mortgage has a pre-payment penalty, that may not be a stopping point for you to get more Cash Flow. Depending on when your mortgage is due, some lenders will allow you to exit their mortgage with little or no pre-payment penalty as long as your deposit accounts stay at their bank. Fannie, Freddie, and HUD insured mortgages do not require your deposit accounts, you choose where you want your deposits to go.

If you are interested in increasing your Cash Flow by refinancing or purchasing another investment property, Howell Investment Finance can help. They specialize in financing with Fannie Mae, Freddie Mac, and HUD , they will assist you in finding the financing you need to pursue your investment goals. With lenders in Chicago, Minneapolis, New York, Washington, D.C. and Dallas they will find the right loan for you. Based in Ames, IA, they offer favorable interest rates and loan terms to investors across Iowa. With more than 25 years of experience, Howell Investment Finance can provide invaluable advice and guidance as you navigate the loan application process. Call (515) 233-8228 to schedule an appointment, or visit them online to view the different types of loans available.

Recourse vs Non-recourse Loans, Why Should I Care?

Tue, 01 Jan 2019 20:09:31 GMT

You might ask why you should care if the mortgages on your investment properties are Recourse or Non-Recourse. Aren’t all loans 100% recourse or at least a partial recourse?

The answer is NO as all the HUD, Fannie Mae, and Freddie Mac loans that Howell Investment Finance close are 100% non-recourse.

What is the Difference? Why should you care?

Recourse loan is secured by a pledge of the collateral plus personal assets of the borrower. If the borrower defaults, the lender can seize and sell the collateral plus additional assets of the borrower, even their home, savings, and vehicles. Thus, a recourse loan places the borrower's personal assets at risk.

Non-recourse loan is secured by a pledge of the collateral, period and the borrower is not personally liable. If the borrower should default, the lender can seize and sell only the collateral, and if the collateral sells for less than the debt, the lender cannot seek that deficiency balance from the borrower. Thus protecting the borrower’s personal assets.

Why is it Important to choose the Right Loan?

Choosing the right loan for your investment property will ensure that your life is safeguarded from the fluctuations of your investment business.

How Choosing the Right Lender Makes a Difference.

Be sure to choose the right lender for your investment. Not only will they review your options, but they’ll also help you to find the best loan and terms. They will counsel you on the types of loans you qualify for, as well as what that means to your investment and how to protect your assets.

Whether you’re taking out a loan for your first investment property or you’ve been in the business for years, keeping up to date on the latest lending policies can easily affect your baseline. Howell Investment Finance has been providing Iowa investors from Ames, Des Moines to Cedar Rapids, Iowa City, to the Quad Cities and Sioux City with trustworthy customer service and loans that will help them build their business the right way. Whether you need construction loans, multi family and senior housing mortgages, hotels, or other assistance with your investment property, they are on hand to help. Call them today at (515) 233-8228 or visit their website for more information.

Building a Multifamily Structure? Consider HUD Financing

Sat, 01 Dec 2018 20:13:20 GMT

When it comes to building multifamily homes, the right financing can make the project simple and marketable. However, for many building owners and managers, a traditional construction loan may not be the best option. Instead, they may need to pursue different financing options—and HUD financing is a very good way to fund the project.

HUD Financing Is Not Just for Low-Income Families

HUD loans have a reputation for being used to build multifamily homes designed for individuals receiving government housing assistance or Section 8 assistance. However, that reputation is not entirely accurate. Multifamily homes built specifically for Section 8 and low-income housing are only one aspect of HUD financed properties.

Private property owners can use the loans to build structures that can be rented out at the standard market rate. There are no rent caps or limits stipulated with the loan, and you’re free to build the structure as you see fit as long as it complies with the local building code and HUD guidelines. As long as the project is designed to house multiple families, the Federal Housing Authority can still insure the HUD construction loan to finance the project.

Why Choose a HUD Financing Over Traditional Construction Loans?

Traditional construction loans often have variable interest rates. This means that if general interest rates rise over the years, the interest rate on the loan will do the same. Those monthly payments on the loan may not always be consistent, and if the interest rates keep increasing, you can expect the cost of the payments to increase as well. HUD loans offer loan terms with a fixed rate of amortization, meaning that those monthly payments will never change for the duration of the loan.

At Howell Investment Finance in Ames, IA, their dedicated team understands the complexities of finding the right financing options for multifamily housing projects and commercial ventures. They’ll work with you to understand the goals behind the property, the value it holds, and the development work required to find the best loan possible. Whether you’re interested in HUD financing or want to explore more traditional apartment mortgages, they’ll make sure you understand your options. Learn more about their services online and call (515) 233-8228 to schedule an appointment with an advisor today.

Freddie Mac & Fannie Mae: A Commercial Loan Comparison

Fri, 25 Aug 2017 20:16:43 GMT

If a commercial loan holder has a long-term mortgage, there’s a high chance the loan was bought by Fannie Mae or Freddie Mac from a bank. These government-sponsored enterprises (GSE) don’t administer the loans, they provide lending and default protections to keep the real estate market stable. The professional team of agents at Howell Investment Finance in Ames, IA, have extensive experience with Fannie Mae and Freddie Mac loans, as well as providing clients expert guidance on which mortgage is the best fit.

There are several key differences between the two GSEs. Below is a brief overview of their distinctions.

Freddie Mac

This GSE buys mortgages from smaller banks known as thrifts. Once the loans are purchased, Freddie Mac bundles them so they are available to be sold on the secondary mortgage market. This means an approved Freddie Mac lender can provide the financing for the commercial loan to borrowers who meet the GSE’s guidelines.

Freddie Mac can either purchase the loan back after the borrower closes on the transaction, or keep the loan and bundle it with other commercial loans that have similar terms. A bundled loan can also be sold to potential investors. Depending on the commercial loan’s structure, an insurance policy is typically included to protect against borrower default.

Fannie Mae

Fannie Mae buys mortgages from larger, national banks, as well as credit unions and community banks. The GSE’s main goal is to make commercial lending affordable to investors who may not have sufficient capital to buy investment properties such as apartment mortgage loans.

A Fannie Mae loan typically has lower down payment and income requirements. Depending on the loan program, borrowers may also be eligible for better terms based on the location of the commercial property. There may also be additional features that provide relief to borrowers with less-than-stellar credit.

Knowing whether a Freddie Mac or Fannie Mae commercial loan is ideal starts by talking with a loan officer who has an in-depth knowledge of the GSEs’ programs. A number of factors are reviewed to determine which loan will meet the borrower’s unique investment property goals and needs.

To learn more about Freddie Mac and Fannie Mae commercial loans, call Howell Investment Finance at (515) 233-8228 to arrange a complimentary consultation. A friendly and knowledgeable loan officer will go over the fine print and answer all of your questions. In addition to Ames, this trusted company serves Des Moines, West Des Moines, Ankeny, and Cedar Rapids. Visit the website for more information on their commercial loan options.

HUD Financing 101: What Is a Non-Recourse Loan?

Fri, 18 Aug 2017 20:18:48 GMT

When you’re looking for a way to finance your commercial property, you’ll come across many different loan options. If you choose to fund your building through HUD financing , you’ll need to understand the term “non-recourse loan”. At Howell Investment Finance in Ames, IA, their experienced brokers want to inform you about what’s involved in financing investment properties. Here, they explain what a non-recourse loan is and why it matters to business owners seeking HUD financing for their project.

What Is a Non-Recourse Loan?

A non-recourse loan refers to a loan backed by collateral. For most business owners financing an apartment mortgage or construction loan for a commercial property, the property itself becomes the collateral. This means if you fail to make payments or default on the loan, the lender can take possession of the property to settle the debt.

Why Should You Choose a Non-Recourse Loan?

If you’re seeking HUD financing for a project, non-recourse loans are the only ones available. Unlike traditional loans, non-recourse loans have a fixed interest rate, guaranteeing you a single monthly payment which will not change throughout the year. This helps you establish a firm budget and makes your expenses more predictable when you’re first starting out. Non-recourse loans from HUD further protect you from financial liability to the lender should you default on your loan.

If you default on a non-recourse loan, the only thing the lender can take from you is the property. Even if the property value falls below the loan amount, your lender cannot take legal action or sue you for any remaining balance on the loan. This means you’ll never have to worry about expensive settlements or continued payments after you default. For many business owners, this is seen as a benefit, especially in times of economic uncertainty.

If you’re interested in learning more about non-recourse loans or securing funds through HUD financing, contact Howell Investment Finance today. Visit their website for more information and call (515) 233-8228 to speak with a broker about your project.

Fannie Mae Broker Explains 3 Advantages of an Interest Only Commercial Mortgage Loan

Wed, 02 Aug 2017 20:20:26 GMT

When you invest in commercial real estate, you have multiple options for financing. Interest-only loans differ from traditional mortgages in that your monthly payment only consists of interest for the beginning period of your loan. Once the specified time frame is up, you begin paying the full mortgage payment. In many cases, the interest-only payment lasts for two to three years, but there are variations available depending on your circumstances.

According to Iowa's leading Fannie Mae broker, Howell Investment Finance , there are multiple benefits associated with interest-only commercial mortgages. Below, they outline the top three advantages this type of loan offers property investors.

Fannie Mae Broker Explains 3 Advantages of an Interest-Only Commercial Mortgage Loan

1. Time to Increase Cash Flow

When you first purchase an investment property, there's a lot of money going out but not much coming in. Businesses, including commercial properties, need time to build cash flow so that they can get on their feet. An interest-only loan provides that much-needed space for properties to begin making money and build up a steady flow of cash before the full mortgage begins. The delay associated with this type of loan is one of the reasons they're so popular among Fannie Mae commercial clients.

2. Ability to Buy a Higher-Priced Property

Another benefit of an interest-only loan is that you can feasibly invest in a larger or more expensive property. Since your payments will be smaller in the early stages, a mortgage size that you may not have been able to afford in a traditional set-up suddenly becomes a possibility. Granted, the full mortgage payments will eventually be higher than a smaller property, but more space or a building in a more lucrative area could easily result in a higher profit once your cash flow grows.

3. Spend More in Other Areas

After buying a property, you'll quickly be faced with expenses outside of your mortgage such as landscaping, unit updates, and marketing to attract customers. Not paying a large mortgage payment in the beginning of your loan allows you to spend that money in other areas of your business. Such additional investments in the early stages may result in a bigger return later.

If you're ready to take the leap and invest in a commercial property, contact Howell Investment Finance. The broker specializes in connecting clients with Fannie Mae, Freddie Mac, and HUD financing for their investment property projects. Based in Ames, the team serves multiple communities across the Midwest including Des Moines, Ankeny, and Cedar Rapids. Browse their commercial loan options today by visiting their website , and speak with a loan specialist by calling (515) 233-8228.

Apartment Mortgages With No Tax Returns Needed?

Thu, 27 Apr 2017 20:22:37 GMT

You don’t need my spouse’s business information?

Commercial real estate can be a fantastic investment, providing a steady revenue stream and an asset with the potential to appreciate dramatically over time. As rents continue to rise around the country, residential rental properties can be particularly lucrative—but acquiring an apartment mortgage can be unnecessarily complex, requiring reams of paperwork and extensive documentation.

Fortunately, Howell Investment Finance in Ames, IA, can connect prospective property owners with lenders willing to issue apartment mortgages without the one very large lender requirement, your tax returns.

If you own any multifamily units, you know applying for a loan through a bank or other traditional financial institution usually means producing several years' worth of past tax returns. The bank will also likely want information about your spouse's financial background, as well as reports from any other investment properties you own. Not only may this disqualify you with some lenders, the process can be extremely onerous---especially if you're trying to purchase a property that's already profitable.

Howell Investment Finance works with a variety of lenders who provide non-recourse loans (no personal guarantees required), which means their decisions are based on the property's net income rather than your own financial state. Instead of your own personal tax returns and other financial information, you may be able to to get an apartment loan at competitive rates by submitting proof of the profitability of the investment. With their expertise, they will help you navigate the difficult process, ensuring that every qualified borrower gets the financial backing they need.

Howell Investment Finance in Ames, IA specializes in commercial loans obtained through HUD, Fannie Mae, Freddie Mac and maintains a wide network of lenders across the country, giving them a wide range of options for you. In addition to Ames, the company serves Ankeny, Cedar Rapids, Des Moines, West Des Moines, Dubuque, Sioux City, Davenport, and Iowa City.

Visit their website now to learn more about their commercial lending services, or call (515) 233-8228 to start financing your apartment today.

What's the future of Fannie Mae, Freddie Mac, & HUD,

Fri, 21 Apr 2017 20:24:28 GMT

Will Fannie Mae, Freddie Mac, and HUD be around in the future?

One of the most frequently asked questions I get asked is “What’s the future of Fannie Mae, Freddie Mac, and HUD . Are these commercial mortgages going to survive? What about the privatization of these I hear in the news?”

Each new administration always has changes to make, so every 4 or 8 years, similar questions have been asked to Howell Investment Finance , however, this new administration seems to want more changes than the past administrations have proposed.

First, lets do a little Finance 101. In the multifamily and senior housing, Fannie Mae, Freddie Mac, and HUD do not actually lend the dollars for the mortgages. They each only insure the Borrower should they default on the loan. Therefore, they have no dollars to be in jeopardy of being cut from the Federal budget. These commercial mortgages don’t cost the US taxpayer dollars, however, they generate billions of dollars for the US government.

The Fannie Mae, Freddie Mac, and HUD multifamily and senior housing departments are extremely large financial cash producers for the government. Howell Investment Finance is constantly in touch with each of the entities and their officials to see what is coming down the road. Each entity has said the same thing, since they are such a cash generator yielding billions of dollars for the US government, they do not see these commercial mortgages going away. In fact, they all have said they look for improved lending terms and other frequently asked for improvements.

Why would you want to finance your multifamily or senior housing property through Fannie Mae, Freddie Mac, or HUD? For starters, they are non-recourse, assumable, 30+ yr amortizations, 1-3 yrs interest only and cash out are possible, and you can lock in a 10+ yr fixed interest rate.

If you are looking for an increase in cash flow of your apartment or senior housing property, you need to call Howell Investment Finance now to get started. Even after your loan closes, Howell Investment Finance stays involved if you ever have any loan serving questions, they are only a phone call away.

Howell Investment Finance in Ames, IA specializes in commercial loans obtained through HUD, Fannie Mae, and Freddie Mac. Howell Investment Finance works with a strong network of commercial lenders from coast to coast to assist sponsors with buying and refinancing a range of commercial investment properties. If you’re ready to learn more about commercial real estate financing, including how Fannie Mae, Freddie Mac, or HUD financing can benefit you, Howell Investment Finance will assist you through the process! Call (515) 233-8228 or visit their website . In addition to Ames, the company serves Ankeny, Cedar Rapids, Des Moines, West Des Moines, Sioux City, Davenport, and Iowa City. Be sure to “Like” us on Facebook .

Apartment Mortgage Alert: How Interest Rate Hikes May Affect Vacancies

Tue, 18 Apr 2017 20:26:07 GMT

Investors who own apartment mortgages could be excited about the third round of interest rate hikes by the Federal Reserve since December 2015. The back-to-back increases means renters will sit tight as housing costs gradually creep back up. As a leading commercial mortgage broker, Howell Investment Finance in Ames, IA, has its finger on the pulse of the latest buying and selling trends so that potential investors are well informed about financing decisions.

A bump in interest rates tends to trickle down to the costs associated with securing home loans, including mortgage interest rates. One of the outcomes is a stabilization or rise in rental occupancies, which puts apartment mortgage loans on solid ground for the short term.

On the flip side, some renters may want to get a jump on purchasing homes before the Federal Reserve raises interest rates again.

Chairman Janet Yellen has signaled more rate hikes are expected by the end of the year. Spring and summer are also traditionally high-volume seasons for home sales compared to the fall and winter seasons.

Geographic location also plays a part in how interest rates may impact apartment mortgages. According to the Federal Reserve , certain major cities such as Houston, New York City and San Francisco have noted sharp declines in vacancies as renters make the shift to home ownership.

Another factor affecting the mortgage landscape is renter income levels. Affluent dwellers traditionally have more housing options and could choose to abandon rental properties for condos or single-family homes.

As the second quarter of 2017 gets underway, it remains to be seen if further rises in interest rates will move renters away from apartments and toward home ownership. Barring any catastrophic scenarios within the commercial real estate market, apartment mortgage investors are expected to see some twists and turns this year.

Howell Investment Finance specializes in securing prime investment properties for their clients. Working with some of the nation’s premier commercial lenders, the firm serves Ames, Des Moines, West Des Moines, Ankeny and Cedar Rapids. To get started on apartment mortgage financing, call (515) 233-8228 to arrange a consultation, or visit the website for extensive information on other investment property and financing opportunities.

Federal Reserve Just Raised Interest Rates

Thu, 16 Mar 2017 20:28:13 GMT

Now is the time to refinance your multifamily and senior housing properties

March 15, 2017; The Federal Reserve just raised its benchmark interest rate .25 bps for the second time in three months. The Fed has been talking about two more increases this year.

Now is the time to be refinancing your investment properties before the interest rates go higher. Even if your loan doesn’t mature for another year, you should be calling Howell Investment Finance now to refinance your apartment mortgages and senior housing properties as the interest rates will be much higher when it is time to refinance.

Fannie Mae, Freddie Mac, or HUD loans are non-recourse, assumable, 30+ yr amortizations, 1-3 yrs interest only and cash out are possible, and you can lock in a 10+ yr fixed interest rate.

If you are looking refinance your apartment or senior housing property before the interest rates increase more, you need to call Howell Investment Finance now to get started or to answer any questions. Even after your loan closes, Howell Investment Finance stays involved if you ever have any loan serving questions, they are only a phone call away.

Just announced- Freddie Mac Multifamily Loans are Bigger and Better

Thu, 16 Feb 2017 20:29:56 GMT

Freddie Mac just increased their lending limit on their Small Balance Loans from $5 million to $6 million on multifamily properties!

Investors have been wondering what the new Presidential Administration will change in the multifamily loans with Freddie Mac. With positive changes like this loan limit increase, more multifamily properties can be purchased or re-financed and receive these great terms:

Non-Recourse
Interest Only
Cash out
30 year amortizations
10+ year fixed interest rate
No tax returns needed
Assumable

Call Howell Investment Finance now to get started getting more cash flow or cash back or both from your apartment mortgage. After your loan closes, Howell Investment Finance stays involved if you ever have any loan serving questions, they are only a phone call away.

Howell Investment Finance in Ames, IA specializes in commercial loans obtained through HUD, Fannie Mae, and Freddie Mac. Howell Investment Finance works with a strong network of commercial lenders from coast to coast to assist individuals with buying and refinancing a range of commercial investment properties. If you’re ready to learn more about commercial real estate financing, including Freddie Mac financing, Howell Investment Finance will walk you through the process! Call (515) 233-8228 or visit their website . In addition to Ames, the company serves Ankeny, Cedar Rapids, Des Moines, West Des Moines, Sioux City, Davenport, and Iowa City. Be sure to “Like” us on Facebook .

Why do a Construction Loan with HUD financing?

Fri, 10 Feb 2017 20:31:06 GMT

You may be asking why would I want to do all of the paperwork and spend the time on a multifamily or a senior housing construction loan with HUD financing? Yes, it is much more time upfront to finance your next construction loan through HUD, however, the benefits could payoff in the long term.

With a HUD construction to perm loan, you will get the following benefits:

By financing with a HUD construction loan, you are able to convert it into a permanent HUD loan as soon as the construction is over. If you finance with a bank construction loan, you will have to wait three after your occupancy permit to finance it with HUD and how much higher will interest rates be in three years?
Up to 40 years amortization and 40 year term, you may never need to refinance this loan. How much time and dollars will you save vs having to refinance every five years?
HUD loans are Non-recourse, so there are no personal guarantees. Plus HUD doesn’t need to see your tax returns.
HUD loans are assumable to qualified buyers. If you build now with the lower interest rates that will be locked in for the next 40 years, your buyer will be able to assume this lower interest rate. Your property should have a much higher value than other properties that will have to go through a new loan process with likely higher interest rates in the future.
Opens up your lending limit at your bank. Banks have lending limits that they can lend to their clients. As with all HUD financing, we’ll cash out your current bank mortgage which will open up your lending limit at your bank. This can allow you to purchase more properties and your all deposit accounts can stay with your bank. There is no change in your banking relationships as HUD doesn’t care where you bank. Bankers that Howell Investment Finance has dealt with like this concept as you will have more income from more properties to run through their bank.
Your down payment is based on the Lessor of the Stabilized Value or the Loan to Cost. Howell Investment Finance recently arranged a 90% LTC on a new HUD construction loan.

Howell Investment Finance will walk you through the process from the idea inception through to construction funding and will stay with you until the tenants move into your HUD construction loan project. Even after the loan closes, Howell Investment Finance stays involved if you ever have any loan serving questions, they are only a phone call away.

Howell Investment Finance in Ames, IA specializes in commercial loans obtained through HUD, Fannie Mae, and Freddie Mac. Howell Investment Finance works with a strong network of commercial lenders from coast to coast to assist individuals with buying and refinancing a range of commercial investment properties. If you’re ready to learn more about commercial real estate financing, including HUD financing, Howell Investment Finance will walk you through the process! Call (515) 233-8228 or visit the website to schedule an appointment. In addition to Ames, the company serves Ankeny, Cedar Rapids, Des Moines, West Des Moines, Sioux City, Davenport, and Iowa City. Be sure to “Like” us on Facebook .

Multifamily Mortgages: More Cash Flow with Fannie Mae or Freddie Mac

Wed, 21 Dec 2016 20:32:46 GMT

Are you wanting to increase the cash flow on your multifamily property?The question comes up as to why investors should consider a Fannie Mae or Freddie Mac mortgage vs going to their local bank for securing their multifamily mortgages .

Iowa-based Howell Investment Finance will highlight the reasons why getting a mortgage through Fannie Mae or Freddie Mac can increase your properties cash flow:

Highlights of the Small Balance Loans through Fannie Mae and Freddie Mac ($1,000,000 – $5,000,000):

30 year amortization
7,10,12+ year fixed rate
Non-recourse
Cash out is possible
1-3 years interest only
Loans are assumable
No tax returns, no global financing

With the Federal Reserve raising interest rates last week, plus announcing there may be three interest rate increases in 2017, now is the time to lock in an interest rate that is lower than it probably will be this time next year. Clients that have recently locked in a 10 year fixed rate through Howell Investment Finance won’t have to worry what their mortgage payment will be in a few years, they have already locked in their future cash flow. What will happen to your cash flow when you need to refinance your multifamily property in a few years and you realize the interest rates have significantly increased.

You’re thinking I have a pre-payment penalty, so I can’t refinance even if I wanted to. You may want to check with your banker. It may be a benefit to your banker to allow you to exit your loan with them earlier, if you refinance your multifamily through Howell Investment Finance with a Fannie Mae or Freddie Mac mortgage. The reason your banker could like this idea is by cashing out your bank, you open up your credit limit with the bank to purchase another property. The benefit to your banker is they keep your deposit accounts in their bank, plus you will be bringing additional operating account deposits to their bank with the purchase of your next multifamily property.

There is value with the mortgage assumption. If you do decide to sell your multifamily property in the future, since your Fannie Mae or Freddie Mac mortgage is assumable your property will have a higher value than other multifamily properties. The other multifamily properties will have to be purchased with the higher interest rates, where they can assume your mortgage at a lower interest rate. Buyers will want your property with the lower interest rate. More on that in future articles.

If you have further questions, let Howell Investment Finance assist you on the details of investment properties and multifamily mortgages. They help Iowans purchase all kinds of real estate, from senior housing and multifamily homes to commercial buildings. Call them at (515) 233-8228 or visit them online to learn more about different loan types.

A Quick Guide to Understanding HUD Financing

Wed, 07 Dec 2016 20:34:17 GMT

HUD financing is channeled through the U.S. Department of Housing and Urban Development (HUD) through a partnership of HUD-approved lenders. The agency doesn’t actually provide financing to buyers. The applicant must either secure financing from a mortgage lender or tap into their own savings. Once the required amount of funding is obtained, the individual is able to obtain any number of HUD-approved mortgages.

HUD Financing

To understand how HUD financing works is to first know what a HUD loan is. The loan, which is available through the Federal Housing Administration (FHA), is insured by HUD through a partnership with approved lenders should the buyer default on the loan or the property go into foreclosure. The loan typically has attractive features such as 35-40 year amortization and term, non-recourse, assumable loans, possibly lower equity participation, and approval to those with less than perfect credit.

When working on the commercial loan side, HUD financing can be used to purchase, refinance or build investment properties. Two of the most popular areas of HUD mortgages are the multifamily program and the residential healthcare facilities program to provide access to much-needed similar capital for hospitals and senior housing facilities.

Howell Investment Finance in Ames, IA specializes in commercial loans obtained through the government lending program. Howell Investment Finance works with a strong network of commercial lenders from coast to coast to assist individuals with buying and refinancing a range of commercial investment properties. If you’re ready to learn more about commercial real estate financing, including HUD financing, Howell Investment Finance will walk you through the process! Call (515) 233-8228 or visit the website to schedule an appointment. In addition to Ames, the company serves Ankeny, Cedar Rapids, Des Moines and West Des Moines.

How the HUD Lean Process Has Simplified Financing for Assisted Living Facilities

Thu, 27 Oct 2016 20:36:09 GMT

If you are interested in investing in an assisted living, skilled care, or memory care facility in Iowa, securing the right financing is an essential step in the process. Fortunately, the Housing and Urban Development Authority (HUD) provides mortgage loans suited to senior care homes, and their HUD L EAN improvements have made applying for these loans much simpler. Howell Investment Finance can help clients navigate the mortgage process for many different types of commercial property by offering up-to-date information, including info on how to acquire HUD financing.

What Are HUD 232 LEAN Loans?

The HUD 232 LEAN loan can help investors refinance, purchase, renovate, or construct a senior care home. There are certain eligibility criteria a project must meet to receive funding. This includes a market study, credit history, a compliance record, and a physical exam of the property in question. Once it’s been established that the project meets these specific qualifications, the HUD will issue mortgage insurance that will provide coverage if a loan cannot be repaid.

How Can a HUD 232 Lean Loan Help You?

In an attempt to create more efficient loan processing, the HUD 232 Lean methodology has been implemented. As a result, many improvements have been made over the previous approval processes which entailed longer timelines and duplication of some procedures.

As part of the creation of the LEAN program, HUD has centralized processing in Washington, DC as opposed to various regional offices. While deals ultimately get routed to regional offices, they are initially sent to Washington, DC. Underwriters now utilize standardized punch lists, which also greatly reduces the time it takes to process an application. These improvements were made in order streamline the overall application process and shorten the due diligence time.

One of the main reasons to choose a HUD LEAN loan is the term and amortization period. With a refinance, your amortization period and the loan term are up to 35 years. With a new construction/ perm loan, you will have up to a 40 year amortization and loan term. As you can see, once you go through the HUD Lean loan process, you may never have to refinance your loan again. If you choose to sell your property, it is assumable to a qualified investor.

The HUD LEAN 232 interest rates are low and continue to be very attractive for borrowers. Now is the time to refinance your senior housing projects and take advantage of the great terms and low interest rates before the upcoming interest rate jump.

When it comes to commercial real estate financing, you can trust in the guidance provided by Howell Investment Finance. Visit the website for more information on loan types, or call (515) 233-8228 to speak to Denny Howell today.

3 Reasons Senior Homes Are a Great Investment

Thu, 22 Sep 2016 20:37:23 GMT

America's population is aging rapidly, with more and more baby boomers reaching retirement age every year. These sweeping demographic changes present potentially lucrative investment opportunities in a variety of industries, particularly real estate and rental investment properties. Howell Investment Finance , a mortgage broker serving senior housing clients throughout the Des Moines, IA, area, recommends considering the advantages of owning senior housing when looking to invest in your next real estate property.

Here are just a few of the reasons senior housing is such an attractive investment opportunity :

Increasing Demand: According to the Department of Health and Human Services , the percentage of Americans aged 65 and over is expanding, and is expected to be over 20% by the year 2040. Being in a position to serve the demands of this growing population will likely result in significant returns, especially for investors interested in long-term investment properties.
A Variety Of Properties: Catering to the needs of the senior population could be as simple as purchasing a 55+ apartment community, building a cooperative senior living community financed with a HUD 213, or operating a CCRC through the HUD 232 loan. Depending on your existing business model or experience, the market could offer an investment opportunity appropriate to your needs.
Fewer Difficulties: Many investors consider seniors to be easier tenants, generally causing less damage to the property and reporting fewer problems than other demographics. If you're looking for a more passive investment opportunity, properties aimed at retirees rather than college students or families with young children may have the qualities you're looking for.

From owning senior housing to multifamily investment properties, Howell Investment Finance will help you get the financing you need—no matter what your real estate investment goals may be. Visit their website to learn more about their extensive expertise and range of services, or call their offices today at (515) 233-8228 to discuss investment opportunities and make an appointment.

3 Popular Financing Options for Real Estate Investors

Thu, 18 Aug 2016 20:38:59 GMT

Commercial real estate investment covers a wide range of projects, from purchasing a smaller apartment building to constructing a large-scale apartment community. To help make these investments possible, lenders offer a wide variety of loans, each of which is ideally suited for different types of projects.

Howell Investment Finance , a specialized commercial mortgage broker based in Ames, IA, explains a few of the types of commercial loans available to those interested in investing in real estate:

Fannie Mae & Freddie Mac: For investors interested in building a portfolio of rental properties, Fannie and Freddie mortgages are now the most suitable type of financing available. In fact, using these GSE’s for your investment is one of the key elements that make real estate investments so lucrative.
FHA/ HUD Mortgages: The HUD/ FHA could have a program to help your cash flow to increase with their 35-year amortizations on refinance and 40-year amortizations on new construction. The HUD/FHA mortgages are one of the best loans available for senior housing projects.
Life Insurance Lenders: Many life insurance companies offer 30-year amortized mortgages as a way to diversify their own investments. In the long run, life insurance mortgages could represent another attractive way to finance your investment property.

In addition, Howell Investment Finance has the expertise to help you secure conduit loans, portfolio loans, or bridge loans, depending on your needs. Visit their website to learn more about their broad array of highly specialized services, or call (515) 233-8228 now to have your real estate investment questions answered.

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Will Interest Rate Cuts = Lower Cap Rates

Federal Reserve Lowers Interest Rates

Leveraging Non-Recourse Mortgages for Succession and Estate Planning

HUD Eliminates 3 Year Rule

The Wait Is Over.

1. Great Terms

2. Lowest interest rates

3. I Can’t Refi Because of my Pre-Payment Penalty

4. Low Interest Rates Won’t last Forever

Multifamily in Quad Cities

Multifamily in Sioux City, IA

Assisted Living and Memory Care in Cedar Rapids, IA

Senior Housing in Marion, IA

Is the Fed's Interest Rate Increases going to Hurt the CRE Market?

Why is the Federal Reserve Raising Interest Rates Now?

How Many Rate Hikes will the Fed do in 2022? ﻿

What do rising interest rates mean for CRE investors?

Should I refinance now or wait until my pre-payment penalty ends?

Maximize Your HUD Loan to Pay Off Higher CRE Interest Rates

Maximize a HUD Mortgage

HUD is NOT just for Section 8 Housing

Benefits of HUD Financing

How the Federal Reserve's "Tapering" could affect Interest Rates

What does Tapering mean to you? ﻿

What happens when Tapering begins?

When will Interest Rates rise? ﻿

As Interest Rates Rise, Your Cash Flow decreases. ﻿

The Time to Act is Now or Very Soon

Don't be a frog in boiling water, not noticing that you're in trouble until it is too late.

What Should You Consider When Refinancing Commercial Real Estate?

1. Timing ﻿

2. Is your Multifamily or Senior Housing in the best financial position? ﻿

3. How do I get started at looking at my options? ﻿

Why use Howell Investment Finance? ﻿

Interest Rates will be Rising, Lock-in Rate NOW for Next 35 Years

It's Time to Refinance with HUD

What is the Benefit of refinancing with HUD? ﻿

Am I Required to Rent to only Section 8 Tenants? ﻿

What Type of Properties Will HUD Refinance?? ﻿

What about my current Prepayment Penalty? ﻿

What do I need to get a loan? ﻿

HUD Does Market Rate Housing, NOT just Sec 8

Types of HUD Loans ﻿

Why HUD and not Another Lender? ﻿

Guide to Rent Rolls and T-12 (Trailing 12 months)

Do You Want a Smooth or Delayed Refinance? ﻿

What needs to be on a Rent Roll? ﻿

What Needs to be on a T-12? ﻿

Tired of Refinancing every 5 years? How about once in 35 years?

What Are The Benefits of a HUD Mortgage?

Working With Banks ﻿

Call Before The Interest Rates go Higher. ﻿

How Low will HUD Interest Rates Go during COVID?

Benefits of HUD Financing

Is HUD only for Low Income Properties?

What About COVID-19?

Prescription to Survive COVID-19 could be a WELL Building

What are you talking about in a WELL building

1. What makes a WELL Building ﻿

2. Are there any WELL Buildings in Iowa?

3. Why Would I Want a WELL Building?

4. Owners Statement: ﻿

HUD is Lending During COVID-19

HUD Remained Open For Business

What about the other lenders? ﻿

What type of properties will HUD finance? ﻿

What are HUD’s typical loan parameters? ﻿

What about construction loans? ﻿

Bridge Loans- Why and When

5 FAQs About Bridge Loans

1. What is a bridge loan?

2. When is a bridge loan needed?

3. What is the borrowing time frame?

4. How much can be borrowed?

5. What types of property can use a bridge loan?

Which Financing Option Should You Choose

Loan Option Smorgasbord

Fannie Mae and Freddie Mac

HUD- also for Market Rate Properties

How Many Rate Hikes will the Fed do in 2022?

What does Tapering mean to you?

When will Interest Rates rise?

As Interest Rates Rise, Your Cash Flow decreases.

1. Timing

2. Is your Multifamily or Senior Housing in the best financial position?

3. How do I get started at looking at my options?

Why use Howell Investment Finance?

What is the Benefit of refinancing with HUD?

Am I Required to Rent to only Section 8 Tenants?

What Type of Properties Will HUD Refinance??

What about my current Prepayment Penalty?

What do I need to get a loan?

Types of HUD Loans

Why HUD and not Another Lender?

Do You Want a Smooth or Delayed Refinance?

What needs to be on a Rent Roll?

What Needs to be on a T-12?

Working With Banks

Call Before The Interest Rates go Higher.

1. What makes a WELL Building

4. Owners Statement:

What about the other lenders?

What type of properties will HUD finance?

What are HUD’s typical loan parameters?

What about construction loans?