Loans Option for Senior Living


If you are looking for a new investment venture, consider building homes and apartments. Shelter is one of those things that people will always need and fortunately the federal government has programs to help investors, developers and others build affordable units. HUD financing for senior housing and other types is a way to financially benefit from constructing place for people to live.

The agency office in your state that is responsible for housing credits through the IRS is the first place you should contact. Investors can receive these credits from investing in builders’ projects.

Secure Matching Financing for Your Housing Project

In addition HUD programs, some states like California run programs similar to the federal program. The actual cost of completing certain housing projects might not be fully covered under the federal program. This makes it convenient to access a state program so your investment and time are not wasted.

Combining different programs are allowed in some situations. Just make sure you have a knowledgeable team, which includes a housing attorney and tax advisor, since it can become a bit complicated.

Verify Project Eligibility

Having an experienced team also helps to ensure that you are eligible to qualify for different programs. For instance, your development should be a residential rental property that adheres to HUD-mandated income requirements and reduced rent standards if you are building low-income properties.

Two standards are used by the agency to determine income and rent thresholds. While every unit does not have to be designated as low-income, you should have at least 20% that use rent limits. These units should have families who earn 50% or less of the median income for the area in which you plan to build. This is the 20-50 standard; the 40-60 standard is applied the same way.

Know the Advantages

As an investor or builder in affordable housing, you can look forward to certain advantages. Besides building homes for more families who otherwise could not afford a decent place to live, you receive an 85% maximum loan to value (LTV) for market-rate properties. Project-based rental assistance properties receive 90% when you build multifamily properties throughout the United States.

With this type of financing, you do not have the risk of changing interest rates. It is low and fixed throughout the term of the loan. This means you have low monthly payments and more net cash flow. Additionally, you are not encumbered with a balloon payment and each loan is assumable, which gives you an exit strategy if necessary.

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