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HUD Financing as a Strategy for Rising Rates and Affordable Housing Projects 

For owners of multifamily housing, a HUD (Department of Housing and Urban Development) loan provides financing and liquidity that allow for lower interest rates, longer amortization, construction to perm financing options for multifamily housing projects. However, achieving HUD financing can be a difficult process and requires a lender who has the knowledge and experience to get the deal closed successfully. 

Why think about HUD financing? 

Now is a fantastic time to think about HUD financing as a strategy when it comes to affordable housing projects. HUD offers up to a 35-year amortization, compared to a typical CRE loan which only offers amortization of 20-25 years with terms as short as 5 years. 

Additionally, loans are fixed-rate, non-recourse, and have no balloon payments. 

Unlike a lot of multifamily financing options, HUD has no geographical restrictions and no minimum population requirements. Because the Federal Housing Administration (FHA) insures the loan, your lender can offer you a better deal. This includes lower down payments, lower closing costs, and easier credit qualifying.  

Here are some other benefits of HUD financing: 

  • One of the highest LTVs (loan-to-value) available 
  • Allows supplemental financing 
  • No financial capacity requirements 
  • Offer 80% LTV without limitations on the market 

Drawbacks of HUD loans 

There are pros and cons to HUD financing, but with the right lender, a lot of the difficult aspects can be avoided. HUD financing is not an easy process.  

Common problems when it comes to closing a deal are the government red tape, as well as working with a lender who might not have a lot of experience with these types of loans.   

A few other things to consider with HUD financing: 

  • Property inspections required 
  • Annual audited operating statements required 
  • Owner distribution and cash out restrictions 

Rent costs are not going down any time soon  

With rent increasing nationwide, cities like Orlando, Los Angeles, Atlanta, Dallas, Las Vegas, and more saw rent surges of 10% or more. Nashville, Jacksonville, Austin, and Seattle (just to name a few) saw surges between 8-10%. 

Local areas Lincoln James Capital serves saw drastic rent increases as well. Residents of Charlotte, North Carolina experienced a rent increase of 14.1%, while Tampa saw a surge of more than 28%. 

In an article by Greystone called “Rising Rents, Low Supply: Multifamily Data Analysis” Kimberly Byrum, managing principal for multifamily for Zonda, a housing market research and analytics firm, said that “rents and occupancy rates are at an all-time high in the multifamily sector as of the first quarter of 2022. Rents rose 19% between the first quarter of 2021 and the first quarter of 2022.” Byrum said nothing in current data indicates that the rent surge will reverse.  

Lincoln James Capital can get HUD deals closed successfully 

Traditional have risen significantly and projected to continue to rise,  and HUD financing is a great alternative to get lower rates and favorable terms. Our experienced team members can help you get HUD deals closed successfully and form strong partnerships with lenders. You shouldn’t have to settle for an undesirable loan. Nobody wants to experience buyer’s remorse or feel like they’ve been taken advantage of. And nobody should attempt to go through the lending process alone. Lincoln James Capital is here to help. 

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Brigitte Grava

Financial Analyst

Brigitte Grava, an accomplished scholar from the University of Tampa, holds both a Bachelor’s Degree in Economics and a Master’s of Science Degree in Entrepreneurship from her alma mater. Brigitte’s dedication to academic excellence is shown in her performance as an undergraduate student as she was invited to the Adam Smith Economic Honor Society in addition to graduating from her Master’s program at the top her class in 2022. With over 5 years of industry experience, including a specialized focus on mergers and acquisitions during her 3-year tenure at a boutique investment bank, Ms. Grava brings a wealth of financial expertise to her endeavors. Her exceptional execution of economic and financial analyses, coupled with her strategic insight, empowers her to provide invaluable recommendations for business growth and corporate development. Brigitte is skilled at navigating intricate M&A transactions, consistently delivering optimal outcomes for her clientele. Her track record speaks volumes about her ability to handle every facet of these transactions with finesse, resulting in remarkable results for her clients.

Alyssa Beatrice

Director of Marketing

Alyssa Beatrice is the Marketing Director of Lincoln James Capital, leveraging over 7 years of expertise in both B2B and B2C domains. Holding a Bachelor’s Degree in Business Administration with a major in Marketing, Alyssa’s career is driven by innovation, determination, and data-driven results. Her impressive track record showcases numerous successful online and offline marketing campaigns, reflecting her inventive spirit and collaborative team approach. Alyssa’s unwavering passion for achieving exceptional outcomes has made her an invaluable asset to our team at Lincoln James Capital.

Andrew Millis

Commercial Loan Originator

Armed with a bachelor’s degree in business administration, specializing in Personal Finance from the University of Wisconsin Stout, Andrew possesses a wealth of knowledge and expertise in the Commercial Finance industry. With a solid background in community banking spanning 3  years and an additional year as a commercial credit analyst at Bankers Healthcare Group, he has demonstrated exceptional proficiency in the financial domain. Notably, Andrew has also successfully ventured into the real estate sector, establishing three thriving businesses in recent years.

Beyond his professional pursuits, Andrew cherishes quality time with family, friends, and his two beloved dogs. He finds solace in exploring new destinations through travel and engaging in outdoor activities such as hiking, golf, pickleball, and hockey. A true sports aficionado, he ardently supports the Green Bay Packers, Milwaukee Brewers, and Chicago Blackhawks.

Alex Cheng

Senior Vice President

After receiving his Bachelor degree in 1978, Alex started his professional career with a reginal CPA firm in New Orleans as Auditor. In 1980 he moved to Los Angeles to join ABPA, a national employee benefit administration firm.  He was promoted to Accounting Manager when he left the firm in 1988 when he was recruited by Dallas TX based Caltex petroleum Corporation, a JV of Chevron USA and Texaco Oil Company.  Alex served as Director of Finance in various countries, including the Philippines, Greater China (China, Hong Kong and Taiwan) and Australia.  Alex left Caltex in 1995 to start his own accounting firm in Burlington North Carolina.  By 2006 his firm has grown to a regional presence with offices in Cary, Burlington, Greensboro, Charlotte and Rock Hill, SC.  Alex sold his successful practice in December 2006 just before the latest financial meltdown.  Since 2007, operating under the firm name Alliance Consulting Group, Alex has been a financial and management consultant advising clients on complicated fiscal matters and improve overall efficiency in management and operation.  In 2015, Alliance Consulting added digital marketing to its service area to meet the changing landscape of business.  Currently his firm manages private equity funds of Family Offices and other high net worth individuals, with focus on multi-family apartments and purpose-built Student Housing apartments near major universities throughout the country.