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How Big is Small Cap Multifamily?

A closer look at the multifamily housing inventory in the United States and the size of the small cap investment opportunity.

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232 Pursuant to 223(f)

Arbor provides FHA-insured, long-term, fixed-rate financing for refinance, acquisition or moderate renovation of assisted living and nursing facilities nationwide. Arbor uses the single-stage LEAN Program to expedite underwriting and approval.

Loan Term & Amortization A maximum term of 35 years or 75% of the remaining economic life, fully amortizing.
Maximum Loan Loan amount of the refinance or purchase of existing properties is the lesser of:

  • 80% (85% non-profit) of market value;
  • A mortgage amount supported by a DSC of 1.45x;
  • 100% of the transaction cost for a refinance, (85% of the transaction cost for a purchase transaction). Recognizable transaction costs include repairs, initial replacement reserves, third-party reports, closing costs, along with eligible existing indebtedness or purchase price
Fixed Rate Yes
Eligible Properties The facility must have been completed or substantially rehabilitated for at least three years prior to the date of the application. Projects with additions completed less than three years previous are eligible as long as the addition was not larger than the original project size and number of beds.
Eligible Borrower Single Asset Entity (for profit or non-profit).
Cash Out Not allowed.
Tax & Insurance Escrows Monthly deposits required.
Recourse Non-recourse.
Commercial Space Maximum 10% of gross floor area and maximum 15% of effective gross income.
Required Reports Appraisal, Property Capital Needs Assessment (PCNA) and Phase I Environmental.
Prepayment Negotiable. Generally two-year lockout with a 10% to 1% declining pre-payment penalty. Other pre-payment options are available.
Assumable Subject to Arbor and HUD approval and payment of assumption fee.
Good Faith Deposit Negotiable based on project type.
Expense Escrow Yes – sufficient to cover Arbor’s expenses and third-party report costs.
Origination Fee Negotiable
HUD Application Fee Non-refundable fee of $3 per $1,000 (0.3%) of the mortgage amount due to HUD with the firm commitment submission package.
HUD Inspection Fee $30 per unit when repairs are less than $3,000 per unit. 1% of the cost of the repairs otherwise.
Legal/Closing Fee Borrower pays Arbor’s Counsel Fee and miscellaneous closing costs.
Rehabilitation Qualifications Repairs cannot exceed 15% of appraised value or replacement of 2 or more major building systems.
Davis Bacon Not applicable to this program.
HUD Mortgage Insurance Premium 1% MIP upfront at closing. Annual MIP:

  • 0.77% for Market Rate Properties
  • 0.45% for Affordable Properties


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