Freddie Mac Value Add Loans For Modest Property Upgrades
Nationwide
“One-stop shopping” for upgrade and permanent financing
Product Snapshot:
- Short-term, negotiable financing for upgrades of $10,000 to $25,000 per unit
- Allows for a wide variation in borrower term and structure needs.
- Up to 50% should be spent on unit interiors.
- Budget can be adjusted up to 20% without additional approval
Competitive pricing
Lower execution costs.
Interest-only and uncapped floating-rate loans available.
Non-recourse
Eligible Borrowers
- Developers/operators with experience in multifamily property rehab in local market with sufficient financial capacity
- 1.5x standard minimum net worth and liquidity requirements for guarantors
Eligible Property Types
- Less than 500 total units in good locations
- Well-constructed properties requiring modest repairs
- Market laggards that require capital infusion and new/improved management
- Properties in receivership capable of improved performance
- Seniors housing, student housing and manufactured housing communities not eligible
Terms
- 3 years with one 12-month extension and one optional 12-month extension at Freddie Mac’s discretion
- Floating-rate loan interest-only; no cap required
- No lock-out; borrower may pay off loan any time with a 1% exit fee (waived if refinanced with Freddie Mac)
- Acquisitions and refinances
- Not assumable
- Loan docs include Value-Add Rider which details rehab terms/requirements
- Escrows: real estate taxes, insurance and replacement reserves
- 15% cash equity required
- For longer term ownership, cash-out available with completion guaranty