LENDERS REQUIRING PROPERTY FIX-UPS

The capital markets are getting a little tighter for cash poor CRE owners with mismatched loan-to-value properties. It seems owners with deferred maintenance items are being forced by commercial lenders to kick in some essential repairs. Banks are quietly doing it. So is HUD.

Whats driving these forced rehabs? Some say too many banks have taken back too many properties that turned out to be in worse shape than anticipated. Others say some operators just havent invested in their properties as their lenders want. Whatever the reason, lenders are asking for on-site deficiencies to be fixed.

Some market observers contend lenders had become complacent. With money tight and things changed, lenders now are going out and seeing some of the properties they havent seen in a while and saying, Wow. You have some deficiencies here. Our loan-to-value doesnt match. So youre going to have to clean and fix this up.

Owners going to HUD for refinancing are seeing much the same thing. HUD is looking at the remaining economic life of a property and how functionally obsolete it is. When it comes to older projects, HUD wants to see they have gone through a substantial rehab. They are not going to do a refi for 35 years on a project that was built in the 70s and still has the same windows it had when built. If the windows arent replaced, the deal often dies.

So if you are looking for a rehabilitation loan, or to finance or refinance an existing property, or need to recapitalize a troubled one, let's discuss the world of capital options available to you at Remington Capital.