Basically All Real Estate
at Deal Away!
That Deal Away!
12725 Ventura Blvd., Suite B, Studio City CA 91604 l 818 l 755l 0880 l Fax: 818l 755 l 0881
Logan Investments BRE License 00902607, NMLS License 209410 l For Broker Use Only
Contact Ron Sentchuk: email@example.com
We fund loans that others don’t:
l Quick turnaround
l In foreclosure or bankruptcy
l Rehab loans
l Land and LTV 40% — 50%
l Mixed-use property
l Interest rates: 7.99% —
l Points: 2 —
4 points plus cost
l Terms: 1 —
5 years (Long-term programs available)
l LTV 55% — 65%
l Land and LTV 40% — 50%
l 1st, 2nd and 3rd trust deeds
*Rates and fees may vary due to position of lien, LTV and term.
l Owner-occupied for
business purposes only
Micro apartments may well be the future of rental
housing. There are plenty of pitfalls for developers and
lenders, however, that commercial mortgage brokers
Having your own bathroom is necessary, as owners
of single-room occupancy (SRO) hotels discovered
long ago. Even more critical, from a lender-risk perspective, is what type of cooking units can be used.
The wrong type of hot plate can spark a fire, which
is much more dangerous in these densely-inhabited,
Experienced property management is important,
too, because common kitchens require regular cleaning,
even with responsible tenants. Staffing, maintenance
writing task. Overall, developers and lenders must
have higher standards for experience, building quality,
location and property management.
Operational challenges aside, the largest impediments to the budding micro-apartment industry are
cities themselves. Cities are starving for affordable
housing, but they hold fast to 20th-century requirements around density and parking, which can push
costs so high that developers can only afford to build
San Diego, for instance, ranks as one of the least-affordable rental markets in the country, but new
development consists of luxury-type units in the
trendy Little Italy and East Village neighborhoods. In
Seattle, a surge of restrictions stifled the pipeline of
planned projects and construction lending has dried
up for all but the most experienced developers. Denver
has experienced mixed results with transit-oriented
development as some transit stations lack the requisite
infrastructure to make these areas walkable.
From a lender’s perspective, the arbitrary requirements of cities raise a host of issues, from renovations
and zoning compliance, to property-tax treatment
and sewer-capacity charges. This exemplifies the old
adage that real estate is a local business. What works in
a Seattle suburb may not work in Southern California
and vice versa.
Not surprisingly, many lenders shy away from micro-
apartment financing. Some have worked for years to
provided they meet the different, higher standards
regarding project quality. A few regional banks compete
in this sector but, again, with the same higher standards.
For out-of-state lenders, avoidance might be the
Lenders may worry that micro units are a fad, but will
the centripetal forces causing urban job growth suddenly reverse, causing demand for affordable urban
housing to fall out of favor? Sure, people move out
when they get married and have children, but that
happens across all apartment types.
Regardless of the mindset of city leaders or lenders,
developers and commercial mortgage brokers should
it or not, the future of rental housing is here. ■