Key Pitfalls to look out for when using this Debt Structure on Acquisitions
Happy Memorial Day Everyone. Before anything, I would like to honor an thank all families and all the U.S. military personnel who have served and currently serving in the United States armed forces. 

I will be closing on multiple value add 
multifamily acquisitions this year and will be using short term debt- Perm debt. 

Using a highly leveraged debt structure  ranging from 90-100% leverage a combination of Senior debt , subordinated debt and common equity. What would be the key pitfalls one ought to look out for during the acquisition to stabilization of the property ?

Figured to present a simple question and hopefully bring refresher to Investors with less then 5 deals trying to scale like myself 

Thanks and looking forward to hear from everyone

Regards 
AP
[{"id": "iak0qys", "text": "Increasing debt rates and declining cap rates, if true, would make for a less-than-ideal refi scenario.", "replies": [], "depth": 1}, {"id": "iak268x", "text": "Make sure you got someone to sign for the loan thats worth the loan amount lol my current problem i dont have a kp worth 13m lmao", "replies": [{"id": "iak4dus", "text": "I should be closing  on a upcoming 5M acquisition. No where near close to a 5M Net worth yet but everything is on track for the close. \n\nSorry to hear that , would it be the particular lender or the particular property ?\nI\u2019ve made it a habit to interview as much lenders as I can before ever settling with a \u201cNo\u201d", "replies": [{"id": "iak6q6c", "text": "Honestly not sure just what my sponsor said he wont qualify because the deal is too big and the lender said he needs to be worth a certain amount idk the exact number but yea thats what i been told so we are searching for a kp who would qualify the loan we were looking at was a Freddie Mac because its non-recourse so maybe thats the requirements for that particular loan not really sure just sucks because how far i got to barley be told this lol", "replies": [{"id": "iak87s6", "text": "Assuming it\u2019s a good Deal @ 13M there\u2019s no reason you ought to be throwing in the white flag to the requirements of just One sponsor. \nFeel free to send me a PM , might be able to recommend a few", "replies": [{"id": "iak8fw5", "text": "Im still on the search but the seller is probably going to pick the buyer end of this week .. ill send you a pm", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iakghkw", "text": "1) If you are counting on rent growth to continue through a possible recession, I'd be careful, especially if you have properties with tenants in the $800-1200 range. Many of those folks are stretched and pushing to the next level of rent range could be difficult for them. Demographics is key. Multifamily is awesome, but rent growth is slowing in many places and some folks are getting fed up being pushed on high rent increases by incoming landlords.  \n2) If your going-in price is a premium to the seller that has your business plan trading out those \\^\\^ tenants for better ones with higher incomes, track the path of progress and other demographic trends carefully. Folks who can do $1500-2000 in rents have more rental choices than the folks in #1 and will shop accordingly.  \n3) If you are at local or regional banks watch out for late closing retrades. Your loan officer may say one thing, the credit officer may say another, and the committee may still bounce your package or chop your proceeds just before closing.  \n4) I consider short-term debt under 3 years. Consider the possibility of refinancing in a completely different environment, perhaps even a deep recession.   \n5) Be sure to take a full increased property tax hit in your model. Another item a loan officer might miss that committee might bang you on.  \n6) If you are relying on IO to make the deal work, make sure the NOI also covers the debt \"fully loaded\" to test the refinance.\n\n7) Lenders are pushing back on appreciation-only refinance valuations. They'll want to see actual CapEx spends and a portion of equity kept in on the refinance side. That means that market cap valuations to hit a cash-out finance target may not fly unless you've spent money on the property and forced the appreciation.\n\nCongrats on your closings..Some or all of these may not pertain to you, but they are my thoughts given the scenario and capital stack you presented. \n\nA few downside cases in your model should cover these items but with such a levered up stack, diving deep into downsides is critical. Good luck!", "replies": [{"id": "iaks6es", "text": "Appreciate your insight. I always welcome into my mind information I know just because there would be times where certain deficiencies join and become stronger just as this was the case. Thanks once again \ud83e\udd1d", "replies": [], "depth": 2}, {"id": "ial2smw", "text": "This is a fantastic list. I had a lender retrade just recently and ask for much higher equity super close to closing. Deal was hard and nothing you could do about it.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ialjer0", "text": "At my debt fund we tend to look at basis over everything else. If the basis is too high you could be in trouble when you go to refinance due to some of the other points mentioned in this thread.", "replies": [{"id": "iamjnd2", "text": "Really appreciate your input. In tend always ask myself  the same question when doing a new reposition which is ..  is it feasible to appreciate the property at least by 25%-30% or not for the exit , unsure if it\u2019s useful for others.", "replies": [], "depth": 2}], "depth": 1}, {"id": "iamnyvc", "text": "Watch out for the bridge loan rates, especially if they are floating. Be conservative with your NOI\u2019s like others said (assuming high rent growth) so that your DSCR is realistic and has panic room. \n\nFor Value add, assume the worst for build out costs, as materials have skyrocketed in price.", "replies": [], "depth": 1}]