If anyone has interest in the HUD multifamily / healthcare programs, I'm happy to answer questions.
I have seen some discussion of the Agency programs but few posts on HUD debt (232, 221d4, 223f, etc). I think HUD scares people off sometimes but for the right scenario and borrower they can be very powerful. For people who don't know, HUD has financing programs for apartment buildings, and ALF/MC/SNF facilities around the country at very high leverage and very long terms.

&amp;#x200B;

The trick is HUD is quite particular about locations, borrowers, and the underwriting timelines are longer with higher soft costs. You also cannot finance office, industrial, credit tenant, etc with these loans.

&amp;#x200B;

I have been working at a direct HUD lender for almost a decade from an analyst position to underwriting (and origination) and been involved in a pretty wide variety of scenarios so I'd be happy to discuss pros/cons and answer any technical questions if people are interested.

&amp;#x200B;

edit. Since this is sliding down the list, if anyone finds this post via Google in the future and I am not available for questions, I have been recording videos on different HUD programs including sample analyses which may be helpful for review -  [https://www.youtube.com/user/bedfordlending/videos](https://www.youtube.com/user/bedfordlending/videos)
[{"id": "etxafl0", "text": "Could you get HUD financing on a portfolio of SFH\u2019s?", "replies": [{"id": "etxek99", "text": "No you couldn't. HUD will finance scattered sites / portfolios, however each parcel must contain 5 or more units. Plus you would need a survey, property condition report, etc for each parcel - it just wouldn't be cost effective. I believe Fannie has a SFR program that may be a fit for you.", "replies": [], "depth": 2}], "depth": 1}, {"id": "etxbc3i", "text": "I just submitted a final approval package to HUD for a  221d4 loan. We are awaiting comments, and expect to start construction within a month. Our interest rate was locked in at just over 4% for a 40 year time frame. Although it took us about a year and a half longer to close with a HUD loan than a conventional loan, for our ownership it is well worth it.", "replies": [{"id": "etxewgj", "text": "That's a good rate. \n\nIt's certainly not for the faint of heart, but the terms are objectively tough to beat for the right scenario. I think HUD used to be best for long term investment strategies, but we have seen an uptick in interest from borrowers who want to lock in the rate now and then have the flexibility for an assumption down the road. Congratulations on the loan.", "replies": [], "depth": 2}], "depth": 1}, {"id": "etxeogx", "text": "Do you have current vertical construction cost estimations for suburban multifamily market rate deals, multi-building, four story with an elevator? Just looking for high level stuff I don't want to engage a GC to cost it - I am looking for more underwriting metrics of SF costs and total all in unit costs.", "replies": [{"id": "etxftal", "text": "I don't really have that to be honest because it varies so wildly from market to market and construction type. We will see costs at $150k a unit in one market that's $220k in another. If helpful we recently funded a 5 building, elevator, four story (each), 153 total unit project that came in at $190k per door for the construction contract but that included a huge amount of site work. Without sitework it was around $164k per unit. This was in a secondary market in New England.\n\nWe have seen increased interest in modular which may be of interest if traditional stick built is coming in high in your area. Also if you have access to Marshall &amp; Swift, that's the best way to ballpark costs, but I'd also recommend reaching out to some CCIMs or other RE folks in your area to ask.", "replies": [{"id": "etxgbrc", "text": "Right on, thank you - and I totally have reached out to a variety of people in the market across a bunch of niches that touch multi. I was just really interested considering we are in late stages of HUD approvals. That's the green light we would need to move forward and cost it in real terms. As far as raising capital etc.... having some ballpark vertical costs helps. \n\nWould be curious - you discussed an uptick in modular as interest to HUD. What are some other macro level trends that would be of interest to say - someone looking to get into the HUD process or if I was just a curious RE nerd...???", "replies": [{"id": "etxk60a", "text": "A trend I've seen is maybe less a trend and more a natural byproduct of some of the saturation that his hit major markets - but we're seeing significantly more interest in secondary or tertiary markets for smaller scale developments. A lot of municipalities are getting smarter and putting together revitalization strategies to rebuild downtown, interest developers, etc, so having a new 40-60 unit project as part of that effort is symbiotic. If the average unit count for HUD (in our experience) was 120+ 5-10 years ago, now it's in the 90 unit range.\n\nA note with modular - you can use it with HUD, but many manufacturers want some sort of deposit or monies provided before closing so that the units can be manufactured and delivered on-time with the construction schedule. HUD does not provide any advanced monies, which means if you have to cover that initial \"deposit\" prior to closing, it's at-risk capital until you're reimbursed by a construction draw.", "replies": [], "depth": 4}, {"id": "etzjvec", "text": "Some states, like Texas, publish appraisals and underwriting reports of LIHTC applications. If you can find those, they will have often have at least a brief discussion of the costs associated with building the project. Like OP said, the range is wide from project to project.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "etxnxlv", "text": "Ex. 150 unit, workforce housing. What's the advantage of the HUD 223f vs. agency debt?", "replies": [{"id": "etxpb89", "text": "Not OP but there a few key differences between HUD &amp; agency:\n\n&amp;#x200B;\n\nTerm - HUD offers a 35 YR fully amortizing loan while agencies are traditional 5/7/10/12/15 YR conventional commercial mortgages with balloon payments due at maturity\n\n&amp;#x200B;\n\nAmortization - HUD's 35 YR product is fully amortizing, and with 420 periods in your PMT calculation you will be paying a lower monthly payment over a longer period of time. Agency loans are almost all calculated using a 30 YR amortization schedule.\n\n&amp;#x200B;\n\nLTV - HUD doesn't discriminate on markets and can get up to 80% LTV almost anywhere. With agencies you will face pricing tiers and will face some levels of subjectivity.\n\n&amp;#x200B;\n\nDSCR - HUD will size to a 1.18x debt coverage ratio where agencies cap out at 1.25x.\n\n&amp;#x200B;\n\nInterest Rate - HUD calculates their interest payments on a 30/360 schedule where agencies use \"Actual/360\". With actual/360 you are paying incrementally more interest on months with 31 days, which does add up over the life of the loan.\n\n&amp;#x200B;\n\nThe cons of HUD loans are you can't add supplemental debt, you have to pay MIP premiums, and you can't get much interest only. Also, I have heard that HUD auditing and reporting is much more strenuous than agency lenders.", "replies": [{"id": "etxq0kf", "text": "This is mostly correct and a good point about I/O but of note you can do supplemental loans under the HUD 241(a) program. It's not widely used but it is available and pretty high leverage.", "replies": [{"id": "etxqgys", "text": "Sorry for taking your thunder on your thread! Just taking a break from sizing some agency deals and felt super charged to contribute!  \n\n\nOn the subject of supplemental loans, is this true for 223(f) as well?", "replies": [{"id": "etxqprq", "text": "No problem at all the more the merrier. I think people have a lot of questions about agency too. Yep you can do a 241a on a 223f.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "etxphjj", "text": "HUD Pros\n\n- HUD leverage and terms do not vary based on market. Affordable projects qualify for 87-90% of value, or 80% LTV cash-out. Agency terms change based on Top Market, Standard Market, etc. Standard under agency is 70-75%.\n- HUD rates are generally lower even with MIP factored in.\n- Longer amortization (35 vs 30 years).\n- Longer fixed rate period (35 vs 5-20 years).\n- Less onerous prepayment penalty (maybe). HUD is declining, whereas agency often will be defeasance or yield maintenance, but sometimes offers declining. \n\nAgency Pros\n- Faster processing\n- Lighter soft costs\n- More flexibility with asset type\n- Less scrutiny of property condition. This is a big one for existing assets as HUD will require a reserve analysis that includes replacement reserve deposits for a 20 year period.\n\nOn a larger asset in the 150 unit range, typically there are enough economies that HUD will beat agency, particularly if it's a long term hold. Generally when we analyze we will do a S&amp;U breakdown of both scenarios so the borrower can see the differences.", "replies": [], "depth": 2}], "depth": 1}, {"id": "etxppe9", "text": "I'm trying to buy a 4-unit that needs a rehab. I need 5 units minimum?", "replies": [{"id": "etxq4qc", "text": "Correct and you would not want to use HUD multifamily loans for a project of that size even if you had 5 or 10 units. There are just no economies of scale at that point to make the soft costs worth it.\n\n&amp;#x200B;\n\nI would recommend a local bank or credit union with an agency small balance take-out if the perm request is over \\~$850k.", "replies": [], "depth": 2}], "depth": 1}, {"id": "etz0iri", "text": "I'm in the HUD space as well and came here to ask a different, less technical question - how was your move from underwriting to originations (assuming that was your path)? Any recommendations for someone thinking about making a similar move?", "replies": [{"id": "etz107g", "text": "Oh I didn\u2019t really transition from one specific role to another - we\u2019re a very small shop in terms of staff (keep low overhead) so we all do a little of everything. The most successful dedicated originators we work with don\u2019t have any particular science they just pound the phones, network and try to reach as many people as possible.", "replies": [], "depth": 2}], "depth": 1}]