There are several subordinate acquisition and rehab loans that are also available for consideration. These could be used in conjunction with a traditional mortgage, funding the renovation work that will be completed and some portion of the original acquisition. Chart
In addition, as part of the marketing of the Small Building Initiative, the marketing agent should establish relationships with Chicago lenders that provide acquisition and rehabilitation loans, as well as 203(k) lenders, to understand how to appropriately broker or otherwise prepare prospective buyers to successfully qualify for loans. Understanding and researching each individual lender requires consideration of the following elements:
¥ Is the lender a reliable entity and are their rates reasonable?
¥ How do they use the 203(k) program and other loans for two- to four-unit buildings?
¥ Do they exercise the 10% bonus on appraised property values?
¥ What protocols exist for how they count rental income in approving mortgages?
¥ Are there different reserve or down payment requirements specific to two- to four-unit buildings?
¥ How best can an intermediary support the rehabilitation/acquisition process?
¥ Do they loan to non-profits using the 203(k) program to create affordable rental housing?