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Tyler White 🚀:
✅ Welcome everyone to the RealAtom lender podcast series. Where you’ll learn about the lenders on the RealAtom platform and the organizations they represent. My name is Tyler White RealAtom‘s head of sales. RealAtom is the industry’s number one lending as a service technology platform and is powering commercial real estate lenders like banks, credit unions, and non-banking organizations to generate more CRE loans. Today I have the pleasure of introducing Stephen Rudow with AGM Financial Services, Inc. Stephen, thank you so much for taking the time to present to us today. Let me pass it over to you to kick things off.
Stephen Rudow:
ℹ️ Well, thank you, Tyler. And thanks to RealAtom, I really appreciate this opportunity. You talk about what we do at AGM, which is the wonderful world of FHA insured, multifamily finance, which gets me up out of bed every day. My name is Stephen Rudow. I’m a senior vice-president with AGM Financial Services, Inc and I’ve been in commercial real estate now since 1985, first as an appraiser and now as a lender. And I’m with AGM, which is an FHA multifamily lender. We’re a map lender, that’s the multifamily accelerated processing system. And we’re a specialized company we’ve been around for about 30 years. We are focused on these FHA insurance products. It’s pretty much all we do. We have about 21 people based in Baltimore and we do about $700 million of loan volume every year. Although this year it looks like we’re going to do about a billion dollars.
ℹ️ So we’re probably the biggest small HUD lender and the largest or one of the biggest small HUD lenders or the smallest large HUD lender. So yeah, it’s a tongue twister. Our typical deal is probably enough, 4 million to $75 million range. And I’m going to show you a few pictures of some of the projects that we do, and this is a dealer’s done card. We’re kind of known for this. It’s a promotional card that we put together for every loan that we close. And here’s one on a project called mission place. And this is a great market-rate project. We financed the original construction of this project. And then this card is for the refinance recently of $41,900,000 in change. So this is a market-rate project and we financed both market-rate and affordable. We also can do multifamily and age restrictions.
ℹ️ Our projects can include some commercial space. We can do ground leases. We can do projects with pilots. We’re pretty flexible, but we can’t do student housing and military housing. And one of the things that everybody likes about the deal is done, the card is on the back. We thank everyone who’s involved in the project. Now this card is a little light because this is just a refinance, but it’s got the title company, the energy consultant lender’s counsel. And we would normally include the architect, the general contractor, and all the folks who made that closing possible. So again, everybody loves a deal is done card, and I tell people that should be your project. You need a deal is done card. So here’s a deal is done a card for new hill place, which was a new construction project that we financed recently. And you’re probably asking Steve, why do I want to use a HUD-insured mortgage?
ℹ️ Well, there’s a couple of really good reasons. It’s fully non-recourse, it’s fixed-rate long-term debt. It’s great. If you want to own the property for a long time, it’s a fully amortizing loan with no balloon. There are some early prepayment penalties, but there’s no yield maintenance. And I happen to think that’s a really attractive feature because we’ve looked at a lot of refinance deals where the yield maintenance is just a killer. One negative is everybody knows HUD is not fast. So it takes a while to get through the process. And that’s one of the negatives, but we have a really strong team that will help guide you through the process. So the new hill place was financed under section 2 21 D four. We refer to these loan programs by the section on the national housing act that created the loan program. And this is for new construction and substantial rehab. And one of the benefits of this loan is that it combines your construction loan with a 40-year permanent loan. So, you do one round of processing, pay one round of fees, lock your rate before construction closes and you’re done. You don’t have any interest rate risk while you’re under construction. You don’t have any resizing risk when the project is coming out of construction. And it’s great again for a long-term hold. If you want to build and hold for your portfolio, if you’re developing affordable housing with low-income tax credits, either with or without bonds, then the hottest short mortgage is a great option to finance your property. There is one big negative that you’ll probably hear and that is that your general contractor has to pay Davis bacon wages, which are prevailing wages on the construction of the project. And that can increase your cost a little bit.
ℹ️ It depends a lot on where you are. So, here’s another deal is done cards, southside village, not the most photogenic property, but we finance a mix of market-rate and affordable. And this is another project where we financed a substantial rehab and then came back later and did a refinance when interest rates came down and this card is for the refinance. Here’s a refinance of victory terrace. This is a senior building in Maryland, and we do a lot of refinance business. One reason of course is the very low-interest rates that come with the HUD mortgages. They are really lower than you’ll find in other programs, but another is you have a 35-year loan, which again is a fixed-rate fully amortizing with no balloon. The 35-year term stretches the payments out a little bit and gets you better cash flow. And one of the advantages now, the 2 23 F program, the standard refinance is that we can now take out a conventional construction loan once a project is stabilized.
ℹ️ So now we have the ability to take out a brand new project. Once they hit stabilization, which is something we couldn’t do in the past. There was a rule that was recently revoked, which prevented us from doing that. Of course, HUD is not fast and you can use 2 23 F for an acquisition in addition to refinance, but the acquisitions are a little tough. So you might wind up wanting to look at a bridge product and bridge to HUD, but again, with HUD’s attractive underwriting criteria and large loan sizing, you can really maximize your proceeds. We can go to 80% loan to value if you’re taking cash out and that’s pretty darn good. So here’s a card on a high rise in Baltimore. This is a sustained substantial rehab, and this was a RAD deal. So RAD is a HUD rental assistance demonstration program where they’re helping public housing agencies generate funds to renovate their projects. We were fortunate enough to be involved in 12 of the 15 RAD deals in Baltimore’s first wave. And it’s a terrific program to help reinvigorate revitalize the existing public housing stock. Here’s another affordable project called Monarch mills. Again, we financed its construction and then a refinance. And of course, I like to end on this shot to the light tower, a hair under $75 million in Kansas City, almost 300 units. We do finance some high-end class, a market-rate product. We were thrilled to finance, one light and two light and three light is in the works. So that’s what I have for you today, Tyler, I really appreciate your letting me come in and talk to everybody. I hope that was helpful. And you know, at AGM, we’re very much about customer service. And so, I would love to talk to anybody and explain how these HUD programs work. That’s pretty much what I do.
Tyler White 🚀:
✅ Perfect. Well, a special thanks to Steve in AGM financial services for taking the time to present to us today. If you’re interested in Steve and speaking with Steve, please do not hesitate to contact him directly. If you want to talk to me in between podcast episodes, feel free to shoot me an email at tyler@realatom.com. And then if you’re interested in learning more about RealAtom or the lender podcast series, please visit our website at realatom.com. See everybody on the next episode.
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