# Presentation: 629811

## PRESERVING RURAL RENTAL HOUSING

**Buyers & Sellers Conference**
**April 17, 2008**

## Putting the Deal Together

**What Works ........**
**Having an Experienced Developer**
**One point of contact with RD for completing the transaction**
**One CNA provider will complete all of the capital needs assessment**
**One Attorney/Title Insurance Company**
**Was able to do multiple loan closings at one time**
**One Appraiser**

## Putting the Deal Together...

**One Application for Portfolio Transfer**
**Buyer of multiple properties can submit one application**
**Will have to do separate budgets, market studies, appraisals, etc. for each property – if not consolidating**
**Can streamline documents required, i.e. only 1 Identity of Interest Disclosure, 1 set of financial reports, 1 commercial credit report, etc.**
**Use Transfer Checklist and Fillable Forms**

## Putting the Deal Together

**What Works...**
**Consolidation of multiple properties located in the same state **
**Created savings benefit for the properties because only 1 audit will be required, 1 set of recordkeeping, etc.**
**Rental Assistance could be shared throughout all units, rather than just one property**
**Marketing for New Tenants & Tenant Placement is improved**
**Can use same site manager for all properties**
**Properties are not competing against each other, but working together**

## Putting the Deal Together.....

**What Works....**
**Multi-Preservation and Preservation Program (MPR)**
**This works well with transfers especially if there are no other funding sources**
**Debt deferral provides resources for making capital improvements as identified in CNA**
**Held meetings with Management and Owner to discuss MPR program and responsibilities**
**Helps them understand the CNA report**
**Reviewed legal documents and requirements**

## Putting the Deal Together

**What Did Not Work or Needs Improved...**
**Timing or Coordination is a challenge**
**Different funding cycles, different programs, different Agencies**
**Different closing deadlines due to different funding cycles**
**Can’t complete underwriting without certain items:**
**Capital Needs Assessment**
**Appraisal**
**Market Study**

## Putting the Deal Together

**What Did Not Work or Needs Improved...**
**Legal Issues due to incorrect legal descriptions, easements, etc.**
**Need to obtain legal survey**
**Obtain experienced title company and closing attorney to make process go smoother**
**Understanding RD Regulatory Requirements and Tax Credit Requirements**
**Developer is a good source for learning more about tax credits**
**Work with RD personnel, attend State Housing Association training sessions, etc. **

## Putting the Deal Together

**What Did Not Work or Needs Improved...**
**Making the Deal Work Without New Funding while still Complying with Regulations**
**Addressing immediate capital needs at property**
**Replacement Reserve account has to be resized to meet long term capital needs identified in CNA**
**Must keep rents affordable **
**New Owner needs to understand that if reserve is not sufficient for capital improvements or deferred maintenance, they will be ultimately responsible**

## Putting the Deal Together

**What Did Not Work or Needs Improved...**
**Paperwork, Paperwork, Paperwork**
**Different Agencies requires different applications**
**Different Agencies require different Legal Documents**
**Recognize that requirements may vary from state to state**
**RD-11, RD-3, and RD-19 required 2 transfers**
**This amounts to 66 Transfers, 66 appraisals, Legal Fees for 66 closings, etc.**
**Simplify if you can**

## Putting the Deal Together

**What Did Not Work or Needs Improved...**
**Replacement of Management during the interim**
**Communication between buyer and seller**
**Will management currently in place take care of property?**
**Does new Buyer have experience to manage or do you need non IOI management?**
**Interim management may need more incentive since management would be temporary**
**State HFA did offer more incentives to keep their interest**
**Need more Non Identity of Interest Management Companies**
**Need Training Program for new Owner’s management company in order for them to be qualified to manage RD financed properties**
**RD wants New Owner and New Management to be successful, so go slowly and don’t take on too much, too fast!**

## Putting the Deal Together..

**Tips**
**Build on what works and make it work better**
**Learn from what did not work and address these early on in future deals**
**Offer suggestions for improvement**
**Be Understanding & Flexible– know that every deal is not the same**
**Build a relationship with HFA and RD**
**Attend as many training sessions as possible to learn as much as possible**
**Communicate, Communicate, Communicate!**

## HFA/RD Partnership

**Missouri RD has 200+ properties connected with Missouri Housing Development Commission (MHDC)**
**LIHTC/HOME Funds/AHAP Credits**
**RD Subordinated with MHDC in first**
**MHDC took a second liens on RD properties**
**RD financed properties with project based    Sec. 8 contracts managed by MHDC **

## MHDC/RD Streamlining

**Agencies identified tasks that were being duplicated by both agencies**
**Supervisory Visit/Management Review**
**Physical Inspections**
**Budget approval process**
**Yearend Reviews/Audits**
**Rent Increases**
**Reserve request**

## RD/MHDC Streamlining

**Partnering Agencies will accept reports/inspections from lender in first lien position**
**Both Agencies will be flexible when special conditions exist**
**Borrower will not have to respond to both agencies for most items**
**Agencies will share reports for monitoring portfolio**
**Both Agencies will meet with borrower/management agent when there is a joint interest, if there are concerns**
**Borrower will to comply with most restrictive regulation**

## Lessons Learned from Noah’s Ark

**Don’t miss the boat!**
**Remember that we are all in the same boat;**
**Plan ahead; it wasn’t raining when Noah’s Ark was built;**
**Stay Fit;**
**Don’t listen to critics, just get on with job that needs to be done;**
**Build your future on high ground**
**For safety, travel in pairs;**
**Speed isn’t always an advantage**
**When your stressed; float a while**
**Remember the Ark was built by amatuers; the Titanic was built professionals!**

- The Woodpecker might have to go!