As the New Year kicks off, Cambridge Realty Capital President Jeffrey Davis has a recommendation for senior living operators who are hoping to get a HUD loan in 2020: Act now. “It takes six months or more to get a HUD loan, so your deal needs to be moving forward sometime over the next 90 to 120 days or it won’t happen in 2020,” Davis advises.
This means that assuming the countdown begins on January 1, 2020, operators must start the HUD application process no later than April 30 to have any chance of obtaining the funds before December 31, 2020. “But, the sooner the better,” notes Davis, since there are no guarantees when it comes to timing. Additionally, any number of things can put a snag in the process, although Cambridge has become adept over the decades at identifying potential issues and covering those bases before they become a hindrance to the application process. “There isn’t much we haven’t seen,” Davis said of his experiences with various senior living borrowers and their HUD applications.
Some things, like government shutdowns, are beyond Cambridge’s control. “The shutdown of 2019 affected some of our applicants,” Davis stated. Even so, Cambridge was prepared well ahead of time, and also prepared its HUD applicants for the delay.
SNF operator and Cambridge client Joseph Vince was one such borrower who was affected by the 2019 shutdown. Vince was well aware going into the process of the impending shutdown. “Cambridge thoroughly briefed us,” Vince recounted. Vince and Cambridge completed as much as they could do on their end prior to the shutdown. The day it ended, Vince recalled, “Cambridge hit the ground running.” In spite of those lost weeks, Vince’s deal closed within six months.
Six to nine months is about average for Cambridge Realty Capital’s HUD applicants from start to closing of a transaction. Davis never makes promises when it comes to timelines, especially when a significant part of the HUD process involves the government. He does, however, point to two aspects that contribute to Cambridge’s efficiency and success in processing and closing HUD 232 loans. One is its Signature ExperienceTM, a proprietary, multi-faceted evaluation tool developed by Cambridge to quickly assess a HUD loan candidate’s eligibility for as well as potential barriers to HUD 232 funding. “Applying this assessment helps ensure that a candidate’s time is valued and not wasted by a lengthy application process that is unlikely to have a favorable outcome,” declared Davis.
Extensive experience is the second tool Cambridge has in its belt when it comes to turning HUD applications into funding. Cambridge, the company, has almost three decades of senior living and HUD 232 underwriting experience. However, when you look at the collective experience of HUD’S staff members, there are well over 50 years. In fact, Cambridge President Andrew Erkes, who has been with the company almost since its founding, had several years of HUD 232 and senior living experience prior to joining Cambridge Realty Capital. “Erkes’ knowledge is comprehensive and his intuition and insight is impeccable. He is a real asset to us, and to our clients,” Davis proclaimed.
Davis urges senior living operators who already know they want to pursue HUD 232 funding, as well as those who are still exploring various loan products and structures, to contact Cambridge Realty Capital to obtain a vision of what Cambridge can do for their business. “Often just a simple phone inquiry can answer a lot of questions an operator might have,” Davis said. “There’s still time to close that deal before 2020 is over.”