CPC’s guide gives step-by-step instruction to navigate acquisition and financing small multifamily projects, including best practices for property management
November 14, 2018 – New York City, NY — The Community Preservation Corporation (CPC), a leading nonprofit affordable housing and community revitalization finance company, announced the launch of Start Small: A guide to financing small multifamily building projects. CPC created this straightforward guide to serve as a free resource to help people of all experience levels (including potential first-time buyers, entrepreneurs and current small building owners) navigate the process of financing a small multifamily building project; from acquisition, to new construction, and rehabilitation or all three. Also included are best practices for managing a fully leased property. The launch of the guide took place on November 13th at a panel discussion in Albany, New York that was focused on the importance of small multifamily buildings in Upstate New York communities.
“Small rental properties are the backbone of communities large and small, and play a critical role in providing housing that’s affordable to families at a diverse range of incomes,” said Thomas McGrath, Senior Vice President & Director of Upstate Revitalization at CPC. “Small building projects are a practical first step for new owners interested in growing their real estate experience, but unfortunately there aren’t a lot of reliable resources to guide people through what can be a daunting process. The Start Small guide brings CPC’s four decades of experience in financing small rental properties to owners of all levels who are looking for clear and concise information on best-practices for acquisition, refinancing, rehab, new construction, and property management.”
Small buildings, defined as those with five to 49 units, make up the majority of the multifamily rental housing stock across New York State, and often serve as an entry point for those looking to enter the multifamily real estate market. Drawing on CPC’s nearly 45 years of experience financing small multifamily projects, the guide was created to support new developers and owners with information on how to realize steady returns through responsible, long-term ownership, and includes:
- A process map, breaking down the model for financing small buildings into key components
- A case study, detailing concrete examples of each stage of a small building project and determining feasibility.
- Market and municipal considerations, providing insight into how building location, building codes and zoning requirements may impact a project.
- Property management guidelines, including a range of activities to ensure the project stays occupied, in good health, and maintains profitability over the long-term.
- Financing milestones tracker as a reference to keep projects on track and on time.
The panel discussion was hosted by Thomas McGrath, Senior Vice President and Director of Upstate Revitalization and Michael Skrebutenas, Vice President and Regional Director of CPC’s Albany office with participants Patrick Chiou, CEO of Chiou Development Group; Darren Scott, Upstate East Director of Development for NYS Homes and Community Renewal (HCR); and Adam Zaranko, Executive Director of Albany County Land Bank Corporation and President of the New York Land Bank Association.
“CPC has been a pleasure to work with on my project at 800-806 Broadway. Without them, it would not have happened and the site would most likely be another vacant parcel in Albany. Restoring small buildings will be essential in the regrowth of the community. We need to tackle these individual buildings to slowly see the revitalization of our neighborhoods,” said Patrick Chiou.
“Whether you are first-time buyer or existing building owner looking to expand, small, multifamily buildings can present a great opportunity to create quality affordable rentals in communities throughout New York State,” said Adam Zaranko, President of the New York Land Bank Association. “The process of successfully acquiring, financing, rehabilitating and managing multifamily buildings can be difficult to navigate. This new guide from the Community Preservation Corporation and resources from partners like NYS Homes and Community Renewal will enable more people to responsibly reclaim multifamily properties and help stabilize neighborhoods across the state.”
The panel participants focused on the financing resources available to construct and preserve small buildings, and the opportunities and challenges this building type presents for developers and communities alike. During the discussion, HCR’s Darren Scott discussed the agency’s new Small Building Participation Loan Program, which provides gap project financing assistance for acquisition, capital costs, and related soft costs associated with the preservation and improvement of rental properties in small multifamily buildings located outside of New York City. HCR’s subsidy is combined with financing from a participating private institutional lender such as CPC, resulting in a lower blended financing cost.
Since its founding in 1974, more than 70 percent of CPC’s investments have been in small building projects, totaling 3,000 loans to a range of borrowers, including: first-time owners who have unexpectedly inherited a rental property; experienced general contractors or property managers who want to expand service offerings; and local business owners who want to own their storefronts and convert additional space into rental housing units for extra income.