Section 515 is a program through rural development. It was a program to improve housing in rural communities and became very popular. All of the ones that I have seen are for 20 years. The ones that I deal with have Section 8 attached, does this one? Are they any reserves? How is the debt larger than the value? Was the structure let go? The 515’s that I see are doing very well. Most are paid off by the 20 year mark, granted they have section 8 attached, but even tax credit money comes with renovation money attached so the property retains it’s value. Section 515’s are audited and inspected by rural development. They usually monitor their collateral very carefully. I over-see about 9 of these properties for HUD (they all have section 8) so I am only commenting on the ones in my portfolio so this may or may not help you. Anyway, you want to learn more about 515’s contact your local rural development office (formally known as farmers home). Best wishes, Mary
Anyone out there know this game. Looking at small apartment complex. 16 years old, and is officially a “former low income tax credit” property.
I must be willing to assume an existing Section 515 debt. What the heck is this? My hunch is that this is the government guaranteed mortgage which was placed on the property 16 years ago. probably a 40 year am. maybe non-recourse. Am I close?
anyone negotiated the purchase of these things before? Is is possible to get part of the debt negotiated away, if the debt balance exceeds the value of the property?
no listing agent. I was trying to gather in some intelligence before I called them, so my ignorance would not come oozing forth.
properties being sold internally by large financial insitution which syndicated public limited partnership deals in 80’s and 90’s (Low income housing credit deals). the value in those deals, to the investors, was the flow of tax credits and paper losses. no back-end money was expected, or even necesary to make the deal work. [a triumph of tax incentives over common sense, in my opinion].
the debt greatly exceeds the value of the underlying property, which is a problem. a problem mitigated, perhaps, by a very low interest rate and a long amortization.
I have a philisophical problem stepping into a deal which is 3-400K under water, no matter the preferential condiments. but I’ll study it anyway, just in case…