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Investment Property Loan Program
FAQ
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What is the program?
Are there any grants?
What is the interest rate?
What is the term of the loan?
What is the maximum loan amount?
What do I need to do to qualify?
How long will the process take?
Will I need to come up with any cash up front?
What rehabilitation items does the loan cover?
Are there any rent restrictions?
What other requirements are there?
What is the Program?
The Investment Property 1-10
Unit Loan program offers owners of small rental properties
(1-10 units) rehabilitation loans of up to $25,000 per unit or
$30,000 per unit (in a target area). In addition to improving
the physical needs of the property, the program also ensures
the long term affordability, maintenance and management of the
units.
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Are there any grants?
No.
What is the interest rate?
2% simple interest.
What is the term of the loan?
20 years
Is there a minimum loan amount?
Yes, $5,000 is the minimum loan amount.
What is the maximum loan amount?
The project loan amount is
based on the property’s physical needs, the availability of
owner equity, and the commitment of other funding to the
project. The maximum loan amount is $300,000 ($30,000 x10) in
target areas and $250,000 ($25,000 x 10) elsewhere in the City
and County.
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What do I need to do to qualify?
We’ll send you an application
package or download it from our website, which includes a
checklist of the documents you’ll need to submit.
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How long will the process take?
If we receive a complete
application with all the required documents, usually about 6-8
weeks. Larger per unit requests and/or requests for over
$100,000 may require committee approval and take longer.
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Will I need to come up with any cash up front?
Yes.
The property owner must contribute a minimum of 10% cash
equity or 20% non-cash equity (i.e. value of the property) to
the project.
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What rehabilitation items does the loan cover?
Just about everything to improve the property, except for
what would be considered luxury items such as a built-in pool,
spa, etc.
The property must meet certain physical
standards to use the loan funds, or include those improvements
in the overall rehabilitation. Any external beautification of
the property (i.e. landscaping, fencing, etc.) must be
incidental to a larger overall structural rehabilitation.
Details on the property standards and levels of rehabilitation
can be found in the loan application.
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Are there any rent restrictions?
Yes. SHRA will impose rent restrictions proportionally to
the funding commitment. For example, if SHRA provides 60% of
the project funding, a minimum of 60% of the units will be
restricted. At a minimum, 20% of the units must be rent and
income restricted.
For properties with 1-4 units, all restricted units are to
be affordable to families earning up to 60% of median income
adjusted for family size. For properties with 5-10 units, a
minimum of 20% of the restricted units must be affordable to
families earning up to 50% of median income adjusted for
family size, with the remaining restricted units affordable to
families earning up to 60% of median income adjusted for
family size.
Gross affordable rents are based on Area Median Income and
published each year by the US Department of Housing and Urban
Development. To comply with funding requirements, net
collected rents must include a utility allowance as published
by SHRA. Current gross and approximate net rents for
Sacramento County are as follows:
|
Unit Size |
Gross Rent |
Utility Allowance* |
Net Rent |
|
50% |
60% |
50% |
60% |
|
Studio |
$561 |
$673 |
$49 |
$512 |
$624 |
|
1 Bedroom |
$601 |
$721 |
$49 |
$552 |
$672 |
|
2 Bedroom |
$721 |
$865 |
$58 |
$663 |
$807 |
|
3 Bedroom |
$833 |
$999 |
$86 |
$747 |
$913 |
|
4 Bedroom |
$930 |
$1,116 |
$121 |
$809 |
$995 |
* Utility allowances may change depending on unit type and
heating fuel.
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What other requirements are there?
All rehabilitation must be performed by a licensed
contractor, and the scope and costs of the rehabilitation must
be approved by the Agency construction department prior to
commencement of the work.
The application must include a management plan from an Agency
approved property management company, or from the owner in an
owner managed property. The management plan must include tenant
screening and selection procedures, house rules, fair housing
provisions, and must demonstrate a working knowledge of
reporting and compliance requirements associated with federal
affordable housing funds.
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