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It’s a combination of factors. First, it’s looking at the sponsors and
market. If the sponsors are thinly capitalized and have no development
experience, and/or the market is oversaturated or supports rents lower
than the sponsors are anticipating, it will be a challenge.
If the sponsors and market look good, we then make sure the proposed
expenses have been reviewed by a management company or other real
estate professional in the area and are feasible based upon comparable
properties.
If the expenses are feasible, we make sure the budgeted construction costs
have been recently updated by a bondable General Contractor.
If all of the above pencil out, it’s a candidate for HUD.

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