Back in the early 1980’s I was a hatchet man for a multifamily lender that had a full pipeline but didn’t want to do any more business. My job was to review the loan request, visit the site if necessary, and find a way to kill the deal without getting sued.
I quickly learned this was a surprisingly easy task; there are few multifamily projects that don’t have flaws. Over the years I’ve refined the list, and I’ve settled in on 50 factors, which I’ll itemize in the next few posts.
Obviously, if you view all 50 as deal killers you’ll never make a loan. In fact, there are just a handful I would consider extremely important. The others are listed because there is some logic to the objection, and in combination with other factors may be a good reason not to do a deal.
This post deals with issues in the neighborhood. The first two issues are very important because they substantially reduce potential tenant traffic. The others on the list might offend some tenants, but probably not enough to substantially affect a project’s success.
| Issue | Comment |
| Lack of proximity to shopping, employment, services, freeways, transportation | Tenants prefer easy access |
| Derelict cars, abandoned furniture, shopping carts, tagging, trash, poorly maintained properties | Tenants prefer a well maintained orderly environment |
| Airport flight path | Noise |
| Railroad lines | Visual, Noise, Safety |
| Transmission lines | Visual, Health |
| Pipelines | Safety |
| High traffic streets | Traffic, Noise, Safety |
| Landfills, wastewater treatment plants | Visual, Health |
| Electrical substation | Visual, Health |
| Manufacturing/distribution facilities | Visual, Noise, Safety, Traffic |
| Pawnshop/pornography stores, etc. | Visual |
| Stadiums, Playfields | Traffic, Noise, Disorder |
| Schools | Traffic, Noise, Disorder |
| Churches | Traffic, Noise |
| Bars/Taverns | Noise, Disorder |
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