Before it received Fannie Mae approval, Michael Bedzow, CEO of Aventura, Fla.-based Groupe Pacific, didn’t have a very deep pool of buyers for his 718-unit Brickell on the River project in Miami. “We were one of the first to get Fannie Mae approval,” Bedzow says. “Our first buyers were cash closings. When we were able to obtain mortgage financing with Fannie Mae, any bank was willing to finance it.”

Without backing from one of the government entities, buyers may need as much as 30 percent or 40 percent down, a 740 FICO scores, two years of verified income, and pristine credit backgrounds to buy a condo, according to Jack McCabe, CEO of Deerfield Beach, Fla.-based McCabe Research and Consulting. That’s why it’s so necessary for developers to get approval from Fannie, Freddie Mac, or the Federal Housing Administration.

But there are catches. Fannie’s approval only comes if more than 70 percent of the units must be pre-sold. The Federal Housing Administration recently increased its pre-sale requirement from 25 percent to 51 percent. “They’re trying to do it to prevent a huge percentage of foreclosures, so it makes sense,” McCabe says. “But for South Florida, it means that with these restrictions, it’s very, very difficult to acquire FHA financing.”

In fact, McCabe wonders why pre-sales are that big of a deal anyway. “These pre-sales don’t amount to more than deposits,” he says. “Between 90 [percent] and 100 percent of people have been walking away.”

The FHA is also requiring that one entity owns more than 15 percent of the units in a building and that no more than 30 percent of the units are rentals. “The banks themselves are putting a lot of restrictions on the owner-tenant relationship,” says Andres Lemos, principal of Miami-based multifamily marketing and investment firm Miami Waterview Properties.

To get around these requirements, some developers with multiple towers, for instance, will re-phase projects—moving the buyers from both towers into one. They then put the rentals in another tower. That not only increases the percentage of contracts in the one building (to help it meet Fannie or FHA guidelines), but it also puts empty units together in the second tower, making it easier to operate (and possibly sell) as a pure rental building.

“When they have more than one phase, they’ll try to move the buyers all to one phase so they can clean up rental units,” McCabe says. “The rentals won’t affect the sales process and financing. Then they can market the building as a rental to a possible buyer.”

There are potential troubles with this approach as well. Some developers have reported that they’ve run into roadblocks from the U.S. Department of Housing and Urban Development by re-phasing. And, enticing buyers to move from one phase to another can get costly. “If people don’t go for it, they may have to make concessions,” McCabe says. “The costs could be in the thousands.”

That leads some developers to wonder if going through the red tape for all of these approvals is even worth it. “In a lot of cases, you’re still dealing with the all-cash buyer,” says Jay Jacobson, a partner in Wood Partners, a multifamily builder based in Atlanta. “You still have to get the individual banks to make a loan.”