Multifamily Loans
Multifamily loans, also referred to as apartment loans, have traditionally constituted the largest portion of our total business volume. We are experts in securing apartment loans and mixed-use mortgages. We have over 30 years of experience working on apartment loans. So, if you have a question about apartment financing and need a loan that is greater than $1 million, give us a call today at 516-596-8537.
Multifamily Loan Rates - Updated March 30th, 2023
| Multifamily Over $6,000,000 | Rate* | LTV | |
|---|---|---|---|
| 5 Year Fixed | 5.22% | Up to 80% | |
| 7 Year Fixed | 5.10% | Up to 80% | |
| 10 Year Fixed | 4.91% | Up to 80% |
| Multifamily Under $6,000,000 | Rates* | LTV | |
|---|---|---|---|
| 5 Year Fixed | 5.32% | Up to 80% | |
| 7 Year Fixed | 5.20% | Up to 80% | |
| 10 Year Fixed | 5.01% | Up to 80% |
Our Apartment Loan Benefits
Apartment Loan rates start as low as 4.91% (as of March 30th, 2023)
• A commercial mortgage broker with over 30 years of lending experience
• No upfront application or processing fees
• Simplified application process
• Financing up to 80% LTV
• Terms and amortizations up to 30 years
• Long term fixed rates
• Loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation
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"Thanks Stephen for all of your hard work in getting our deal closed! I appreciate your professionalism and patience throughout a complicated process. You always were there for my partner and I whenever we had questions and needed answers quick. It was a pleasure to have worked with you and Select Commercial!"
Frequently Asked Questions
What type of commercial property should I consider purchasing in 2023?
Inflation fears, high interest rates, and the prospect of recession have slowed the pace of the commercial real estate market considerably. Some property types are outperforming others. Apartment buildings in desirable neighborhoods are performing well, as owners have been able to raise rents and keep up with rising interest rates. Multifamily properties in smaller and less desirable areas, or areas where unemployment is rising, are not performing as well, as rent increases are harder to implement. In the office sector, only medical office buildings are generating lender interest. General office properties have underperformed the market as a result of the work from home policies established during the Covid-19 pandemic. Office demand is unlikely to return to pre-Covid levels making the office sector extremely hard to navigate right now. In the retail sector, essential service businesses, such as grocery stores and pharmacies, are performing well, while traditional brick and mortar retailers are still feeling the effects of Covid-19 and the competition from online retailers. Many malls are experiencing record high vacancy levels, and some are being repositioned for other purposes. In the industrial sector, we are seeing strong demand for warehouse and distribution space to accommodate the online retailers. Industrial space in urban markets and close to transportation are performing very well. We expect to see sales prices for underperforming properties to drop in 2023 as investors gravitate to better positioned properties.
There are many different types of lenders offering a myriad of different loan products to finance the acquisition or refinance of apartment properties nationwide. These lenders include agency lenders (Fannie Mae and Freddie Mac), local and national banks, insurance companies, credit unions and private lenders.
Most lenders write apartment loans for five, seven or ten years (fixed) with a 30 year amortization. It is also possible to obtain loans that are fixed for up to 30 years, although this is not the norm. Rates are typically based on a margin over the corresponding US Treasury rate.
Lenders offer non-recourse to strong borrowers and solid properties. The borrower will be expected to have strong credit, good net worth and liquidity, and experience owning and managing similar properties. The property will be expected to demonstrate solid long term positive cash flow, be in good to excellent condition, and be located in a strong market with low vacancy rates.
Apartment loans are typically screened and pre-approved in 2-3 days. Since lenders require appraisals, environmental and property condition reports, and title, closings will usually take 45-60 days from application.
Multifamily Loan Recent Closings
Apartment Loans
Whether you are looking to finance a small apartment building, a complex with hundreds of units, or a co-operative looking for an underlying mortgage, we can help you find the optimal financing solution to meet your apartment loan needs. Our company has access to multiple capital sources, including: Fannie Mae, Freddie Mac, HUD, numerous local and national banks, Wall Street conduit lenders, Agency lenders, credit unions and insurance companies. We will entertain multifamily loan requests of all sizes, beginning at $1,000,000. We arrange financing for the following:
- Large urban high-rise apartment buildings
- Owner occupied multifamily financing
- Suburban garden apartment complexes
- Small apartment buildings containing 5+ units
- Underlying cooperative apartment building loans
- Portfolios of small apartment properties and/or single-family rental properties
- Other multi-family and mixed-use properties
Our company has multiple capital sources and multifamily lenders for these commercial multifamily loans, including: Fannie Mae, Freddie Mac, FHA, national banks, regional and local banks, insurance companies, Wall Street conduit lenders, credit unions and private lenders. We provide apartment loans in the following areas. Whether you are purchasing or refinancing, we have the right solutions available. We will entertain loan requests of all sizes, beginning at $1,000,000. Get started with a Free Loan Quote.
What is the outlook for apartment lending in 2023?
The apartment market has been one of the strongest performing sectors of the commercial real estate market for a long period of time. The growing demand for apartment housing has fueled this market as a strong demand for housing continued unabated. Inflation and Federal Reserve interest rate hikes are slowing down the market pretty quickly. Slower hiring levels coupled with lower rates of household formation are further adding to a slower rate of growth in this sector. New construction from the last year or two will come on to the market this year just as overall demand is showing signs of weakening. We expect to see higher vacancy rates and slower rent growth as a result. On the other hand, higher costs of single-family homes and higher interest rates will keep more potential homebuyers in the rental pool, which should help mitigate potential slowdowns in the apartment market. During the pandemic, many urban renters relocated to warmer climates in the Sun Belt. Many of those cities recorded explosive rates of growth and tremendous increases in rental rates. This trend is not expected to continue this year. Higher interest rates and higher cost of living expenses might cause some renters to relocate from more expensing markets to less expensive and more rural or tertiary markets. Affordable Housing is the hot topic this year as President Biden’s Housing Supply Action Plan looks to lower the country’s affordability concerns.
2023 Economic Outlook
The national economy has rebounded nicely over the past two years following the Covid pandemic, however aggressive government spending has caused a period of rampant inflation. The Federal Reserve has acted aggressively to slow the rate of inflation by raising short term rates. These hikes in short term rates caused a dramatic rise in US Treasury rates, which in turn, has caused an increase in commercial mortgage rates. Employers have responded to rising costs by reducing staffing levels. We expect 2023 to be a year of net job loss and higher unemployment. This will translate into a slowing of wage growth. The labor market might contract significantly if the economy slips into a recession. Uncertain economic trends and higher expenses are slowing the rate of household formation after high levels in 2021 and the beginning of 2022. Higher residential mortgage rates should slow the residential single family home market. This will cause more families to remain as renters in apartment buildings. Even though fuel costs have trended down in 2022, the continuing war in Ukraine and OPEC production cutbacks could put upward pressure on these costs. Residential and commercial real estate values could suffer as higher interest rates decrease sales activity.
2023 Capital Markets Outlook
In May 2022, the Federal Reserve’s Open Market Committee began aggressively raising short term interest rates in order to combat high rates of inflation. The Fed began a quantitative tightening process and raised the target range of the federal funds rate from near zero at the beginning of 2022 to a rate of above 4.00% by the end of 2022. This was the fastest series of rate hikes in over 40 years. The speed of these rate hikes has left the markets in disarray as borrowers and lenders try to make sense of the new market realities. Continued, although slower rate increases, will continue to affect the markets in 2023. The Fed’s goal is to lower the rate of inflation without causing a recession. Higher interest rates cause commercial property owners to spend more of their cash flow on debt payments and limit their property’s overall profitability. Lower cash flow means that lenders are tightening their credit criteria, and are lending at much lower leverage rates than they were previously. Average loan to value rates are down and lenders are more cautious overall. There currently exists a disconnect between what sellers think their properties are worth and what buyers are able to offer. This has caused a slowdown in overall sales activity. The agency lenders (Fannie Mae and Freddie Mac) have seen a slowdown in overall deal volume and both are hyper-focused on providing financing for apartment properties that meet affordability requirements. New apartment construction is down this year as higher material costs and higher borrowing costs make new projects less attractive. Since most apartment leases are for a period of one year, landlords are finding it easier to implement rent increases, helping to keep this market sector healthy.
2023 Investment Outlook
Apartment properties have seen constantly lower cap rates for many years as price appreciation has soared. The Fed’s raising of interest rates is causing cap rates to rise as well, and price appreciation to slow or decline. Rising overall costs for fuel and building supplies is also eating into cash flow and causing further downward pressure on prices. Many apartment investors have begun 2023 defensively due to a weak economic outlook and uncertainty in the market due to global events. While sales activity is expected to slow, overall, the apartment market is healthier than other sectors of the commercial real estate market. The European Central Bank has been less aggressive than the Federal Reserve, contributing to a drop in the value of the euro against the US dollar. This may cause more investment by Europeans in dollar denominated assets such as US commercial real estate. Higher living costs and tightening cap rates in primary markets are causing investors to focus more of their attention and assets in smaller, or tertiary, markets. Investors are looking for opportunities in changing markets, such as those near new sources of transportation, near new stadium construction, or neighborhoods undergoing revitalizations.
2023 Housing Outlook
Elevated housing prices along with today’s much higher home interest rates have caused many potential homebuyers to remain on the sidelines and continue as apartment renters. The number of residential home listings is well below average levels and will likely remain low throughout the year. Likewise, economic concerns and reduced levels of hiring are causing many first time buyers to avoid the leap into home ownership. Higher living costs, higher interest rates and job uncertainty are causing many millennials and Gen Z renters to remain in the rental market for the time being. From a cost-savings approach, rental apartments have become more attractive as the cost between owning and renting now exceeds $2500 per month on average. One trend we have been witnessing since the pandemic began is the migration of people from urban markets in the north to Sun Belt locations. We do see a continuation of that trend. Another trend we are seeing is individuals who had been looking to purchase a single family home have decided to rent a home instead. These individuals are looking to get of their apartments but are not ready to commit to home ownership. Until either prices come down or rates ease, we see this trend continuing as well.
Apartment Loan Products
Freddie Mac Multifamily Loan
Fannie Mae Multifamily Loan
FHA HUD Multifamily Loans
Underlying Co-op Loans
Apartment Bridge Loan
CMBS Loan
Apartment Loan Helpful Articles
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