Austin Apartment Loans
Loans from $1 Million to $25 Million+
|Austin Apartment Loan Rates Over $6,000,000||Rates (start as low as)||LTV|
|Apartment 5 Year Fixed Loan Rates||5.37%||Up to 80%||Get Free Quote|
|Apartment 7 Year Fixed Loan Rates||5.12%||Up to 80%||Get Free Quote|
|Apartment 10 Year Fixed Loan Rates||5.08%||Up to 80%||Get Free Quote|
|Austin Apartment Loan Rates Under $6,000,000||Rates (start as low as)||LTV|
|Apartment 5 Year Fixed Loan Rates||5.47%||Up to 80%||Get Free Quote|
|Apartment 7 Year Fixed Loan Rates||5.22%||Up to 80%||Get Free Quote|
|Apartment 10 Year Fixed Loan Rates||5.18%||Up to 80%||Get Free Quote|
Select Commercial has excellent Austin Apartment loan products and options available for owners and purchasers of multifamily properties throughout the city of Austin. Whether you are looking to finance a small apartment building, a complex with hundreds of units, or a co-operative, we can help you find the optimal financing solution to meet your Apartment mortgage loan needs. While we lend across the entire continental US, we are able to give our best rates and loan programs to certain areas that we feel are strong markets. Austin is one of the cities that we consider to be a premium market and we actively look to originate good quality loans here for our clients. We have a diverse array of many available loan products to help qualified Austin TX borrowers looking to purchase or refinance an apartment property. We offer apartment loans with terms and amortizations up to 30 years, recourse and non-recourse, and many options for prepayment. We typically approve Apartment building loans within 1 day and usually close within 45 days of application. Our clients love our simplified application process, 24-hour pre-approvals with no-cost and no-obligation, great rates and terms, fast closings and personalized service. If you are looking to purchase or refinance an apartment building, don't hesitate to contact us. For more information on multifamily loans, check out how to get the best rate on a multifamily loan and how to get the best rates on an apartment refinance.
Austin Apartment Loan Benefits
Austin Apartment Loan rates start as low as 5.08% (as of September 25th, 2022)
• A commercial mortgage broker with over 30 years of lending experience
• No upfront application or processing fees
• Simplified application process
• Up to 80% LTV on multifamily financing
• Terms and amortizations up to 30 years
• Multifamily loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation
Recent TRUSTPILOT Reviews
Select Commercial Funding Reviews from TRUSTPILOT
A three year journey
"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!"
Austin Apartment Loan Types We Serve
If you are looking to purchase or refinance a Austin apartment building, don't hesitate to contact us. We arrange financing in the city of Austin for the following:
- Large urban high-rise multifamily buildings
- Suburban garden multifamilycomplexes
- Small multifamily buildings containing 5+ units
- Underlying cooperative multifamily building loans
- Portfolios of small multifamily properties and/or single-family rental properties
- Other multi-family and mixed-use properties
Austin Apartment Loan Helpful ArticlesHow to Get the Best Rate on a Multifamily Loan
Fannie Mae and Freddie Mac 2022 Update
How To Get The Best Rates On An Apartment Refinance
What Do Underwriters Look for When Evaluating Apartment Loans?
What You Need to Know About Freddie Mac SBL Multifamily Loans
How to Calculate Debt Service Coverage Ratio for Apartment Loans
Apartment Occupancy Levels – Concern in Some Major US Markets
How to Invest in an Apartment Building
Are You Shopping for an Apartment Building Loan?
How to Buy an Apartment Building
What Are Commercial Mortgage Lenders Looking for These Days
How to Qualify for a Great Rate When Refinancing Your Apartment Building
2022 Austin Apartment Loan Outlook
East Austin tells the larger story in this market. Austin is one of the few US markets that recovered all of the jobs lost during the Coronavirus pandemic by the end of 2021 and is now displaying rapid new growth. Even though the entertainment and hospitality sectors remain decimated due to the health crisis, the pace of technology firms moving into the market has increased. The arrival of auto manufacturer Tesla, a company that was critical of local policies in the State of California, demonstrates this migration and the attraction of Austin. Tesla first established a huge new factory in East Austin and then decided to relocate its headquarters to the market. The Chamber of Commerce estimates that Tesla created at least 5,000 new jobs in the local market in 2021, with plans to add up to 15,000 more new jobs within the next few years. East Austin is indicative of the broader market; while the rental demand is currently strong, an overactive construction schedule could pose some near-term oversupply. Austin’s apartment availability will grow by the second fastest pace in the US in 2022, with nearly 5,000 new apartment units expected in the East submarket.
The expectation of long-term economic health in this market is generating investment interest from around the world. Foreign investment transactions in Austin rose in 2021, with sales volume to international buyers approaching $1 billion, just shy of major markets like Chicago, Los Angeles, and Boston. The strong economic recovery in Austin as compared to many other metro areas is expected to continue to create strong international interest in 2022. The increased interest from buyers and high predictions for future growth are causing a surge in sales prices and a reduction in cap rates. Class A and B apartment properties have been selling with first year returns in the mid-3 percent range in Austin, nearly matching coastal markets in California. Higher-quality apartment properties in areas with many technology firms, such as North Austin, as well as expanding suburbs just north, such as Cedar Park, Round Rock, Georgetown and Pflugerville have been selling with cap rates in the 3 percent range. Unit costs in these areas frequently exceed $200,000 per door as well.
2022 Apartment Market Forecast and Austin Apartment Loan EconomicsThe Austin apartment market has a National Multifamily Index of 7. The fast-growing local economy and strong population growth gives Austin a top 10 rating.
Austin employment is up 3.9%. Austin’s job market grows by 45,500 personnel, pushing the total above the pre-pandemic level by nearly 66,000 jobs.
New construction expected to add 16,700 apartment units. Builders finish 4,300 more rental units than last year, increasing availability by 6.1 percent. The East Austin, Round Rock-Georgetown and Cedar Park areas combine for over half of all new units.
Apartment vacancy is down 10 basis points. Availability goes down to 3.5 percent despite record-level completions. Net apartment absorption is expected to exceed 16,000 units for the second consecutive year.
Rent growth is up 7.3%. The market’s effective rent is expected to increase by the second fastest rate among major U.S. markets in 2022. The average rental rate will rise to $1,610 per month.
Investment in Austin apartments is strong. Outstanding rent growth and a market vacancy rate in the mid-3 percent range cause strong investor demand. Buyers expand their buying pattern to far west and south suburbs, as well.
Austin apartment loan rates will start to increase in 2022 as the Federal Reserve starts raising rates to slow the rate of inflation. We will be watching to see if Austin apartment loan rate increases will affect market activity in 2022.
All data provided by Marcus and Millichap
2021 Austin Apartment Market and Trends
Large population growth has increased the availability of labor in Austin in 2021. This population growth, and the business-friendly environment in Texas, has lured firms to move into the Austin market. In 2020, 45 out-of-state companies decided to move to Austin. Additionally, over 100 locally based firms announced plans to expand operations. The most notable commitment came from Tesla and work is already underway on a Gigafactory near the Austin-Bergstrom International Airport that will employ 5,000 people.
New multifamily construction in 2021 is expected to stimulate additional headwinds this year despite durable demand drivers. Last year, vacancies in the market grew by over 4,500 units. Twelve of Austin’s main submarkets are expected to add at least 500 multifamily units in 2021. Three thousand doors are set to be constructed in East Austin itself.
In terms of employment numbers, Austin’s strong recovery during Q3 and Q4 of 2020 has set the city up to recover all of the jobs lost during the COVID pandemic. Austin’s 2021 labor force is expected to grow by at least 3.9 percent, which will surpass the national growth rate. New construction completions should hit the highest point in 20 years in 2021 as solid demographics have encouraged a rapid development pace. Additionally, stock in Austin will increase by five percent this year. In terms of supply, Austin is set to be the second fastest growing major market in the country.
While experts anticipate demand to recover from the COVID pandemic, the incoming pipeline of new projects are set to apply real pressure to Austin’s vacancy rate. The vacancy rate is expected to approach 7.1 percent in 2021, a level not seen in Austin since the global financial crisis in 2009. The average effective rent will dip near $1,232 per month in 2021, the lowest rate since mid-2018.
- Data provided by Marcus and Millichap
2021 Multifamily Outlook
The COVID-19 pandemic affected the ability of young graduates to find jobs and move into apartments of their own. The demand for apartment rentals is usually fueled by young graduates entering the workforce and moving into rental apartments. Many young adults lived with their parents or friends during the pandemic and into early 2021. As 2021 progressed, many companies reopened their offices and began hiring again which generated record levels of new apartment rentals. This trend should continue through late 2021 as more new workers are able find jobs and move into their own apartments. Many of these new multifamily units are in metro areas of the sunbelt states as workers have been moving out of colder urban areas in favor of more suburban warmer climates.
The tight market in 2021 for new home purchases has caused many would be homebuyers to continue renting. Prices for existing homes have risen due to lack of inventory and the cost of construction has skyrocketed due to increased costs for raw materials. The high cost of purchasing a new or existing home is keeping the demand for rental units very strong in 2021.
During the pandemic, when workers were either out of work or working from home, many people moved out of densely populated urban areas in favor of suburban locations. In 2021, as more employees are returning to their offices, we are seeing demand pick up once again for rental apartments in urban locations. In addition, as more and more retail and dining locations reopen in downtown areas, we expect to see a return of employees to these areas.
During the pandemic, the CDC and local governments instituted a moratorium of evictions. This caused many landlords to suffer economic losses and depressed the value of apartment properties. In 2021, as these moratoriums start to expire, we expect to see strong demand from investors for these properties.
Nationwide, the first half of 2021 saw more than 175,000 new apartments completed and a total of 363,000 for the previous 12 months. A high percentage of these new units were in Texas and other sunbelt states, as more and more people are relocating to warmer climates. Occupancy rates and asking rents have been lower in larger urban markets in the Northeast and other colder climates, while occupancy rates and asking rents have been increasing in these warmer sunbelt climates. These 2021 trends have definitely been driven by the COVID-19 pandemic and we are watching these trends closely to see if these trends persist after the pandemic is over. Check out our low commercial real estate loan rates and use our commercial mortgage calculator to calculate monthly principal and interest.
What Happened with Apartment Loans in 2020
Economic Core Shifting to North Austin Where ‘Silicon Valley’ Transplants Are Increasingly Prominent
Expanding tech presence ripples to all echelons of housing. The rapid job creation trend of this cycle faced headwinds in 2019, when the unemployment rate started the year below 3 percent. A diminished available labor supply is forcing employers to moderate hiring; however, the technology segment is maintaining its vigorous expansion in northwest Austin. Numerous Bay Area tech companies are establishing strongholds here, highlighted by Apple’s ongoing extension into a $1 billion facility. These companies continue to bring high-wage staff members into the metro, who often look toward luxury apartment rental housing options because of their location, amenities and flexibility. Consumer spending is also being enhanced as more high-wage jobs emerge in Austin, boosting the presence of retailers and service industry employers. The workforce tied to these industries will aid Class B/C multifamily leasing, holding vacancy tight in the 4 percent range. Austin is a great city for investors to look for apartment loans to finance their multifamily acquisitions.
Investors cognizant of surging apartment rents. Consistent inflow of an educated, young population to Austin has investors yearning for multifamily assets. The metro ranks near the top nationally in terms of both net migration and age 20-34 population growth, two key drivers of apartment demand. Amid the positive demographics of the locale, a high concentration of deals will be centered around vibrant central Austin neighborhoods near the university. Out-of-state apartment investors often deploy capital in excess of $30 million for newly built properties, where initial returns have been in the mid-4 percent range on average. Opportunistic multifamily investors will steer capital toward pre-21st-century-built assets in east Austin and midtown. Here, sales in the $1 million to $7 million tranche are frequently targeted, delivering initial first-year yields in the low-5 to mid-5 percent range. Institutional investors will concentrate on Class A multifamily assets in northwest Austin, where prices will be at a premium- but rental costs have the potential to surge. Austin is a top market in the country and a great place for investors to look into taking out multifamily loans to finance their next acquisition.
2020 Austin Apartment Market Forecast
National Multifamily Index Rank 30, up 4 places. Robust employment and apartment rent gains advance Austin in this year’s ranking.
Employment in Austin is up 2.3%. Job creation exceeds the 2.0 percent growth logged in 2019 as labor-shortage headwinds ease.
Construction in Austin is expected to exceed 9,200 apartment units. Deliveries will amass 9,000 multifamily units for the first time since 2016, with roughly 1,300 more rentals brought to market than the trailing-three-year annual average.
Vacancy in Austin is expected to rise 60 bps. A large influx of apartment deliveries overshadow commendable net absorption, pushing vacancy up to 5.2 percent.
Apartment rent in Austin is up 6.5%. Average effective rent reaches $1,400 per month by the end of 2020, growing by its largest annual margin in five years.
Investment in Austin apartments is strong. With cap rates compressed for core and north Austin assets, buyers searching for value-add will have to widen their search parameters. Suburbs far north will catch buyers’ eyes as the population sprawls to less dense regions. Austin is certainly a good market for investors to look for apartment loans to purchase their next property.
Data provided by Marcus & Millichap.
Apartment Loan Trends in 2020
At the start of 2020 the market outlook did not indicate any significant factors that would cause major trouble in the multifamily market. Market indicators suggested that demand for housing, especially for apartment rentals, would remain healthy, thus continuing to generate new construction of multifamily buildings. Both the high number of permits and starts over the past couple of years led experts to believe that developer confidence is very high in the multifamily market. Market experts predicted an annual completion of 340,000 apartment units over 2020, way above the 300,000-annual average for the past five years. Over the last couple of years, the multifamily market has seen absorptions outperform expectations due to both changes in lifestyle and demographic preferences and new supply has consistently taken longer to be built. These two factors have helped the market to perform stronger than expected in the past and should continue throughout this year. Market data indicated that rent growth would remain strong in 2020, growing 3.6% (which is above the historical average). In terms of mortgage origination, low interest rates and strong multifamily performance were expected to help loan volumes grow. Experts predicted that the origination volume in 2020 will increase by 5.7% to $390 billion. Market data indicated that cap rates have more room to decline, which would lead to increasing property values and should drive up origination volume. However, with the current outbreak of Covid-19, the overall economy has been in flux. The stock market has crashed and commercial mortgage interest rates have been severely impacted. Huge metros such as New York have all but shut down much economic activity and entertainment. In this unsteady climate, many investors are scared to purchase commercial real estate and to take out commercial mortgages and apartment loans. Additionally, the oil industry has taken a big hit. Not only are people traveling less due to the pandemic, foreign countries like China and Russia are involved in a huge price war which is driving the price of oil way down. Experts are hopeful that as the weather warms up and public health policy learns how to handle this pandemic, the economy should revert back to its pre-virus strength.
Austin Apartment Loan Options
Austin Freddie Mac Apartment loans
Austin Freddie Mac Multifamily Loans provide mortgage capital in the secondary market for apartment building loans. Together, Fannie Mae and Freddie Mac control a very large portion of the multifamily loan market. Freddie Mac has a very aggressive program for small balance apartment loans (from $1,000,000 to $7,500,000). Some features of this program include:
- Market size driven. Freddie Mac classifies loans by the size of the overall market: Top, Standard, Small, and Very Small. Rates are best in top market locations (major metropolitan areas).
- Capped costs. Freddie Mac lenders often cap the closing costs at a fixed dollar amount, thereby lowering the overall cost to borrow money.
- Flexible pre-pay penalties. Freddie Mac offers many options for pre-payment penalties, from yield maintenance to step-down to “soft” step-down.
- Interest-Only (I/O) loans. Freddie Mac will allow payments consisting of only interest and no amortization of principal.
- Fixed rate terms. Freddie Mac offers fixed rates of 5, 7, and 10 years, followed by an adjustable period. These loans are called Hybrid/Adjustables. Loans have a 20 year term and a 30 year amortization schedule.
Austin Fannie Mae Apartment loans
The Austin Fannie Mae multifamily loan platform is one the leading sources of capital for Austin apartment building loans in the US. Fannie Mae is a leader in the secondary market – meaning they purchase qualifying apartment loans from leading lenders who originate these loans for their borrowers. Fannie Mae purchases loans secured by conventional apartments, affordable housing properties, underlying cooperative apartment loans, senior housing, student housing, manufactured housing communities and mobile home parks on a nationwide basis. The Fannie Mae platform has many benefits, including:
- Long term fixed rates and amortizations. Fannie Mae allows terms and amortizations of up to 30 years. Most banks offer only 5 or 10 year fixed rates and 25 year amortizations.
- Non-recourse options. Most banks will require the borrower to sign personally for the loan. Fannie Mae offers non-recourse apartment loans.
- Lending in smaller markets. Many national lenders do not like to lend in rural or tertiary markets. Fannie Mae is a good option for these loans.
- Assumability and Supplemental Financing. Fannie Mae allows their loans to be assumed by a qualified borrower. They also have a program which allows borrowers the ability to come back and borrow additional funds during the life of the loan (subordinate financing).
Austin FHA HUD Multifamily Loans
HUD (Department of Housing and Urban Development) and FHA (Federal Housing Administration) insured multifamily loans are some of the best financing options for real estate investors and developers. While HUD does not directly make these loans, they do insure multifamily loans made by third party lenders to real estate investors. The third party lender will process the loan in accordance with the FHA HUD guidelines and HUD will underwrite the loan in order to provide the insurance. There are two primary types of HUD insured loans that multifamily investors can take advantage of.
Austin Apartment Lending with Banks and Other Programs
While the agencies (Fannie Mae, Freddie Mac and HUD) offer some excellent programs, not every apartment loan applicant qualifies for these programs. We have many excellent choices for these loans with our correspondent banks, credit unions, insurance companies and private lenders. Some examples of these loans include:
- Austin Multifamily loans that require flexible underwriting or those that don’t meet standardized criteria.
- Properties in less than desirable markets, or those that require repairs or updating.
- Properties that don’t cash flow according to industry guidelines or lack stabilized cash flow.
- Borrowers with past credit issues, including foreclosures, short sales, or judgements.
- Borrowers who are not US citizens.
Whether you are purchasing or refinancing, we have the right solutions available for your multifamily mortgage loans. We will entertain apartment loan requests of all sizes, beginning at $1,000,000. Get started with a Free Commercial Mortgage Loan Quote.
Austin Apartment Building Loans
• Hyde Park • Hancock • Holly • Barton Hills • Crestview • Downtown • St. Edwards • Windsor Road • Rosedale • Old West Austin / Clarksville • East Oak Hill • East Cesar Chavez • West Austin / Tarrytown • Bouldin Creek • North Loop • Allandale • Upper Boggy Creek / Cherrywood • Old Enfield • Brentwood