Boston Apartment/Multifamily Loans
|Boston Apartment/Multifamily Loan Rates Over $6,000,000||Rates (start as low as)||LTV|
|Multifamily 5 Year Fixed Loan Rates||2.54%||Up to 80%||Get Free Quote|
|Multifamily 7 Year Fixed Loan Rates||2.68%||Up to 80%||Get Free Quote|
|Multifamily 10 Year Fixed Loan Rates||2.88%||Up to 80%||Get Free Quote|
|Boston Apartment/Multifamily Loan Rates Under $6,000,000||Rates (start as low as)||LTV|
|Multifamily 5 Year Fixed Loan Rates||3.20%||Up to 80%||Get Free Quote|
|Multifamily 7 Year Fixed Loan Rates||3.21%||Up to 80%||Get Free Quote|
|Multifamily 10 Year Fixed Loan Rates||3.23%||Up to 80%||Get Free Quote|
Select Commercial has excellent Boston apartment/multifamily loan products and options available for owners and purchasers of multifamily properties throughout the city of Boston. 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/multifamily 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. Boston 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 Boston MA 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/multifamily 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.
Boston Apartment/Multifamily Loan Benefits
Boston Apartment Loan rates start as low as 2.54% (as of July 28th, 2021)
• 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
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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!"
Boston Apartment/Multifamily Loan Types We Serve
If you are looking to purchase or refinance a Boston apartment building, don't hesitate to contact us. We arrange financing in the city of Boston 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
Boston 2021 Multifamily Market and Trends
Experts anticipate the Boston market to face ample hurdles in 2021. The combination of a large amount of multifamily openings last year was unfortunately timed with the onset of COVID-19. The pandemic considerably lowered the demand for dense urban living and as a result many units were left vacant. It should take a significant amount of time for the Boston multifamily market to reover from a multiyear setback in vacancy. There are about 1,200 new apartment units are slated to open in the Intown area in 2021. This should pose some challenges to the market’s leasing process. While there are a lot of reasons to be cautious about the Boston market, the city is still home to not only some of the world’s best educational institutions but also many prominent employers. As the COVID-19 vaccine continues to be administered, the reopening of these facilities should revitalize the multifamily market and bring more renters back downtown.
Boston’s coastal suburban submarkets are on pace for solid growth in 2021. These markets were much less damaged by COVID-19 than the city’s urban center. Many people who were working from home relocated to larger houses in the less dense suburban areas. Multiple submarkets, including Lowell and Essex County, reported flat or falling vacancy along with climbing rents last year, positioning these areas for strong performance in 2021. Experts anticipate 115,000 jobs to be created in 2021. This does assume that a large portion of Boston residents receive the COVID-19 vaccine. If this occurs, employment should rise to within 6 percent of the pre-COVID levels. As 2020 saw a record amount of deliveries to the Boston market, development of new multifamily units should fall off a bit this year. Experts anticipate about 7,000 new units to hit the Boston market in 2021. This tapering off of construction combined with the administration of more COVID-19 vaccines should help bring down the multifamily vacancy rate in 2021. The vacancy rate should dip 20 basis points in 2021, to 4.7%. Lastly, rents are expected to decrease by 2.1% in 2021.
- Data provided by Marcus and Millichap
What Happened with Apartment Loans in 2020
Wave of Larger Projects Test Pent-Up Demand; Buyers Target Sizable Returns Outside Core Boston
Widespread absorption, strong apartment rent growth spur increased development. Consistent job creation by tech and biotech firms raised the number of high-paying positions in Boston over the past three years, generating demand for newly built multifamily units that command monthly rents in excess of $3,000. The metro also recorded robust competition for mid- and lower-tier rentals as a significant gap between Class A and Class B/C rents exists. Heightened leasing activity in each class over the previous three years reduced the overall market vacancy substantively, enabling the average effective apartment rent to push up 16 percent during the same time period. This year rising demand will fill more multifamily units than the number projected within the 2020 construction pipeline, which will be the largest apartment delivery recorded in the metro over the past two decades. With upcoming properties comprising an average of more than 300 apartment rentals, concessions usage will rise as short-term vacancy is tested. Still, strong rates of income growth and household formation should allow for most of these apartments to be absorbed in a relatively short time frame, holding metro vacancy in the 3 percent band. Boston remains a strong metro for investors to look for apartment loans to finance their next purchase.
Pricing near historical highs push private investors to expand targets. The strong performance of Boston’s multifamily sector has elevated asset values to near all-time highs. While opportunities to acquire larger multifamily assets are sparse, due to the notable REIT and pension fund ownership presence in the market, the chances to obtain smaller properties with upside potential remain distributed throughout the metro. In-state investors seeking centrally located Class B and C listings are active in Downtown Boston, Back Bay and Cambridge. In these locales, pricing below $500,000 per unit and returns beyond the 4 percent range have become difficult to obtain. Buyers priced out of the core have flocked to cities along the North Shore, where discounted pricing and 7 percent-plus returns are commonplace for lower-tier apartment complexes. This is a great area of Boston for investors to look for multifamily loans to acquire their next property.
2020 Boston Apartment Market Forecast
The Boston National Multifamily Index Rank is at 8th place this year as a strong rent gain offsets the tick up in vacancy.
Employment in Boston is up 0.7%. Building on last year’s 31,200 jobs, employers will add 20,000 workers to payrolls in 2020.
Construction of apartment units in Boston is expected to exceed 9,700 units. The pace of completions elevates by more than 3,000 units on a year-over-year basis in 2020, increasing the metro’s rental inventory by 2.4 percent.
Vacancy in Boston is up 40 bps. Nearly 8,000 rentals will be absorbed in 2020, yet the market vacancy will rise to 3.4 percent, ending a three-year stretch of declining unit availability.
Apartment rent in Boston is up 5.9%. Unwavering tenant demand will support a third consecutive year of strong rent growth, lifting the metro’s average effective rate to $2,550 per month.
Investment opportunities in Boston remain strong. Private investors seeking sub-$2 million assets in areas of tight vacancy and pronounced rent growth target listings in Boston’s northern outlying submarkets with access to Interstate 495. This is a great place for investors to take out apartment loans to finance their next property.
Data provided by Marcus & Millichap.
Apartment/Multifamily 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.
Boston Apartment/Multifamily Loan Options
Boston Freddie Mac Apartment/Multifamily loans
Boston 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.
Freddie Mac is a government sponsored agency that offers incredible financing solutions to investors looking for apartment loans. They provide both fixed rate and floating rate multifamily loans to acquire or refinance a wide variety of multifamily properties. These apartment building loans are used to finance properties such as market-rate apartments, student housing, senior housing, and affordable housing. While Freddie Mac has always been one of the industry's most aggressive financing source for larger apartment loans, Fannie Mae used to really dominate the smaller balance market. However, over the last 7 years, Freddie Mac has rolled out their Freddie Mac Small Balance Multifamily Loan program to compete with Fannie Mae in the small balance market. For eligible borrowers, Boston Freddie Mac Multifamily loans offer some of the best terms and rates in the market. However, qualifying for Freddie Mac loans requires that the borrower and property both meet a high standard set by Freddie Mac. Borrowers must typically meet a threshold for net worth and liquidity and properties must be cash flowing with at least 90% occupancy for 90 days.
Freddie Mac’s Boston Multifamily Loan Programs offer many unique and beneficial features for apartment purchases and refinances, with a minimum loan size of $1,000,000. The loan application process is simple and streamlined. As an example, tax returns for the borrower and the property are not required. Loans typically close in 45 days and the program has much lower costs than other government or agency programs. These apartment building loans are non-recourse, which means that the borrower is not required to guarantee payments personally. Prepayment penalties are flexible, ranging from yield maintenance to soft stepdown. Perhaps the best feature of these multifamily loans is that Freddie Mac offers a free rate hold for 45 days from application. If rates change during the processing period, the loan rate is automatically held from the date of application.
Freddie Mac has a publicly stated mission to help maintain stability in the American housing-mortgage markets. Additionally, their goal is to both keep the housing market well-financed and to promote affordable housing. Freddie Mac accomplishes this goal by helping investors to purchase, refinance, preserve, and renovate existing multifamily and apartment buildings. A large portion of the properties financed by Freddie Mac are more than 10 years old, need significant improvements and have a hard time procuring financing with other lenders. Freddie Mac’s main focus in the multifamily arena is affordable housing. Around 90 percent of their apartment loans are written for properties with affordable rents (based on local area median income). Over the years the number of renters has continued to grow leading to a short supply of available affordable apartment units. Many of Freddie Mac’s programs were designed with this challenge in mind. They focus on financing apartment buildings that are affordable to renters with lower annual incomes. They also write apartment building loans for subsidized housing that assists individuals with very low (below average) incomes. Through these programs, Freddie Mac’s multifamily loan programs are playing a crucial role in ensuring that Americans have access to affordable housing throughout the country.
One potential complication with Boston Freddie Mac multifamily loans is that Freddie Mac does not directly originate their loans. Rather they rely on authorized lenders from within their Optigo network to underwrite and service their loans. While these apartment loans may be financed by outside lenders, they all must conform to Freddie Mac guidelines. While Freddie Mac offers loans in varying markets for many different situations, each Optigo lender may have their own limitations on eligible deals they are willing to finance. At Select Commercial Funding, we have access to a wide array of Freddie Mac funding solutions so we can help to connect you with the right Freddie Mac lenders for your specific needs.
Boston Freddie Mac Small Balance Multifamily Loan Highlights
$1,000,000 - $6,000,000, up to $7,500,000 in large markets
Purchase or refinance, including cash out refinances
Up to 30 years
Apartment buildings of 5+ units, senior housing (with no resident services), apartment buildings with commercial space, properties with tenant-based housing vouchers, etc.
Debt Service Coverage
1.20x in top markets, 1.25x nationwide
Maximum Loan to Value
80% in top markets, 75% nationwide
5, 7, and 10 year fixed rate options. After fixed rate period loan can either mature or convert to an adjustable rate (hybrid adjustable) at borrower option.
Non-Recourse, with standard carve-out provisions
Minimum of 650
Typically, 1-3 years of interest only are offered with slight adder to rate. Full term I/O might be available on lower leverage loans.
Minimum occupancy of 90% for previous 90 days
Escrows for taxes and insurance may be waived on lower leverage transactions
Not usually required
Rate held for 45 days from application without additional fee. No worries that rate will rise during the application period.
Annual and lifetime caps on all adjustments (on hybrid/adjustable option)
Yield maintenance, step-down and soft step-down options available
The Freddie Mac SBL program offers a combination of benefits and features not available anywhere else. Whether your objective is to buy additional property, get a lower rate on an existing loan, or take cash out of an existing property, Freddie Mac has the strength and expertise to get you to the closing table faster than most other lenders.
Boston Fannie Mae Apartment/Multifamily loans
The Boston Fannie Mae multifamily loan platform is one the leading sources of capital for 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).
Fannie Mae is one of the nation’s leading secondary market sources of capital for apartment building financing. Fannie Mae provides mortgage capital for conventional, affordable housing, cooperatives, senior housing, student housing, manufactured housing communities and mobile home parks nationwide. Fannie Mae's apartment loan program offers many distinct advantages over traditional bank programs, including long-term fixed rates up to 30 years, high LTV ratios up to 80%, and nonrecourse financing (no personal guarantee to the principals). Fannie Mae Multifamily provides long term permanent mortgage loans for the purchase or refinance (cash-out OK) of apartment properties nationwide.
Fannie Mae Multifamily loans can be used to finance apartment buildings with at least 5 residential units. No more than 20 percent of net rentable area can be leased out to commercial tenants. Fannie Mae Multifamily is an industry leader in apartment building loans and there terms are incredibly difficult to beat. This program offers loan terms between 5 and 30 years with amortization schedules up to 30 years. They offer flexible prepayment penalties and interest-only options. In addition, loans are typically assumable and allow for secondary financing.
While Boston Fannie Mae Multifamily loans are a terrific option for investors in the multifamily space, this program does have some very specific underwriting guidelines. Typically, these loans are only eligible for apartment buildings in primary or secondary MSAs (with some exceptions for tertiary markets). These properties must be stabilized with 90% occupancy for at least 90 days. Standard multifamily properties must have at least 5 units and manufactured housing communities must have at least 50 pad sites. Borrowers must have strong financials with net worth equal to the loan amount and liquidity of 9 to 12 months of debt service. Typically, borrowers must have a credit score of at least 680 with no recent delinquencies.
If you are looking for a multifamily loan, Fannie Mae Multifamily may be the perfect option for you. The professionals at Select Commercial Funding are excited to help you find the perfect Fannie Mae product for your multifamily loan. Give us a call today to take the next step in financing your apartment building with a Fannie Mae Multifamily loan.
Apartment Lending with Banks and Other Programs
While the agencies (Fannie Mae and Freddie Mac) 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:
- 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.
Boston Apartment/Multifamily Building Loans
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