Chicago Multifamily Loans in 2024
At Select Commercial, we specialize in Chicago apartment building loan financing. Our team is dedicated to offering the most competitive rates and tailored solutions for multifamily investments in the area. If you're interested in a multifamily loan outside of Chicago, be sure to check out our Illinois multifamily loans page. For comprehensive rates on all loan products available across the 48 states, visit our commercial mortgage rate page, where we offer competitive rates for loans starting at $1,500,000.
Chicago Multifamily Loan Rates - updated 10/22/24
| Multifamily Loan > $6Million | Get Free Quote | ||
|---|---|---|---|
| Loan Type | Rate* | LTV | |
| Multifamily 5 Yr Fixed | 5.22% | Up to 80% | |
| Multifamily 7 Yr Fixed | 5.26% | Up to 80% | |
| Multifamily 10 Yr Fixed | 5.28% | Up to 80% | |
| Multifamily Loan < $6Million | Get Free Quote | ||
| Loan Type | Rate* | LTV | |
| Multifamily 5 Yr Fixed | 5.66% | Up to 80% | |
| Multifamily 7 Yr Fixed | 5.54% | Up to 80% | |
| Multifamily 10 Yr Fixed | 5.67% | Up to 80% | |
Chicago Multifamily Loan Benefits
Chicago Apartment Loan rates start as low as 5.22% (as of October 22nd, 2024)
• 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
Our Reviews
Chicago Apartment Loan - Rental Information
As of September 2024, Chicago's apartment rental market continues to be one of the most expensive in the country. With an average rent of $1,858 per month, Chicago's rental prices are 19% higher than the national average, making it a prime area for Chicago apartment loans. Over the past year, rent has increased by 2.3%, reflecting the steady demand for rental properties in the city.
Apartment rents in Chicago range from $1,503 for a studio to $2,846 for a three-bedroom unit, offering numerous opportunities to secure a Chicago apartment loan. Neighborhoods like Far North Chicago and South Lakefront provide more affordable options, while premium areas like Lincoln Park and the Chicago Loop offer higher-end investment opportunities.
The Chicago apartment loan market benefits from diverse rental price ranges, with 35% of rental prices falling between $1,001 and $1,500 per month. Investors considering larger developments or apartment building financing can explore opportunities in Chicago's growing rental market.
For professionals in the apartment loan sector, Chicago's dynamic rental market presents excellent opportunities for growth. A well-structured Chicago apartment loan can help capitalize on the city's thriving rental landscape.
2024 Chicago Multifamily Loan Overview: Home Affordability Hurdles Sustain Rental Absorption
Suburban Expansion and Corporate Commitments Enhance Chicago Apartment Loan Market
Recent commitments by major employers such as Travelers Insurance and Hartford Insurance to suburban offices have mirrored an increase in suburban apartment demand in Chicago. The strategic location of these offices, chosen for their proximity to where employees live, like Oak Park and Naperville, continues to drive demand for nearby apartments, reducing commutes and supporting local rental markets. This trend is complemented by the high interest rates making homeownership less accessible, thereby widening the gap between renting and buying. This dynamic supports a robust environment for stakeholders in the Chicago multifamily loan market.
As economic growth moderates, Chicago's multifamily sector, particularly in areas like Schaumburg, remains resilient, with vacancy rates expected to remain below the long-term average of 5.7%, supporting strong rent growth which is projected to be among the top three nationally in 2024.
Education Corridors Attracting Chicago Multifamily Loan Investments
Despite financing challenges, the areas around major educational institutions like the University of Chicago and Loyola University are becoming hotspots for investors. The steady enrollment at these universities ensures long-term demand from students and faculty, making areas such as Lincoln Park and Hyde Park prime targets for investment. The shift towards larger, more luxurious properties is a notable trend, helping to meet a broader range of renter preferences and boosting the potential for the Chicago apartment loan market.
2024 Chicago Multifamily Market Forecast
- EMPLOYMENT: The pace of employment growth in Chicago is expected to tick up in 2024, aligning with the city's long-term average, supporting stable economic conditions beneficial for the Chicago apartment loan sector.
- CONSTRUCTION: With new constructions primarily concentrated in The Loop and River North, the total housing stock is expected to increase by just 1% in 2024, focusing growth in high-demand areas.
- VACANCY: The vacancy rate in Chicago is projected to rise to 5.3% by the end of 2024, still below the historical average, indicating a tight market with less risk for investors in the Chicago multifamily loan market.
- RENT: Despite a slight increase in vacancy, rent growth is expected to continue, with the average effective rent predicted to reach $2,025 per month by the end of 2024.
- INVESTMENT: Potential changes to Cook County's transfer tax rate on properties valued over $1 million may influence investment strategies, highlighting the need for adaptive approaches in the Chicago multifamily and apartment loan markets.
Latest Expert Insights from Stephen A. Sobin
Stephen A. Sobin, the president of Select Commercial Funding LLC, is a renowned expert in the field of multifamily financing. His insights and perspectives are regularly sought by leading industry publications. Here are his latest contributions that highlight his deep understanding of the multifamily financing landscape and his commitment to providing clear, insightful analysis on key industry issues.
Persistent Inflation and Its Effects on CRE
In an article featured in Multi-Housing News, Stephen Sobin highlighted that while inflation is still a challenge for the Federal Reserve, there are many positive signs for the commercial real estate industry. The headline Consumer Price Index rose 3.2 percent for the year ended Feb. 29, a figure 20 basis points lower than the Dec. 31, 2023, rate. read the full article.
Commercial Spotlight: Mid-Atlantic Region In this four-state powerhouse, smaller metros are thriving.
In a feature in Scotsman Guide, the Mid-Atlantic Region's real estate dynamics are explored, highlighting its resilience and growth amidst the pandemic.
Stephen Sobin of Select Commercial Funding LLC shared insights on the New York market's allure and the challenges buyers face. He noted the shift from primary urban areas to tertiary markets due to evolving preferences and financial conditions. For a deeper dive into Sobin's analysis, read the full article.
What the New Jobs Report Means for CRE
In an article titled "What the New Jobs Report Means for CRE" in Commercial Property Executive, Stephen Sobin shared his perspective on the latest jobs report and its implications for the Commercial Real Estate (CRE) sector. He highlighted the challenges posed by high interest rates and the prevailing uncertainty in the market. Sobin remarked, "Sellers aren’t selling, buyers aren’t buying... Everyone is waiting because no one knows what to expect." For a detailed analysis and more of Sobin's insights, read the full article.
Decoding "Junk Fees" in Rental Housing
In another latest contribution to Multi-Housing News, Sobin provided expert commentary in an article titled "What's Next for Junk Fees? The Industry Weighs In". He clarified the difference between legitimate fees collected for various third-party services and so-called "junk fees". Sobin emphasized the importance of borrowers understanding their rights in negotiating all loan terms and the obligation of lenders to disclose all fees.
Understanding the Impact of Federal Reserve's Decisions
In a recent article titled "How the Fed's Pause on Interest Rates Impacts Multifamily" published by Multi-Housing News, Sobin shared his expert insights on the Federal Reserve's decision to pause interest rate hikes. He accurately predicted that the Fed would not raise rates in June, citing recent bank failures and lingering concerns about a potential recession.
Stay tuned for more expert insights from Stephen A. Sobin on the evolving multifamily financing landscape.
Frequently Asked Questions
What’s going on with commercial mortgage rates as we near the end of 2024?
The Federal Reserve’s Federal Open Markets Committee cut the federal funds rate by 50 basis points at its September 18, 2024, meeting. This was the first rate cut since March 2020, when the Fed began a long series of rate hikes to curb the high rate of inflation. The Fed’s decision shows that they believe that inflation is under control and moving into the 2% range that the Fed has set as its goal. The Federal Reserve took this decisive action to prevent further declines in the labor market. The Fed has further hinted at further cuts at its two remaining meetings in 2024, followed by additional cuts in 2025. This rate cut, along with possible future rate cuts, may create positive investor demand for commercial real estate, and may provide aid for commercial mortgage customers, as well as consumers in general. We must caution, however, that the Federal Reserve cuts affect short term interest rates directly and long-term rates only indirectly. The Prime Rate, which is a short-term rate, dropped from 8.50% to 8.00% with the Fed’s recent action. However, most commercial mortgage rates are based on the 5-, 7-, or 10-year treasury rates, and not the Prime Rate. We have seen these treasury rates actually rise since the Fed took its action. On September 18th, the 10-year treasury was roughly 3.70%. Three weeks later, this rate had jumped to 4.03%. Investors are still concerned about future inflation and are adopting a wait and see attitude.
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.
Recent Banking Failures Likely To Impact Illinois Multifamily Lending
The recent collapse of Silicon Valley Bank and Signature Bank has sent shockwaves through the business and real estate lending sectors. As a leading IL commercial mortgage broker with over 30+ years of experience, Select Commercial knows that the multifamily sector is not immune to these developments. Here's how these banking failures could impact multifamily lending:
Regional Banks Under Pressure
Regional banks, which provide significant liquidity to the apartment sector, are likely to face increased pressure. The collapse of SVB and Signature Bank has raised concerns about the stability of smaller banks. This could lead to a pullback from regional banks providing loans to the multifamily sector, making it more challenging for developers and investors to secure financing.
Development Challenges
Developers could face significant challenges, particularly in securing construction loans and value-add renovation dollars. The current environment is leading to a slowdown in construction lending and a return to traditional underwriting and banker skepticism. This could particularly impact the affordable housing sector, where developers need their financing lined up to secure tax credits.
Volatility in the CMBS Market
CMBS loans have experienced turbulence following the bank failures. This volatility could impact a new crop of lenders that have emerged over the past half-decade, many of which are capital markets-dependent. If the securitization market stabilizes, some of the CMBS and bridge lenders may re-enter the market to fill the liquidity gaps left by regional lenders.
Interest Rate Uncertainty
The bank failures could also contribute to uncertainty around commercial mortgage rates. If these failures lead to a slowdown in rate hikes by the Federal Reserve, this could potentially benefit the commercial real estate market in the long run. However, it's too early to predict the exact impact on apartment transaction volume.
In summary, the recent banking failures have the potential to significantly impact how banks handle multifamily loans. We will closely monitoring these developments to provide the best advice and service to my clients during these uncertain times.
Apartment Loan Types We Serve
If you are looking to purchase or refinance a Chicago apartment building, don't hesitate to contact us. We arrange financing in the city of Chicago 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
Apartment Loan Helpful Articles
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How To Get The Best Rates On An Apartment Refinance
Recent Multifamily Loan Closings
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 $1,500,000. Get started with a Free Commercial Mortgage Loan Quote.
Chicago Apartment Loans
Select Commercial provides apartment loans throughout Chicago, Illinois including, but not limited to, the areas below. We provide apartment loans in most major cities throughout the United States.