Houston Multifamily Loans in 2024
At Select Commercial, we specialize in Houston 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 Houston, be sure to check out our Texas 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.
Houston Multifamily Loan Rates - updated 10/29/24
Multifamily Loan > $6Million | Get Free Quote | ||
---|---|---|---|
Loan Type | Rate* | LTV | |
Multifamily 5 Yr Fixed | 5.42% | Up to 80% | |
Multifamily 7 Yr Fixed | 5.43% | Up to 80% | |
Multifamily 10 Yr Fixed | 5.43% | Up to 80% | |
Multifamily Loan < $6Million | Get Free Quote | ||
Loan Type | Rate* | LTV | |
Multifamily 5 Yr Fixed | 5.86% | Up to 80% | |
Multifamily 7 Yr Fixed | 5.81% | Up to 80% | |
Multifamily 10 Yr Fixed | 5.82% | Up to 80% |
Houston Multifamily Loan Benefits
Houston Apartment Loan rates start as low as 5.42% (as of October 29th, 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
Houston Apartment Loan - Rental Information
As of October 2024, the average rent in Houston, TX is $1,193 per month, which is 23% lower than the national average of $1,556. This makes securing a Houston apartment loan a great option, with rent prices showing a 1.1% increase over the past year.
Renters in Houston can expect to pay $1,085 for a studio apartment, $1,193 for a one-bedroom apartment, and $1,493 for a two-bedroom apartment. A Houston apartment loan could help you secure a larger three-bedroom rental, with costs around $1,851 or more.
Affordable neighborhoods like Alief, Westchase, and Woodlake-Briar Meadow offer excellent opportunities for those looking to secure a Houston apartment loan.
2024 Houston Multifamily Loan Market: Affordability and High-Wage Job Growth Drive Migration
Houston's Sustained Appeal for Relocating Households
Houston continues to attract relocating households, with the city adding 165,100 households from 2020 to 2023. This influx, accelerated by pandemic circumstances, has been supported by Houston's cost-of-living and quality-of-life advantages compared to other Sun Belt metros. Despite a moderation in rent growth last year, Houston's effective rent remains competitively lower than the Sun Belt average, enhancing its long-term migration prospects, particularly among budget-conscious movers. Additionally, notable hiring in high-wage industries contributes to Houston's leading position in Texas for median household income growth, further stimulating demand for apartments and opportunities for Houston apartment loan investments.
Challenges and Opportunities in the Houston Apartment Market
Despite the nationwide slowdown in transactions due to higher interest rates and reduced financing availability, Houston might see an increase in listings in 2024. The cost of insuring apartment units in Houston rose significantly, coupled with rising property taxes, which could prompt more trading activity. Investors ready to manage these costs might find lucrative opportunities in suburbs like Clear Lake and Katy, which show robust demographic growth and a promising outlook for the Houston multifamily loan market.
2024 Multifamily Market Forecast for Houston
- EMPLOYMENT: Houston is projected to add 62,000 jobs in 2024, maintaining its position as one of the top cities nationally for job creation, supporting multifamily loan opportunities.
- CONSTRUCTION: Apartment inventory is expected to expand by 2.7 percent this year, continuing the pace set in 2023. The construction pipeline is set to decrease, with about half of 2024's volume expected to roll over into the next year.
- VACANCY: Vacancy rates are projected to rise moderately to 7.5 percent, remaining more stable compared to other major Texas markets.
- RENT: Even with rent growth slowing, Houston's rent increase remains in the top 15 nationally, with the average effective rent expected to reach $1,410 per month.
- INVESTMENT: While recent years saw a focus on fast-growing suburbs, there may be a renewed interest in urban core areas like Downtown-Montrose-River Oaks, especially with significant hiring in these locales, potentially revitalizing interest in downtown Houston multifamily loans.
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 Texas 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 TX 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 Houston apartment building, don't hesitate to contact us. We arrange financing in the city of Houston 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.
Houston Apartment Loans
Select Commercial provides apartment loans throughout Houston, Texas including, but not limited to, the areas below. We provide apartment loans in most major cities throughout the United States.