Indianapolis Apartment Loans
Loans from $1 Million to $25 Million+
|Indianapolis Apartment Loan Rates Over $6,000,000||Rates (start as low as)||LTV|
|Apartment 5 Year Fixed Loan Rates||5.40%||Up to 80%||Get Free Quote|
|Apartment 7 Year Fixed Loan Rates||5.40%||Up to 80%||Get Free Quote|
|Apartment 10 Year Fixed Loan Rates||5.50%||Up to 80%||Get Free Quote|
|Indianapolis Apartment Loan Rates Under $6,000,000||Rates (start as low as)||LTV|
|Apartment 5 Year Fixed Loan Rates||5.50%||Up to 80%||Get Free Quote|
|Apartment 7 Year Fixed Loan Rates||5.50%||Up to 80%||Get Free Quote|
|Apartment 10 Year Fixed Loan Rates||5.60%||Up to 80%||Get Free Quote|
Select Commercial has excellent Indianapolis Apartment loan products and options available for owners and purchasers of multifamily properties throughout the city of Indianapolis. 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. Indianapolis 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 Indianapolis IN 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.
Indianapolis Apartment Loan Benefits
Indianapolis Apartment Loan rates start as low as 5.50% (as of October 3rd, 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
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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!"
Indianapolis Apartment Loan Types We Serve
If you are looking to purchase or refinance a Indianapolis apartment building, don't hesitate to contact us. We arrange financing in the city of Indianapolis 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
Indianapolis 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 Indianapolis Apartment Loan Outlook
Limited New Construction Boosts Existing Apartments - Investors Active Downtown
Strong demand for rentals and limited new construction benefits the market. Net rental rates have stayed ahead of new construction every year since 2016, driving down vacancy rates over the same period. The slow pace of new construction will help keep vacancy low in 2022 with new construction increasing inventory by only 1.1%, a rate that is half of the national rate. New construction projects outside of the downtown area are focused in the northern suburbs, such as Carmel and Fishers, where Class A apartments are in demand and new apartments usually rent quickly. The downtown area has recovered from Covid-related problems and vacancy has dropped to almost pre-Covid levels. The downtown area contains employers in the growing technology and biosciences markets, including Salesforce and Eli Lilly, providing high-income employment to Class A apartment renters. FedEx and Radial have announced plans to hire additional entry-level employees at their fulfillment centers, strengthening rental demand for lower cost apartments in surrounding neighborhoods.
The market’s potential along with low sales prices drives activity in the market. Solid demographics in the northern neighborhoods from 16th Street to Interstate 465 are the most active areas for investment in the city. Sales prices are a little higher than the city’s average cost of $92,000 per apartment and cap rates of about 6% are common for apartments in these neighborhoods. Sales activity is being generated by national investors looking for higher rates of return and lower sales prices than available for similar properties in their home markets, evidenced by the large number of sales in excess of $10 million. Sales volume is lower in the downtown area as purchasers looking for premium properties are willing to look north of downtown and those seeking lowers average sales prices look at areas south of downtown in South Marion County and Southeast Indianapolis. Initial returns around the city average of 6% are typical in these submarkets. Above average returns on investment can be found with buildings selling for less than $5 million dollars north of I-465 and in Madison County.
2022 Apartment Market Forecast and Indianapolis Apartment Loan EconomicsIndianapolis has a National Multifamily Index of 24, which ranks near the middle of the list in 2022, due to low vacancy but limited by weaker employment statistics.
Employment is up 1.8%. A gain of 19,500 jobs helps to push total employment in the city near the levels seen pre-pandemic.
New construction adds 1,900 new apartments. New additions come nearly 300 units short of the five-year average. This makes 2021 and 2022 the lowest two-year period for new construction since 2012-2013.
Vacancy rates down by 20 basis points. The weak pace of new construction in 2022 and 2021 will help drop the vacancy rate to 3.4%. Vacancy has not been this low since at least 2000.
Apartment rents are up 4.3%. After soaring 11.1% in 2021, the average effective rent reaches $1,100 per month in 2022, on pace with the annual average gain of 4.4% between 2016 and 2020.
Investment in Indianapolis apartment buildings. Purchasers seeking Class A apartment buildings look at suburbs north of I-465 and can expect sales prices above the city average. These sales often have cap rates around 5%.
Indianapolis 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 Indianapolis apartment loan rate increases will affect market activity in 2022.
All data provided by Marcus and Millichap
2021 Indianapolis Apartment Market and Trends
After the Covid- 19 pandemic, the Indianapolis multifamily market is beginning to recover in 2021. Employment is expected to increase 2.7 percent this year. That is an increase of 28,900 jobs in 2021 which should offset a significant number of jobs lost during the pandemic. Only about 1,100 new units are set to be completed in 2021. This amounts to about 0.7 percent of the current inventory. Vacancy rates in Indianapolis are expected to decrease in 2021. They should come down about 3.8 percent, or 90 basis points. With vacancy rates going down, rents are expected to increase 3.6 percent in 2021. The average effective rent in 2021 should hit $986 per month.
- 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
IndyGo Boosts Connectivity to Downtown Employers; Rental Demand Near Route to Benefit
Red Line completion enhances lease-up outside the core. More than a decade in planning, the IndyGo transit development came to fruition with the completion of the Red Line in late 2019, the first of a three-part transit project. The Red Line runs north to south through the densest portion of Marion County, within 1 mile of roughly 150,000 total jobs. Many of these roles are downtown, and residents of neighborhoods well outside of the core will now have transit accessibility to them. Class C apartment rentals, particularly in north Marion County near the route along College Avenue, will be in high demand from working-class individuals seeking budget-friendly multifamily housing options with efficient access to their employers. Additionally, the southern portion of the Red Line feeds into the University of Indianapolis, and students previously inclined to find housing within walking distance of the campus will explore apartments farther away along the route. As strong lease-up will reduce available options for tenants seeking multifamily rentals within proximity of the Red Line, properties along the route will foster sizable rent gains. Indianapolis is a great place for investors to take out an apartment loan to purchase their next property.
North Indianapolis receiving the bulk of investor attention. Vacancy has contracted every year since 2013, boosting the metro’s multifamily investment appeal. The majority of apartment sales are within the densely populated neighborhoods north of the core, in the corridor between Interstate 65 and I-70. With little space to develop apartments, few projects have come to market here recently, and a large share of deals have been for apartments built prior to 1950. These properties have been able to maintain robust demand through renovations as well as a lack of competition, and buyers have been closing on these multifamily assets priced between $1 million and $5 million with cap rates in the 7 to 8 percent range. Investors willing to pay a higher price point for large-scale mid-tier multifamily assets will expand their search parameters farther north to Washington Township. Here, multiple 250-plus-unit Class B apartment complexes recently traded for $10 million to $25 million, with initial yields in the 6 percent area. Investors looking to finance their next acquisition with a multifamily loan should definitely consider the Indianapolis market.
2020 Indianapolis Apartment Market Forecast
The Indianapolis National Multifamily Index Rank is at 29, up 4 places. Tightening vacancy and escalating rents improve Indianapolis’ standing in this year’s Index.
Employment in Indianapolis is up 0.7%. Employment growth holds par with the 0.7 percent advance logged in 2019 as 7,500 roles created.
Construction in Indianapolis is expected to exceed 1,900 apartment units. Development activity moderates significantly from the 3,300 units finalized in the previous year. This will be the fewest rentals completed since 2013.
The vacancy in Indianapolis is down 20 bps. A wane in construction allows vacancy to contract for the seventh consecutive year, moving down to 5.2 percent.
Rent in Indianapolis is up 5.0%. Average effective rent continues to jump, reaching $968 in 2020. This year’s growth rate exceeds the trailing-three-year average annual 4.8 percent gain.
The Indianapolis market remains a strong option for investors looking for an apartment loan. Institutional investors home in on newly built apartments in Fishers and Carmel. Those priced out will target obtainable assets north of downtown where entry costs are lower on average. We recommend investors obtain a multifamily loan to finance their next purchase in Indianapolis.
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.
Indianapolis Apartment Loan Options
Indianapolis Freddie Mac Apartment loans
Indianapolis 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.
Indianapolis Fannie Mae Apartment loans
The Indianapolis Fannie Mae multifamily loan platform is one the leading sources of capital for Indianapolis 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).
Indianapolis 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.
Indianapolis 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:
- Indianapolis 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.
Indianapolis Apartment Building Loans
Babe Denny • Lockerbie Square • Rogues Run • Chatham Arch • Mass Ave (Massachusetts Ave) / Arts District • St. Joseph • Fletcher Place • Old Northside • Upper Canal • Indiana University / Purdue University • Ransom Place • Wholesale District