Massachusetts Apartment Loans and Multifamily Financing $1,000,000+
Massachusetts Apartment Loan Rates - Rates updated April 1st, 2020
|Multifamily Loan Product||Starting Rates||LTV|
|5 Year Fixed||3.57%||Up to 80%||Get Free Quote|
|7 Year Fixed||3.62%||Up to 80%||Get Free Quote|
|10 Year Fixed||3.69%||Up to 80%||Get Free Quote|
Select Commercial has excellent apartment building loan and multifamily loan products and options available for owners and purchasers of multi-family and apartment properties throughout the state of Massachusetts. 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. Massachusetts is one of the states that we consider to be a premium market for apartment building loans 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 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 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.
Massachusetts Apartment Loan Benefits
Massachusetts Apartment loan rates start as low as 3.57% (as of April 1st, 2020)
• No upfront application or processing fees
• Simplified application process
• Up to 80% LTV on apartment financing
• Terms and amortizations up to 30 years
• Loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation
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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!"
Massachusetts Apartment Loan Types We Serve
If you are looking to purchase or refinance a Massachusetts apartment building, don't hesitate to contact us. We arrange financing in the state of Massachusetts for the following:
- Large urban high-rise apartment buildings
- Suburban garden apartment complexes
- Small apartment buildings containing 5+ units
- Underlying cooperative apartment building loans
- Portfolios of small apartment properties and/or single-family rental properties
- Other multi-family and mixed-use properties
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.
What Happened with Apartment Loans in 2019
The multifamily market ended the 2019 year on a high note. Despite increased levels of new units entering the market, the apartment sector maintained strong and steady growth throughout the year. Vacancy rates throughout the country remained fairly stable, easing investors’ concerns of a significant decline in occupancy due to the high sum of multifamily units delivered. Furthermore, rent growth on the national and metropolitan levels remained healthy throughout the year. While 2019 rent growth was more modest than 2018, it was in line with 2016 and 2017 levels and remained above the national historic average of 3.4%. Based on data provided by the U.S. Census Bureau, multifamily completions increased slightly in 2019 when compared with 2018. The data also show that reported permit growth has increased 3% and starts are up 2%. Although 2019 data is not yet fully complete, these metrics suggest that the supply will remain elevated over the next few years. In terms of multifamily mortgage origination, the most up to date information has surpassed expectations. Mortgage Bankers Association reported that the 2018 mortgage volume came in at about $339 billion, an increase of 18.9% from 2017. While the actual 2019 numbers will not be available until later this year, experts estimate that due to solid fundamentals, low interest rates and heightened demand for multifamily investments, the total origination volume last year was about $369 billion.
The 2019 economy thrived overall. Throughout the year 2.1 million jobs were added which were in line with 2017 number (although it fell short of the 2018 total of 2.7 million). The unemployment rate also continued to decrease in 2019 as it went down 50 basis points to 3.5% at the end of the year. This number matched the lowest unemployment rate in fifty years. The labor market heavily supported increased salaries, as indicated by the 2.8% annual growth in the Employment Cost Index as of September of 2019. While these gains were below the expected amount for a market with such a low unemployment rate they were above the average for the past decade. At the beginning of the year many investors were concerned due to expectations of a recession. There were many indicators that supported this concern such as inverted two and ten year yield curves, an unanticipated rise in the June unemployment rate of ten basis points, an unstable stock market and slowed job growth. However, during the third and fourth quarters of 2019, the economy improved as job growth rose, the unemployment rate fell. This economic improvement has had a clear impact on the multifamily market as more investors are feeling bullish on putting their money into this asset class.
Massachusetts Apartment Loan Options
Our company has multiple capital sources for these apartment loans, including: Fannie Mae, Freddie Mac, FHA, national banks, regional and local banks, insurance companies, Wall Street conduit lenders, credit unions and private lenders.
Massachusetts Apartment Financing with Fannie Mae (FNMA)
Fannie Mae’s 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 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).
Massachusetts Apartment Mortgages with Freddie Mac (FHLMC)
Freddie Mac is another government agency that provides mortgage capital in the secondary market for apartment building loans. Together, Fannie Mae and Freddie Mac control a very large portion of the multifamily market. Freddie Mac has a very aggressive program for small balance 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.
Massachusetts 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:
- 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 loan requests of all sizes, beginning at $1,000,000. Click here to get started with a free loan quote.
Massachusetts Multifamily Loan Information and Economic Overview
The state of Massachusetts provides much potential to investors looking for commercial mortgage financing. This market is heavily driven by the major hospitals, universities and employers in the region. From Boston to Lowell and Waltham to Springfield, there are many significant investment opportunities available to investors. The average value of commercial real estate properties in Massachusetts is just over $780,000 and the median sale price of these properties is about $364,000. Over the last two years there have been slightly under 48,000 commercial sales; about 30,200 have sold for greater than $250,000, close to 6,200 of them were valued at over $1,000,000, and nearly 640 were appraised at over $10,000,000. Per square foot, the average price of commercial real estate properties in Massachusetts over the last two years is $135 and the average lot size of these properties is 9,040 square feet (92% below the United States average). There are nearly 754,000 commercial properties in Massachusetts, 194% below the country’s average, with a total acreage of over 1,000,000 acres. In terms of commercial mortgages, there are slightly under 1.5 million mortgages for commercial properties throughout the state of Massachusetts. The average value of these commercial mortgages is about $829,000, 144% below the United States average.
The Boston market is incredibly lucrative and is a wonderful place to take out a commercial mortgage loan. At the moment, development is very prominent in downtown Boston and its surrounding suburbs as we continue to see projects being finished in the Seaport, in Fenway, and at North Station. While Boston might seem oversaturated with commercial real estate properties, it is anticipated that numerous key development spots will be traded this year. We will also see development move beyond Boston itself, with development of certain location in the Dudley Square and parts of Dorchester. While one of the best incentives for developers is what’s known as “opportunity zones”, development this year has been largely impacted by tax credit incentives and other programs. About half of the opportunity zones in Massachusetts are located in lower income “gateway cities,” which happen to also be covered by state incentives like the Housing Development Incentive program. Additionally, The Seaport continues to grow and expand. Even with the news that General Electric will no longer build an anticipated $200 million development along Fort Point Channel, Boston officials still expect an intense amount of demand for the now-available property. It remains to be seen what will be built in this land, however it is clear that the heavy demand confirms that development and investment in the Seaport is still strong. Thus, Boston and its surrounding suburbs is a great place for investors to look for commercial mortgage financing.
The Boston multifamily market offers much upside for those commercial real estate investors looking for apartment loans. While Boston’s multifamily market saw remarkable strength after the Great Recession of 2008, those conditions have now moderated moving the rental market from exceptional to simply healthy. Even though the local economy has slightly slowed down, the apartment development pipeline has still been active, with a high level of new apartment and multifamily units to be added to inventory this year. While Boston was among the first cities to recover the jobs it lost in 2008, it has not necessarily had one of the most vigorous recoveries as jobs grew 1.8 percent last year, just .1 percent higher than the national average. However, Boston’s diverse economy is low risk and stable. The city’s economy should perform predictably (but at right below national average rates). With vacancy rates below 4 percent, Boston has maintained an incredibly stable rental market, due to its position as the financial capital of the New England region. Boston’s time-consuming development approval process has created an environment where existing multifamily and apartment projects are well-received by the market. Boston’s above-average land prices and rent levels strongly indicate the ample demand for new supply in the overall multifamily market. Thus, commercial real estate investors should definitely look into receiving an apartment loan in this region.