Nashville Apartment Loans
Loans from $1 Million to $25 Million+
|Nashville Apartment Loan Rates Over $6,000,000||Rates (start as low as)||LTV|
|Apartment 5 Year Fixed Loan Rates||5.37%||Up to 80%||Get Free Quote|
|Apartment 7 Year Fixed Loan Rates||5.12%||Up to 80%||Get Free Quote|
|Apartment 10 Year Fixed Loan Rates||5.08%||Up to 80%||Get Free Quote|
|Nashville Apartment Loan Rates Under $6,000,000||Rates (start as low as)||LTV|
|Apartment 5 Year Fixed Loan Rates||5.47%||Up to 80%||Get Free Quote|
|Apartment 7 Year Fixed Loan Rates||5.22%||Up to 80%||Get Free Quote|
|Apartment 10 Year Fixed Loan Rates||5.18%||Up to 80%||Get Free Quote|
Select Commercial has excellent Nashville Apartment loan products and options available for owners and purchasers of multifamily properties throughout the city of Nashville. 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. Nashville 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 Nashville TN 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.
Nashville Apartment Loan Benefits
Nashville Apartment Loan rates start as low as 5.08% (as of September 25th, 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
Recent TRUSTPILOT Reviews
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!"
Nashville Apartment Loan Types We Serve
If you are looking to purchase or refinance a Nashville apartment building, don't hesitate to contact us. We arrange financing in the city of Nashville 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
Nashville 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 Nashville Apartment Loan Outlook
High Paying Jobs Create Strong Renter Demand - Construction Activity Increases
Strong economic diversity creates demand for apartment of all classes. Nashville has attracted many new companies as businesses move to the downtown area and create a large number of new job openings. Amazon and Asurion have moved their offices downtown, and development continues on Nashville Yards, a 17-acre site containing music venues, residences, offices, and retail space along with large public walking spaces. New construction and the number of businesses expanding downtown provide many new middle- and high-income positions, creating strong demand for apartment units in downtown areas. In addition, the strong leisure and hospitality sectors in Nashville will continue to cause strong demand for lower cost apartments. Even though more than 4,000 apartment units hit the market last year over the prior year, strong renter demand will cause the absorption of more than 90% of the new units, keeping apartment rents growing. This boost in new construction will create opportunities for renters in a tight market where vacancy rates have dropped to their lowest levels in over 20 years. Increasing rents and strong demand in Nashville will likewise cause strong demand in the market’s suburban neighborhoods.
Buyers are seeking higher returns and lower costs in the suburbs. Investor demand for downtown apartment properties has caused an increase in sales prices in the market, with investment returns around the 5% mark at the beginning of 2022. Transactions involving large Class A apartment properties in the downtown area are favored by national investors willing to pay almost a 50% premium above market and willing to settle for cap rates near or below 4%. This has caused many local buyers to look at other markets and deal types. Sales volume remains high in the southern suburbs as investors look for opportunities as far south as Columbia, as higher returns and increased household formation trends to the south. Sales have also increased in the eastern part of the market and north of the Cumberland River where investment returns have been closer to 6%.
2022 Apartment Market Forecast and Nashville Apartment Loan EconomicsNashville has a National Multifamily Index ranking of 20. Strong numbers of new residents and positive job growth help Nashville generate a ranking in the top half of this year’s survey.
Employment is up 2.9%. Employment recovery in Nashville’s crucial leisure and hospitality sectors will help add 31,000 jobs in the market in 2022. New construction adds 11,000 apartment units. The number of new apartments will exceed the 10,000 level for the first time in Nashville’s history. This represents 6.7% increase in apartment inventory.
Vacancy rates up 30 basis points. A strong number of new apartments slows down net absorption, increasing the apartment vacancy rate by 30 basis points to 2.9% in 2022. In 2021, vacancy dropped 300 basis points.
Apartment rents increase by 4.1%. Following tremendous rent growth in 2021, the average effective rent will reach $1,520 per month. The 2-year growth rate exceeds 22%.
Investment in Nashville apartments. Class A and B buildings have contributed a larger share of total sales volume each of the past four years as investors focus on increased rental demand caused by high-income job growth in the market.
Nashville 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 the Nashville apartment loan rate increases will affect market activity in 2022.
All data provided by Marcus and Millichap
2021 Nashville Apartment Market and Trends
After the Covid- 19 pandemic, the Nashville multifamily market is beginning to recover in 2021. Employment is expected to increase 2.7 percent this year. That is an increase of 27,300 jobs in 2021 which should offset a significant number of jobs lost during the pandemic. About 6,400 new units are set to be completed in 2021. This amounts to about 4 percent of the current inventory. Vacancy rates in Nashville are expected to increase in 2021. They should rise about 5.8 percent, or 20 basis points. Rents are expected to increase 3.2 percent in 2021. The average effective rent in 2021 should hit $1285 per month. As vaccine rollouts continue in 2021 and the economy continues to open up, the multifamily market in 2021 should continue to heat up.
- 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
Strong Housing Demand Paces Elevated Construction As Major Employers Bolster Presence
Nashville’s urban lifestyle draws apartment renters as employers converge on downtown. Nashville’s skyline continues to grow as construction of the first tower of Amazon’s Operations of Excellence Center began last year. Just south of this development, Asurion broke ground on its 550,000-square-foot headquarters in the Gulch, consolidating its four local locations. These projects will generate over 5,400 workers combined. As these and other newly created jobs fill, households will continue to form metro wide. Multifamily rental leasing will be robust, falling slightly shy of the apartment units opening in 2020 and allowing market demand for apartments to support rental rate growth for the 11th consecutive year. The rising price point to live in the central business district has triggered some multifamily renters to seek lower monthly rental rates in surrounding submarkets where commuting to downtown is easily accessible. Suburban locations southeast on Interstate 21 to Murfreesboro offer monthly rent that is approximately 45 percent below central Nashville’s average. Residential demand here is also driving new construction for those who desire apartments with modern amenities, yet at a lower price point than downtown. Investors looking to purchase property in the Nashville market should definitely look into taking out an apartment loan to finance their acquisition.
Bidding heats up in southern submarkets. The construction pipeline in suburban areas will continue to support an increase in deal velocity south of downtown, as investors favor the area’s affordable price points. In southeast Nashville toward Smyrna, out-of-state buyers have been actively purchasing multifamily inventory in the $15 million-plus price tranche for approximately 18 percent below the metro price per apartment unit average. First-year yields for these are slightly above the metro average cap rate of 5.6 percent. An influx of bidding in the southern suburbs has triggered some high-net-worth investors with a smaller pool of capital to seek Class B/C apartment buildings closer to downtown. In West End, building stock in the $1 million to $8 million area trades with cap rates near the low-6 to mid-6 range. Nashville is a great market for investors to finance their next apartment purchase with a multifamily loan.
2020 Nashville Apartment Market Forecast
The Nashville National Multifamily Index Rank is at 31, up 6 places. Tight vacancy, heightened unit pricing and higher yields than many other markets raise Nashville in the Index.
Employment in Nashville is up 1.3%. Low unemployment will result in a slowdown in hiring this year as firms add 13,600 workers. Last year 16,500 jobs were created.
Construction in Nashville is expected to exceed 4,900 apartment units. Construction will rise slightly from last year’s as deliveries near the 4,700-unit mark. The area southeast of downtown including the town of Smyrna and farther out to Murfreesboro will receive the largest share of completions.
Vacancy in Nashville is down 10 bps. Strong demand will contract vacancy for the second consecutive year, tightening the rate to 4.8 percent.
Rent in Nashville is up 7.0%. Building on last year’s 6.9 percent rent surge, the average effective rent will lift to $1,365 per month.
Investment opportunities in Nashville remain strong for those looking to finance their next purchase with an apartment loan. Increased leasing momentum downtown continues to attract investors to the urban core, pursuing cap rates in the mid-5 percent cap rate area. We highly recommend any investors looking to buy in the Nashville market to reach out to us regarding a multifamily loan.
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.
Nashville Apartment Loan Options
Nashville Freddie Mac Apartment loans
Nashville 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.
Nashville Fannie Mae Apartment loans
The Nashville Fannie Mae multifamily loan platform is one the leading sources of capital for Nashville 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).
Nashville 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.
Nashville 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:
- Nashville 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.