Phoenix Apartment Loans
Loans from $1 Million to $25 Million+
|Phoenix 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|
|Phoenix 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 Phoenix Apartment loan products and options available for owners and purchasers of multifamily properties throughout the city of Phoenix. 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. Phoenix 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 Phoenix AZ 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.
Phoenix Apartment Loan Benefits
Phoenix 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!"
Phoenix Apartment Loan Types We Serve
If you are looking to purchase or refinance a Phoenix apartment building, don't hesitate to contact us. We arrange financing in the city of Phoenix 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
Phoenix 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 Phoenix Apartment Loan Outlook
Red Hot Apartment Market Combines with Record New Supply – Purchasers Look to Get into the Market
Phoenix expected to post large rent growth again in 2022. Several factors drive the demand in Phoenix. The market is expected to add approximately 50,000 new households this year, a growth rate more than double the national average. Strong relocation numbers are the driving force, with many residents moving from colder weather climates or more expensive markets along the coasts, with a heavy concentration of former California residents. At the same time, the local economy is open for business and growth. The employment numbers surpassed the pre-Covid high by the third quarter of 2021, although the unemployment rate remained above 5%, keeping job availability high and leaving potential for growth. This combination of factors is driving extensive rent growth and very tight vacancy. Phoenix was one of only three major U.S. cities to register an annual rent growth rate exceeding 20% in 2021 and Phoenix will remain near the top of the charts again in 2022. Nonetheless, new apartment completions in 2022 will double the previous annual mark seen during the past 20 years, potentially having an impact on vacancy rates. The new apartment additions are necessary, however, as apartment availability beginning 2022 was more than 100 basis points below the next lowest year-end rate going back to 2000.
Sales price appreciation and a drop in cap rates result from increased competition. Many national and international investors are aware of the strong apartment performance in Phoenix. A large buyer pool with a desire for apartment assets throughout the Valley has resulted in strong price appreciation. In 2021, the average sale price of an apartment building increased to a level more than double the same metric in 2016. Over that same time period, the average cap rate fell 120 basis points to 4.9%. Buyers willing to pay much higher prices for apartment buildings in markets that appeal to young adults look in Tempe, Old Town Scottsdale and Downtown Phoenix. Initial investment returns in the high 3% range are increasingly common in these submarkets, though Class C apartment cap rates can sometimes exceed 5%. Investors seeking higher returns look the far east and west sides of the Valley where household creation is strong.
2022 Apartment Market Forecast and Phoenix Apartment Loan EconomicsPhoenix has a National Multifamily Index ranking of 5. Solid rent growth, low vacancy rates and strong household creation combine to give Phoenix a top rank in this year’s ranking.
Employment is up 3.9%. Total employment expands by 88,000 jobs, producing a level that exceeds the pre-Covid high by 137,400 jobs.
New construction adds 20,800 apartment units. Phoenix’s rental stock increases by 5.5% in 2022, the fourth fastest rate among major U.S. cities. Construction is heaviest Downtown and in West Valley suburbs like Glendale.
Vacancy rates are up 20 basis points. Net absorption exceeds 19,000 apartment units, the highest annual number since at least 2000. Still, the record setting number of new apartments results in a slight vacancy increase to 2.8%.
Apartment rents are up 7.2%. Rent growth will slow down from 2021’s 21.9% gain but remain strong. The average rent will increase to $1,630 per month in 2022, on pace with the 2016-2020 annual average growth rate.
Investment in Phoenix apartments. More purchasers look at Class B and C apartments Downtown and in North Phoenix. These may better fit with the budgets of some renters in the market amid a wave of new modern apartment buildings.
Phoenix 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 Phoenix apartment loan rate increases will affect market activity in 2022.
All data provided by Marcus and Millichap
2021 Phoenix Apartment Market and Trends
Over the past 12 months, the Phoenix multifamily market has produced record-setting numbers. Availability of apartment units fell to a 20-plus-year low in the second quarter of 2021. The low supply of and high demand for apartment housing has caused rent to increase nearly four times as fast as the national average in in 2020 and 2021. More than 40,000 new households were created during that stretch, with relocations to the metro accelerating as job openings grew. It is much more affordable to live in Phoenix than to live in many other West Coast cities. This factor and the quality of life many residents find in Phoenix has motivated many to migrate to the city in 2021. Meanwhile, the median home price in Phoenix jumped 24 percent in the past year, raising the barrier to homeownership. A large portion of the demand from new residents is going toward multifamily units, as can be seen by the improvement of the market in the second quarter of 2021. Net absorption during the April through June time frame exceeded 5,500 units, the largest quarterly total in over 15 years.
Employment is up in Phoenix in 2021. With a gain of about 137,000 jobs, the Phoenix market is set to rise above the pre-pandemic level by about 46,000 workers in 2021. The employment total will grow by about 6.4 percent in 2021. This is the fastest annual growth in Phoenix since 1996. About 10,000 new apartment units are slated to be completed in 2021. This delivery volume in 2021 will be one third larger than the average over the past five years. Vacancy is rapidly declining in 2021. By the end of 2021, the Phoenix multifamily market is expected to have one of the ten lowest vacancy rates amongst major US markets. The vacancy rate is expected to come down 70 basis points, to 3.1 percent. The average expected rent in Phoenix is expected to increase 12.2 percent to $1,400 per month in 2021. This is the fastest growth in over 20 years..
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
Migration to Phoenix Highest in the Nation, Driving Continued Apartment Housing Demand
Positive business and lifestyle climates draw new residents and companies to the Valley. Phoenix stands out this year with one of the nation’s fastest-growing economies as firms are drawn to the favorable business environment, lower expenses and an increasingly educated workforce. Many businesses are moving operations out of high cost markets and into the Valley, tapping into the deep roots that finance, insurance and software firms have grown. This will propel Phoenix to the top spot in net migration in 2020, adding more than 77,000 new residents, many of which being young professionals. The Valley is a prime example of activity picking up in secondary multifamily markets at this point in the cycle as the single-family sector has been unable to meet the needs of an expanding metro. Reflective of this is the exceptionally limited availability of traditional workforce housing as the Class B and C apartment vacancy rates sit in the mid-3 percent and high-2 percent ranges, respectively. This will restrain absorption this year, resulting in the majority of new leases stemming from luxury apartments. Investors looking to purchase property in the Phoenix market should definitely look into taking out an apartment loan to finance their acquisition.
Rush of capital flowing into the market to capture remaining upside. Phoenix has been characterized by strong capital migration into the apartment sector this cycle as favorable yields and healthy job gains swell multifamily investor appetites. The Valley led the nation last year in apartment rent growth, creating robust cash flows for owners, which holds buyer interest elevated in 2020. Caps on multifamily rent growth in nearby states encourage private investors to consider acquisitions in Phoenix as the sector here faces minimal legislative threats. The East Valley will remain a target among private and institutional groups for its concentration of finance and insurance companies, often recording an initial yield in the upper-5 percent to mid-6 percent band. Many areas of the market remain the focus of value-add and opportunistic apartment buyers, especially submarkets that have recorded minimal supply growth this cycle, including the West Valley, Mesa and South Phoenix. Phoenix is a great market for investors to finance their next apartment purchase with a multifamily loan.
2020 Phoenix Apartment Market Forecast
The Phoenix National Multifamily Index Rank is at 6, up 7 places. Rising asset values and sizable job creation vault Phoenix up seven positions in the 2020 Index.
Employment in Phoenix is up 1.8%. Following a 2.5 percent employment expansion in 2019, Phoenix remains one of the nation’s top job creators with employers adding40,000 workers to company payrolls this year.
Construction in Phoenix is expected to exceed 9,000 units. An impressive wave of apartments is scheduled for delivery this year, eclipsing last year’s total by almost 1,200 units and accounting for the greatest supply increase in at least 20 years.
Vacancy in Phoenix is up 40 bps. Moderated leasing activity due to limited Class B/C apartment availability will support a vacancy bump to 4.3 percent.
Rent in Phoenix is up 8.6%. Rent growth remains strong this year, bringing the average effective rent up to $1,280 per month after a 9.7 percent advance was registered last year.
Investment opportunities in Phoenix remain strong for those looking to finance their next purchase with an apartment loan. Assets near major employment nodes including Glendale and Tempe Town Lake will continue to receive strong investor interest this year as workers seek short commutes in these areas. We highly recommend any investors looking to buy in the Phoenix 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.
Phoenix Apartment Loan Options
Phoenix Freddie Mac Apartment loans
Phoenix 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.
Phoenix Fannie Mae Apartment loans
The Phoenix Fannie Mae multifamily loan platform is one the leading sources of capital for Phoenix 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).
Phoenix 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.
Phoenix 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:
- Phoenix 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.
Phoenix Apartment Building Loans
Ahwatukee Foothills, Alhambra, Camelback East, Camelback Corridor, Central City, Central Phoenix, Cooper Square, Deer Valley, Desert View, Downtown, Encanto, Estrella, Maryvale, Metrocenter, Moon Valley, North Mountain, North Phoenix, Paradise Valley, Roosevelt, South Mountain, South Phoenix, Sunnyslope.