Phoenix Apartment Loans
|Phoenix Apartment Loan Rates Over $6,000,000||Rates (start as low as)||LTV|
|Apartment 5 Year Fixed Loan Rates||5.90%||Up to 80%||Get Free Quote|
|Apartment 7 Year Fixed Loan Rates||5.78%||Up to 80%||Get Free Quote|
|Apartment 10 Year Fixed Loan Rates||5.64%||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||6.16%||Up to 80%||Get Free Quote|
|Apartment 7 Year Fixed Loan Rates||6.09%||Up to 80%||Get Free Quote|
|Apartment 10 Year Fixed Loan Rates||5.97%||Up to 80%||Get Free Quote|
Frequently Asked Questions
Is multi-family real estate a good investment in 2023?
Inflation fears, high interest rates, and the prospect of recession have slowed the pace of the commercial real estate market considerably. Some property types are outperforming others. Apartment buildings in desirable neighborhoods are performing well, as owners have been able to raise rents and keep up with rising interest rates. Multifamily properties in smaller and less desirable areas, or areas where unemployment is rising, are not performing as well, as rent increases are harder to implement. In the office sector, only medical office buildings are generating lender interest. General office properties have underperformed the market as a result of the work from home policies established during the Covid-19 pandemic. Office demand is unlikely to return to pre-Covid levels making the office sector extremely hard to navigate right now. In the retail sector, essential service businesses, such as grocery stores and pharmacies, are performing well, while traditional brick and mortar retailers are still feeling the effects of Covid-19 and the competition from online retailers. Many malls are experiencing record high vacancy levels, and some are being repositioned for other purposes. In the industrial sector, we are seeing strong demand for warehouse and distribution space to accommodate the online retailers. Industrial space in urban markets and close to transportation are performing very well. We expect to see sales prices for underperforming properties to drop in 2023 as investors gravitate to better positioned properties.
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.
How do we help our clients needing financing for a multifamily apartment building get the best rate and terms?
Select Commercial has excellent Phoenix apartment loan products and options available for owners and purchasers in need of multifamily properties throughout the city of Phoenix. Whether you need an apartment lender to finance a small apartment property, a complex with hundreds of units, or a co-operative, we can help you find the optimal apartment loan solution to meet your apartment 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 apartment loans here for our clients. We have a diverse array of many available loan products to help qualified 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.
Apartment - Multifamily Loan Benefits
Phoenix Apartment Loan rates start as low as 5.64% (as of September 26th, 2023)
• 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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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
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
What are the market conditions expected for Phoenix Apartment Loans in 2023?
Experts anticipate above average performance for the multifamily sector in 2023. Occupancy rates are expected to remain above 95% and rental rates are expected to grow by 4%. These figures are not as robust as the past couple of years, however, which saw vacancy rates under 3% and rent growth in the double digits. During the second and third quarters of 2022, leasing activity for apartment buildings was slow. This coincided with a solid pace of new multifamily deliveries to the market. The combination of slower leasing activity and heightened supply caused the overall vacancy rate to increase by 150 basis points in the middle portion of 2022. Throughout 2023, vacancy rates will likely continue to rise at a slower pace and move toward the 20-year average of 5%.
The overall multifamily housing demand is expected to remain strong in 2023. With inflation continuing to impact consumer spending, more and more renters are determining whether to renew their leases. While new leasing activity stalled throughout the middle portion of 2022, the overall multifamily demand remained pretty strong. The rise in home prices and residential mortgage rates is also helping to increase multifamily demand. Monthly payments for homes purchased in the third quarter of 2022 were, on average, 57% more than monthly apartment rents. That difference is the widest gap on record. Even if home values and mortgage rates decrease in 2023, the relatively lower cost of renting will support multifamily demand.
Rapidly rising interest rates on multifamily loans caused multifamily investment activity to slow down in the second half of 2022. Many buyers not willing to pay higher rates for apartment loans stepped out of the market. As apartment loan rates stabilize in 2023, many buyers will return to the market and look to finance apartment building investments with multifamily loans. The multifamily sector has historically been one of the most attractive sectors to investors. Over the past decade, the multifamily sector has seen average annual total returns of 9.3%. Additionally, this sector offers multifamily loan options from both Fannie Mae and Freddie Mac. These apartment loan options are not available for other asset classes. As the market stabilizes in 2023, more and more investors will look to acquire apartment buildings and finance them with agency apartment loans.
One other factor that caused the multifamily sector to stall in 2022 is that buyers expected cap rates to increase commensurate with the rise in interest rates, but sellers still expected higher prices. This caused many deals to simply not cash flow. Cap rates are expected to increase in 2023. With this increase, many buyers will have the option to finance acquisitions with apartment loans at more attractive prices.
Phoenix Apartment Loan Outlook - 2022
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
Phoenix Apartment Market and Trends - 2021
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..
Apartment Loan Outlook - 2021
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.
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 $1,500,000 to $25,000,000+). 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 Multifamily Loans
FHA 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 FHA will underwrite the loan in order to provide the insurance. There are two primary types of FHA insured loans that multifamily investors can take advantage of.
Phoenix HUD Multifamily Loans
HUD 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 Loans 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 $1,500,000. Get started with a Free Commercial Mortgage Loan Quote.
Phoenix Apartment Loans
Select Commercial provides apartment loans throughout Phoenix, Arizona including, but not limited to, the areas below. We provide apartment loans in most major cities throughout the United States.
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.