San Francisco Apartment Building Loans
At Select Commercial, our primary expertise in is in apartment/multifamily financing. We're dedicated to providing the most competitive rates and tailored solutions for multifamily investments in the area. However, if you're also exploring broader commercial real estate opportunities in other areas of California, our state-specific commercial mortgage page offers a wealth of information and resources. For those seeking comprehensive rates on all loan products available across the 48 states, our comprehensive commercial mortgage rate page offers competitive rates for loans starting at $1,500,000.
San Francisco Multifamily Loan Rates - updated 04/20/24
| Multifamily Loan > $6Million | Get Free Quote | ||
|---|---|---|---|
| Loan Type | Rate* | LTV | |
| Multifamily 5 Yr Fixed | 5.96% | Up to 80% | |
| Multifamily 7 Yr Fixed | 5.91% | Up to 80% | |
| Multifamily 10 Yr Fixed | 5.88% | Up to 80% | |
| Multifamily Loan < $6Million | Get Free Quote | ||
| Loan Type | Rate* | LTV | |
| Multifamily 5 Yr Fixed | 6.22% | Up to 80% | |
| Multifamily 7 Yr Fixed | 6.12% | Up to 80% | |
| Multifamily 10 Yr Fixed | 6.11% | Up to 80% | |
San Francisco Multifamily Loan Benefits
San Francisco Apartment Loan rates start as low as 5.88% (as of April 20th, 2024)
• 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
Our Reviews
Latest Expert Insights from Stephen A. Sobin
Stephen A. Sobin, the president of Select Commercial Funding LLC, is a renowned expert in the field of multifamily financing. His insights and perspectives are regularly sought by leading industry publications. Here are his latest contributions that highlight his deep understanding of the multifamily financing landscape and his commitment to providing clear, insightful analysis on key industry issues.
Persistent Inflation and Its Effects on CRE
In an article featured in Multi-Housing News, Stephen Sobin highlighted that while inflation is still a challenge for the Federal Reserve, there are many positive signs for the commercial real estate industry. The headline Consumer Price Index rose 3.2 percent for the year ended Feb. 29, a figure 20 basis points lower than the Dec. 31, 2023, rate. read the full article.
Commercial Spotlight: Mid-Atlantic Region In this four-state powerhouse, smaller metros are thriving.
In a feature in Scotsman Guide, the Mid-Atlantic Region's real estate dynamics are explored, highlighting its resilience and growth amidst the pandemic.
Stephen Sobin of Select Commercial Funding LLC shared insights on the New York market's allure and the challenges buyers face. He noted the shift from primary urban areas to tertiary markets due to evolving preferences and financial conditions. For a deeper dive into Sobin's analysis, read the full article.
What the New Jobs Report Means for CRE
In an article titled "What the New Jobs Report Means for CRE" in Commercial Property Executive, Stephen Sobin shared his perspective on the latest jobs report and its implications for the Commercial Real Estate (CRE) sector. He highlighted the challenges posed by high interest rates and the prevailing uncertainty in the market. Sobin remarked, "Sellers aren’t selling, buyers aren’t buying... Everyone is waiting because no one knows what to expect." For a detailed analysis and more of Sobin's insights, read the full article.
Decoding "Junk Fees" in Rental Housing
In another latest contribution to Multi-Housing News, Sobin provided expert commentary in an article titled "What's Next for Junk Fees? The Industry Weighs In". He clarified the difference between legitimate fees collected for various third-party services and so-called "junk fees". Sobin emphasized the importance of borrowers understanding their rights in negotiating all loan terms and the obligation of lenders to disclose all fees.
Understanding the Impact of Federal Reserve's Decisions
In a recent article titled "How the Fed's Pause on Interest Rates Impacts Multifamily" published by Multi-Housing News, Sobin shared his expert insights on the Federal Reserve's decision to pause interest rate hikes. He accurately predicted that the Fed would not raise rates in June, citing recent bank failures and lingering concerns about a potential recession.
Stay tuned for more expert insights from Stephen A. Sobin on the evolving multifamily financing landscape.
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.
Recent Banking Failures Likely To Impact California Multifamily Lending
The recent collapse of Silicon Valley Bank and Signature Bank has sent shockwaves through the business and real estate lending sectors. As a leading CA commercial mortgage broker with over 30+ years of experience, Select Commercial knows that the multifamily sector is not immune to these developments. Here's how these banking failures could impact multifamily lending:
Regional Banks Under Pressure
Regional banks, which provide significant liquidity to the apartment sector, are likely to face increased pressure. The collapse of SVB and Signature Bank has raised concerns about the stability of smaller banks. This could lead to a pullback from regional banks providing loans to the multifamily sector, making it more challenging for developers and investors to secure financing.
Development Challenges
Developers could face significant challenges, particularly in securing construction loans and value-add renovation dollars. The current environment is leading to a slowdown in construction lending and a return to traditional underwriting and banker skepticism. This could particularly impact the affordable housing sector, where developers need their financing lined up to secure tax credits.
Volatility in the CMBS Market
CMBS loans have experienced turbulence following the bank failures. This volatility could impact a new crop of lenders that have emerged over the past half-decade, many of which are capital markets-dependent. If the securitization market stabilizes, some of the CMBS and bridge lenders may re-enter the market to fill the liquidity gaps left by regional lenders.
Interest Rate Uncertainty
The bank failures could also contribute to uncertainty around commercial mortgage rates. If these failures lead to a slowdown in rate hikes by the Federal Reserve, this could potentially benefit the commercial real estate market in the long run. However, it's too early to predict the exact impact on apartment transaction volume.
In summary, the recent banking failures have the potential to significantly impact how banks handle multifamily loans. We will closely monitoring these developments to provide the best advice and service to my clients during these uncertain times.
Apartment Loan Types We Serve
If you are looking to purchase or refinance a San Francisco apartment building, don't hesitate to contact us. We arrange financing in the city of San Francisco 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 Articles
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How to Invest in an Apartment Building
Are You Shopping for an Apartment Building Loan?
How To Get The Best Rates On An Apartment Refinance
Recent Multifamily Loan Closings
San Francisco Multifamily Loan: Downtown Rentals Demand Rises; Full Pandemic Recovery Hinges on Office Reoccupation
The demand for downtown rentals in San Francisco is on the rise, thanks to the appeal of local amenities. However, the full recovery from the pandemic is still dependent on the return to office work.
San Francisco's market conditions are showing signs of improvement. In 2022, it was one of only two major markets in the U.S. to see a decrease in annual vacancy rates. The availability of rentals in the Central Business District (CBD) matched the suburban rate for the first time since 2015, as amenities such as restaurants, nightlife, shops, and parks attracted renters back to the city center, despite the reduced office usage by local employers.
While the vacancy rate remains above the long-term average as we enter this year, it's a significant improvement from the record high of 10.4 percent in December 2020. Looking forward, the barriers to homeownership are expected to continue driving rental demand and reducing vacancy rates in 2023, even with the potential for an economic slowdown.
San Francisco's median single-family home prices are at least 10 percent higher than any other Bay Area metro and rank the highest among all major U.S. markets. However, despite the minimal competition from the single-family sector and the positive momentum in operations, the widespread adoption of remote work has created uncertainty about the speed of a full recovery in apartment usage. If hybrid and remote work schedules become the norm, vacancy rates may remain above historical averages in the short to medium term.
San Francisco's unique multifamily investment market is attracting investor interest for the long term. Development opportunities are limited, which reassures buyers that rental demand will outpace new supply in the long term, leading to improved operating incomes.
Submarkets within San Francisco proper have been the most liquid recently. The rapid decrease in vacancy rates over the past two years in the CBD has increased investor interest in downtown assets. Properties in Richmond-Western Addition, Marina-Pacific Heights, and the Haight-Mission area are also in demand, where median household incomes are among the highest in the metro.
Outside the city, investors are willing to pay a premium for assets in San Mateo-Burlingame and Redwood City-Menlo Park, where entry costs often exceed $450,000 per unit.
2023 San Francisco Multifamily Market Forecast
Employment is up 0.7%. National economic conditions cause a slowdown in job growth. 8,000 new jobs are added in 2023.
New construction adds 2,600 apartment units. The pace of construction in 2023 is double the pace seen in 2022, but still below the market average of 2,900 new units. The apartment stock will rise by 1% this year.
Vacancy rate is down 10 basis points. San Francisco is the only large city in the country to see a drop in vacancy this year. Vacancy will drop to 6.3%.
Apartment rents are up 1.6%. Rent growth slows after larger increases in 2021 and 2022, and the average monthly rent hits $2,900. This is a record for the market.
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.
San Francisco Apartment Loans
Select Commercial provides apartment loans throughout San Francisco, California including, but not limited to, the areas below. We provide apartment loans in most major cities throughout the United States.