San Francisco Multifamily Loans in 2024
At Select Commercial, we specialize in San Francisco apartment building loan financing. Our team is dedicated to offering the most competitive rates and tailored solutions for multifamily investments in the area. If you're interested in a multifamily loan outside of San Francisco, be sure to check out our California multifamily loans page. For comprehensive rates on all loan products available across the 48 states, visit our commercial mortgage rate page, where we offer competitive rates for loans starting at $1,500,000.
San Francisco Multifamily Loan Rates - updated 10/29/24
Multifamily Loan > $6Million | Get Free Quote | ||
---|---|---|---|
Loan Type | Rate* | LTV | |
Multifamily 5 Yr Fixed | 5.42% | Up to 80% | |
Multifamily 7 Yr Fixed | 5.43% | Up to 80% | |
Multifamily 10 Yr Fixed | 5.43% | Up to 80% | |
Multifamily Loan < $6Million | Get Free Quote | ||
Loan Type | Rate* | LTV | |
Multifamily 5 Yr Fixed | 5.86% | Up to 80% | |
Multifamily 7 Yr Fixed | 5.81% | Up to 80% | |
Multifamily 10 Yr Fixed | 5.82% | Up to 80% |
San Francisco Multifamily Loan Benefits
San Francisco Apartment Loan rates start as low as 5.42% (as of October 29th, 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
San Francisco Apartment Loan - Rental Information
As of October 2024, the average rent in San Francisco, CA is $2,884 per month, which is 85% higher than the national average of $1,556. The rental market shows an increase of 1.2% from last year, averaging $36 more per month.
When renting an apartment in San Francisco, you can expect to pay about $2,239 for a studio, $2,884 for a one-bedroom apartment, and around $3,966 for a two-bedroom apartment. For larger families, a three-bedroom rental averages $5,044 per month, making a San Francisco apartment loan an appealing option for prospective buyers.
Most rental prices in San Francisco fall above $2,000, suggesting that a San Francisco apartment loan could be beneficial for renters looking to invest in this iconic city.
2024 San Francisco Multifamily Loan Market: Adapting to New Supply Dynamics and Shifting Demand
Navigating the Market with a Focus on Mid-Tier Assets
San Francisco's employment landscape continues to grow, aiding demand particularly for mid-tier residential units. Despite an influx of new units concentrated in Downtown and SoMa, this year's deliveries primarily affect luxury segments, leaving mid-tier markets relatively stable. Notably, areas such as Marina-Pacific Heights-Presidio maintain low vacancy rates due to limited new supply, underscoring a robust demand for non-luxury housing options amidst rising overall rents. These conditions present prime opportunities for San Francisco apartment loans and multifamily investments.
Investment Trends: Vintage Assets in Focus
Investment interest remains high in vintage assets, particularly in northern San Francisco, where early-20th century properties attract local capital. With minimal new construction, these areas offer potential for high returns, especially in the Marina-Pacific Heights-Presidio submarket, known for its lower entry costs and competitive cap rates. This interest is poised to grow as the market continues to adjust to post-pandemic norms and evolving demand patterns, further supporting the San Francisco multifamily loan market.
2024 San Francisco Apartment Loan and Multifamily Market Forecast
- EMPLOYMENT: San Francisco's job market shows modest growth with an addition of 8,000 roles, focusing on diversifying beyond traditional white-collar sectors.
- CONSTRUCTION: The city sees a slight increase in completions, with significant developments in San Mateo County, adjusting the overall housing supply upward by 1.0 percent.
- VACANCY: As residents return, the vacancy rate decreases to 5.8 percent, closely approaching pre-pandemic levels, signaling a recovering rental market, which bodes well for San Francisco multifamily loans.
- RENT: Despite new supply, average effective rents face downward pressure, particularly in luxury segments, stabilizing at $2,800 per month due to ongoing concessions.
- INVESTMENT: With continued barriers to homeownership, San Francisco remains an attractive market for multifamily investments, particularly as new conversion initiatives offer fresh opportunities, highlighting the importance of San Francisco apartment loans.
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
What’s going on with commercial mortgage rates as we near the end of 2024?
The Federal Reserve’s Federal Open Markets Committee cut the federal funds rate by 50 basis points at its September 18, 2024, meeting. This was the first rate cut since March 2020, when the Fed began a long series of rate hikes to curb the high rate of inflation. The Fed’s decision shows that they believe that inflation is under control and moving into the 2% range that the Fed has set as its goal. The Federal Reserve took this decisive action to prevent further declines in the labor market. The Fed has further hinted at further cuts at its two remaining meetings in 2024, followed by additional cuts in 2025. This rate cut, along with possible future rate cuts, may create positive investor demand for commercial real estate, and may provide aid for commercial mortgage customers, as well as consumers in general. We must caution, however, that the Federal Reserve cuts affect short term interest rates directly and long-term rates only indirectly. The Prime Rate, which is a short-term rate, dropped from 8.50% to 8.00% with the Fed’s recent action. However, most commercial mortgage rates are based on the 5-, 7-, or 10-year treasury rates, and not the Prime Rate. We have seen these treasury rates actually rise since the Fed took its action. On September 18th, the 10-year treasury was roughly 3.70%. Three weeks later, this rate had jumped to 4.03%. Investors are still concerned about future inflation and are adopting a wait and see attitude.
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
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.