San Jose Apartment Building Loans

At Select Commercial, our primary expertise in San Jose is in multifamily financing. We're dedicated to providing the most competitive rates and tailored solutions for multifamily investments in the city. However, if you're also exploring broader commercial real estate opportunities in San Jose, our city-specific commercial mortgage page offers a wealth of information and resources. Beyond the city, for those seeking comprehensive rates on all loan products available across the 48 states, our comprehensive rate page offers competitive rates for loans starting at $1,500,000.

San Jose Multifamily Loan Rates - updated 09/26/23

Multifamily Loan > $6Million Get Free Quote
Loan Type Rate* LTV
Multifamily 5 Yr Fixed 5.90% Up to 80%
Multifamily 7 Yr Fixed 5.78% Up to 80%
Multifamily 10 Yr Fixed 5.64% Up to 80%
Multifamily Loan < $6Million Get Free Quote
Loan Type Rate* LTV
Multifamily 5 Yr Fixed 6.16% Up to 80%
Multifamily 7 Yr Fixed 6.09% Up to 80%
Multifamily 10 Yr Fixed 5.97% Up to 80%
*Rates start as low as the rates stated here. Your rate, LTV and amortization will be determined by underwriting.

San Jose Multifamily Loan Benefits

San Jose 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

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!"


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.

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 Basics

Apartment Loan Types We Serve

If you are looking to purchase or refinance a San Jose apartment building, don't hesitate to contact us. We arrange financing in the city of San Jose 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 Loans - Lending Options

Apartment Loan Helpful Articles

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Are You Shopping for an Apartment Building Loan?
How To Get The Best Rates On An Apartment Refinance

Recent Multifamily Loan Closings

San Jose Multifamily Loan: Lowest Apartment Vacancy in Bay Area; Market Aided by Development Deceleration

San Jose apartment supply and demand

San Jose, the heart of the Bay Area, is currently experiencing the lowest apartment vacancy rate in the region, a trend that is being supported by a slowdown in development and a potential return to office work.

As we entered the current year, the local vacancy rate was recorded at 3.7 percent, a figure that is 30 basis points below the pre-pandemic level and the lowest among all Bay Area metros. Major companies such as Apple, Google, and Intuit have indicated their preference for employees to work in-office for at least two to three days a week. This has likely spurred a return of many residents to the metro area, in anticipation of the need to be physically present at work.

Several factors are expected to continue driving demand for multifamily housing in the area. The high cost of single-family homes often pushes new households towards rentals, providing a consistent demand for apartments. Despite a slight expected contraction in the overall employment base this year, the growing life sciences sector continues to attract new residents, thereby expanding the local pool of renters.

While household formation may slow down in the near term due to inflation and potential recession, construction activity is projected to hit a four-year low in 2023. This is expected to balance net absorption with supply additions, keeping the vacancy rate relatively stable throughout the year.

Investor interest in San Jose's real estate market has been robust, with deal flow bouncing back to pre-pandemic levels in 2022. This resurgence in leasing activity has restored investor confidence in the city's apartment assets. Moving forward, value-add investors may target older Class C apartments in Downtown San Jose, where entry costs are often below the market average.

Properties with higher upside potential may be in demand in the near term due to rising interest rates. Assets in Mountain View-Los Altos and Santa Clara are also garnering attention due to their proximity to major employers like Google, Intuit, LinkedIn, Intel, Avaya, and Nvidia.

In Sunnyvale, the absence of rent control and easy access to Silicon Valley's major job centers make it an attractive location for investors. With the lowest vacancy rate among South Bay submarkets, owners seeking stable cash flow can find promising opportunities in this area.


2023 San Jose Multifamily Market Forecast

San Jose rent trends

Employment is down 0.3%. National economic conditions create instability in the market causing a loss of 4,000 positions this year.

New construction adds 2,300 apartment units. The local apartment stock increases by 1.3% in 2023.

Vacancy remains unchanged. After a 40 basis point increase in 2022, vacancy will remain steady in 2023. San Jose's vacancy rate is at 3.7%, well below the national average of 5.3%.

Apartment rents are up 3.7%. San Jose leads other surrounding cities in rent growth, and the average monthly rent hits $3,255. Rents have increased by more than 30% in the last three years.

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 Jose Apartment Loans

Select Commercial provides apartment loans throughout San Jose, California including, but not limited to, the areas below. We provide apartment loans in most major cities throughout the United States.

Willow Glen • Airport / North San Jose • East San Jose • Silver Creek Valley • West San Jose • Fairgrounds • Downtown • Burbank • Berryessa • Blossom Valley • North Valley • Almaden Valley • Cambrian • Alum Rock • Rose Garden • Evergreen • Edenvale • Santa Teresa