Multifamily Property Lending News

Surveys on new multifamily properties sales the past 2 months are showing some strain. This correlates to a drop in multifamily loans as well although Fannie Mae loans have increased substantially. Each market is local of course but the trend towards lower CAP rates is something we projected beginning the first quarter. It's not due to lower NOI's as occupancy has been at record highs for our clients. Expensive are going up but our clients with well maintained properties have been able to increase rents. The CAP rates were under pressure by lenders who began demanding better returns for investors to ensure payment.

This of course has been debated back and forth on listings. Sellers still wanted that sales price that were being sold in the fall and our agents were in a tough position. No one wants to be told their property isn't worth what they thought. Our experience was the proforma formulas and rule of thumb rules began using an expense debt load of 40% for many properties rather than the standard 35%. Lenders began holding borrowers to a higher net worth and more liquid asset reserves eliminating many borrowers. Thank goodness for LoopNet as many of our partners were able to sell to national investors. However, the crack down on out of market investors began several months ago that has had an impact in my opinion. Perhaps the new Fannie Mae commitment to invest in more MF properties and programs will offset the drop we have seen.

A good mortgage professional is needed now more than ever before. Choose someone who understands the needs of all parties involved.