Multifamily borrowers are continuing to benefit from a strong rental market. Many are taking advantage of the increased rents and NOI’s by refinancing and pulling cash out to be used for a variety of purposes, such as returning equity back to investors, performing capital improvements, or applying the funds toward additional investment opportunities.
- Banks and credit unions will typically lend up to 70 – 75% LTV on stabilized assets.
- They are typically looking for 24 – 36 months of seasoning shown through a leveling of revenues and expenses on the operating statements, prior to allowing a full cash out of all the borrower’s equity on value-add deals.
- If the borrower has owned the property for less than 18 – 24 months, the lenders will typically offer loan proceeds based upon the borrower’s total cost, and not on the current perceived value of the property.
- Fannie Mae and Freddie Mac remain the most competitive non-recourse multifamily lenders for investors looking for longer term, fixed rate, loans at higher leverage.
- Life Co’s most competitive at lower leverage with some offering full term IO, forward rate lock, or more unique structures.
- The agencies will lend up to 75 – 80% LTV after 18 months of ownership, and can provide supplemental financing after 1 year of placing the initial loan.
- While short term borrowers have seen coupon rates rise due to increasing 30-day LIBOR, decreasing lender spreads have helped buffer the increase.
- Treasury rates remain steady and long term borrowers can still obtain 10 year money in the high 3 to low 4% range depending on loan size, asset quality, and location.
About Tower Capital:
Tower Capital was founded to enable owners of commercial real estate to achieve their investment goals with the least amount of time, energy, and cost, while creating surety of execution and peace of mind.
Established in 2015 and headquartered in Phoenix, Arizona, Tower Capital provides customized structured financing to investors throughout the United States. We specialize in debt and equity placement ranging from $2 Million to $100 Million and have financed over $500 Million for our clients since inception. We focus on independent financial advising with an entrepreneurial mindset, market vigilance and personalized attention to every client.