Over the last few years, the multifamily sector has proven to be the strongest sector in the commercial real estate industry. Occupancy and rental rates nationally have soared to levels not seen in well over 15 years. This has also forced an increase in new construction. Furthermore, the strong operating fundamentals afforded by current market trends have proven quite lucrative for investors. This has caused values to soar in markets all over the nation.
The strength of this sector can best be observed in the way occupancy has remained steady even with the onslaught of new construction currently coming online. More people are choosing to rent apartments over home ownership. This is the result of people relocating the central core of cities and away from the suburbs. Furthermore, a growing number of people don’t want to burden themselves with the debt of a mortgage following the recession.
With all of these factors coming into play, there is no better time than now to a secure multifamily financing. Some of the best multifamily investment opportunities are being found in smaller properties under $5 million. These properties are typically easier to manage and are achieving both strong short-term and long-term yields.
Some investors are concerned that Fannie Mae multifamily rates and Freddie Mac multifamily rates have increased over the past few months. Rates have grown around 30 basis points due to the mandate by the federal government that both agencies focus more on home loans for high-risk borrowers. To make up the difference, Fannie and Freddie have increased their multifamily mortgage rates.
The good news is still K2 Commercial Finance providing multifamily loans at attractive rates. Lower interest rates are key for multifamily investors so they can obtain the best possible return on their investments and those rates are still available. With the Federal Reserve stating that they intend to raise rates within the next few months, there is no better time than now to act on securing a multifamily loan.
In addition to attractive rates, K2 Commercial Finance also offers a variety of flexible options to ensure borrowers obtain the loan that best suits their needs. For those who want to effectively leverage their capital, we offer interest only loans. With demand so strong for multifamily housing, some investors have opted to build their own small properties. For those investors we offer fast and flexible construction loans and bridge loans for those planning to renovate an existing apartment property.
Even with the ups and downs in rates, multifamily financing remains red hot. Strong market fundamentals are showing little signs of slowing meaning the demand investor demand for apartments of all sizes should remain strong for at least the next 12 to 18 months.