As we go into the new year, a variety of capital sources sources from banks to private equity funds still find multifamily lending attractive. Despite concerns regarding rising interest rates, high property prices, and overbuilding, multifamily borrowers will still have lots of choices on where to get permanent loans in the new year. Managing directors with major capital market services providers note that there isn’t anything out there that will create a lack of liquidity. From Freddie Mac and Fannie Mae lenders to banks and life companies, multifamily investors are able to get permanent loans from an expanding list of lenders. Moreover, debt funds have also been created to provide loans on apartment properties. As we move into the new year, multiple capital sources are available to multifamily investors when it comes to perusing multi family real estate for sale. Luxe Crowdfunding is a top investment management company in the Chicago area. Call us today for your investment needs!
Real Estate Developers Can Find Money to take out Their Construction Loans
If a new project is taking too long to lease up, developers are able to find loaners in order to take out their construction loans. Debt funds have been created by many private equity fund managers that now provide bridge financing on apartment properties. This means that if you are thinking of investing in multi family real estate for sale, you will be able to find sources of capital to finance your investment. Loans of this sort are able to cover up to 85 percent of the value of a property, and interest rates can float at 375 to 300 basis points over the 30-day LIBOR. The borrower is able to find conventional permanent financing to take out most of the bridge loan once the property has fully leased, so a much smaller mezzanine loan comes from the remainder of the bridge loans from the debt fund. These debt funds are also used by value-add investors to secure bridge financing for their properties. Despite two years of rate hikes from the Federal Reserve, permanent loans still harbor relatively low interest rates. While interest rates are up half a percentage point from the end of 2017 for permanent loans from Fannie Mae or Freddie Mac programs that cover up to 75 percent of the value of a stabilized, fully-leased property, the increase is still far below the rate hikes from the Federal Reserve Officials. The Federal Reserve has been trying to push their benchmark Fed funds rate higher by 25 basis points at a time since 2017.
Capital Sources Plentiful For Investors
In 2019, all the biggest lenders are expected to stay busy. Despite having a new federal overseer in 2019, Freddie Mac and Fannie Mae remained the biggest sources of capital for apartment loans in 2018, and are probably going to remain so in 2019. From banks to life insurance companies, other sources of capital remain active, and loans are competed upon by life companies on the most desirable, class-A apartment properties. Interest rates as low as 105 to 110 basis points over the yield on Treasury bonds for low-leverage loans are being offered.
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Going into 2019, investors will not lack for capital sources from which they can fund their investments. If you are looking at multi family real estate for sale as an investment, contact Luxe Crowdfunding, a top investment management company in Chicago. Call us today for a consultation!