Articles by
Content Team
Capital Gains Taxes for Multifamily and Commercial Real Estate Investors
Having an effective tax strategy is critical to your success as a multifamily investor. Otherwise, you could see a large portion of your profits consumed by an outsized tax bill.
Section 8 Investing: A Comprehensive Guide
Section 8 properties can be remarkably good investment opportunities, especially during an economic downturn. Find out everything you need to know.
What is the National Multifamily Housing Council (NMHC)?
The NMHC is an active public policy group that donates to candidates that support the multifamily housing industry while advocating for a variety of policies, including the expansion of the affordable housing supply in the U.S.
How Debt Service Coverage Ratio Is Used in Multifamily Finance
The debt service coverage ratio (DSCR) is calculated by dividing the net operating income (NOI) by the entity's annual debt service.
The Top 10 Multifamily Law Firms in 2021
In today’s world, contracts have never been more complex and litigation has never been more common. For multifamily investors, developers, this means that acquiring quality legal counsel isn’t just a luxury-- it’s a necessity. To help you better understand your options when it comes to real estate lawyers with specific experience in multifamily real estate, we’ve compiled a list of the top 10 multifamily real estate law firms in 2019.
The Top 15 Multifamily Property Managers of 2021
When it comes to owning or investing in multifamily real estate, hiring an effective and competent property management company is key. While there are many firms on the market, the industry is dominated by a group of major players. Check out our list.
SOFR: The New Replacement for LIBOR
For decades, the basis of the interest rates for loans— particularly for commercial real estate loans, has been the London Interbank Offered Rate, more commonly known as LIBOR. In essence, LIBOR is the rate which banks charge each other for short-term loans. However, LIBOR is rapidly being phased out by the Secured Overnight Financing Rate, or SOFR. By 2022, LIBOR will have been completely replaced, as major banks have no longer agreed to submit rates past that point in time.
Is Yield Maintenance Right for You?
A yield maintenance prepayment penalty guarantees that the lender will attain the same yield on the loan, even if it gets paid off before the scheduled maturity date.
What Is ClickPay and How Is It Used?
ClickPay allows property owners and managers to bill tenants while accepting payments via credit cards, checks, and ACH transfers.
Understanding the Factors Impacting CMBS Rates
CMBS loan rates are generally based on the U.S. Treasury Index, plus a margin, also known as a spread, which compensates a lender for their risk and provides for their profits.
What Is Corporate Housing?
Corporate housing can be a great way to increase your apartment building's profits, but there are some drawbacks and challenges you must be aware of.
What Is the American Apartment Owners Association?
The American Apartment Owners Association (AAOA) is currently the largest landlord association in the United States, with more than 100,000 members. Should you join? Read about the organization along with a few others.
What is the National Apartment Association?
The National Apartment Association (NAA) is an industry trade group for apartment owners, landlords, and investors, as well as service providers to the apartment industry. The NAA also has many local chapters, which leads to a variety of networking and partnership opportunities. In addition to landlords and investors, the NAA also attracts suppliers, builders, developers, property managers, leasing consultants, and maintenance firms.
What is Defeasance and How Does it Work?
Defeasance refers to the replacement of the collateral of a loan with securities (generally fixed-rate government bonds) that will offer a lender an equivalent return. In many cases, borrowers will need to purchase U.S. Treasury bonds to conduct defeasance, though other types of government-backed securities may be used in some scenarios.
What Are the Best Cities for Multifamily Investing in 2019?
Though some are concerned about an increased supply of properties on the market, as well as potential increases in interest rates, now is still an incredible time to purchase a multifamily property.
What are the Advantages of Securitization?
Mortgage debt is the most commonly securitized asset, with common securitized products including mortgage-backed securities (MBS), commercial mortgage-backed securities (CMBS), and commercial debt obligations (CDOs).
What Are The ADA Requirements for Multifamily Properties?
For multifamily investors and developers, it's essential to know what ADA rules may apply to their property. That way, they can steer clear of potential lawsuits and fines. Despite widespread knowledge that the Act exists, many people misunderstand the exact ways in which these regulations apply to the average multifamily property.
The Everything Guide to the 1031 Exchange in Multifamily Investing
1031 exchanges allow a commercial property owner to sell an asset and use the equity to purchase new property, with 100% of capital gains taxes deferred.
The Historic Tax Credit (HTC): What You Need to Know
Developers interested in rehabilitating and repurposing historic buildings may wish to look into the Historic Tax Credit, or HTC program, a federal tax credit program which provides a 20% credit against the cost of rehabilitating eligible historic structures.
The New Markets Tax Credit (NMTC): What You Need to Know
The New Markets Tax Credit, or NMTC, is designed to encourage investment in low-income communities through the use of Certified Development Entities — specialized financial entities which must be authorized and annually re-certified by the Community Development Financial Institutions Fund (CDFI Fund).
Who are the Top Affordable Housing Developers in the United States?
Each year, thousands of affordable housing units are developed across the United States. If you’re considering investing in affordable housing, or even developing affordable housing yourself, it’s essential to understand the market landscape. Fortunately, this April, Affordable Housing Finance issued a list of the Top 50 affordable housing developers of 2018. We’ve taken the top 10 and provided some additional color, so you can get a better understanding of today’s biggest players in the affordable housing industry.
The Pros and Cons of CMBS Loans: A Guide
CMBS loans aren’t ideal for everyone, but they have some advantages other financing products don't. Learn more with our guide.
Who Are the Top 10 Multifamily Developers in the United States?
With more than 300,000 multifamily units added in 2018 alone, the multifamily development industry is growing at a steady pace. And, whether you’re a multifamily real estate investor, a broker, or are a developer yourself, it’s essential to understand the overall market landscape.
Rental Assistance Demonstration (RAD): A Guide
Rental Assistance Demonstration, or RAD, is a Department of Housing and Urban Development (HUD) program, which seeks to help investors preserve affordable housing across the U.S. To do this, the RAD program allows investors using four HUD legacy programs the ability to convert their housing into long-term Section 8 contracts. This helps investors by giving them more flexibility in terms of acquiring the financing to repair their properties, including making it easier to apply for the LIHTC (Low-Income Housing Tax Credit Program).
Special Servicers for CMBS Loans
One potential downside to CMBS is that these loans are not serviced by the lender that originated them, and are typically placed under the supervision of separate loan servicing company referred to as master servicer. But what if things go south and a borrower defaults on their loan? That’s when another company, called a special servicer, comes in.
Small Apartment Loans: The Best Options for Borrowers
For investors with smaller multifamily properties, loan options may seem a bit limiting. However, there are plenty of strong financing choices out there.
Single Asset Single Borrower (SASB) CMBS Loans: What You Need to Know
SASB CMBS transactions involve the securitization of a single loan, which is typically collateralized by one, very large property. Single Asset Single Borrower transactions are typically based on loans of at least $200 million, and often range up to $800 million to $1 billion+. While most are collateralized by one property, SASB loans can also be collateralized by a group of cross-collateralized/cross-defaulted properties all owned by the same borrower (much like a Fannie Mae Bulk Delivery Loan or Fannie Mae Credit Facility financing, though with much less flexibility).
Understanding Loan Ratios in Multifamily and Commercial Real Estate
One of the primary components used by commercial real estate underwriters to determine a loan amount is leverage. Leverage is summed up and determined based on the loan to cost and loan to value ratios.
Master Servicers for CMBS Loans: What Borrowers Need to Know
Unlike a traditional bank or credit union loan, a CMBS loan is not serviced by the lender that originated the loan. A third-party loan servicing firm, known as a master servicer, will typically take on this responsibility.
How the CMBS Securitization Process Works: A Guide
When a conduit lender issues a CMBS loan, they will pool it in with a variety of other loans in order to create a commercial mortgage-backed security. These CMBS loans are similar to bonds, in the sense that they are traded on the open market.
LURAs: Land Use Restrictive Agreements and the LIHTC Program
If you’re a multifamily investor/developer using LIHTCs to fund the construction or rehabilitation of a multifamily property, you must agree to limit rents and follow other restrictions (agreed to in a LURA) for a certain time.
How Property Management Fees Work for Multifamily Properties
Commercial and multifamily property management fees will range between 4% and 12% of the property’s overall rent. However, in some situations, these numbers may go as low as 3% and as high as 15%. In other cases, especially when a building is very large, a company may charge one flat, monthly fee.
Purchase or Refinance a Multifamily Property Today
Whether you are a new borrower or are looking to refinance an existing loan, it's important that you partner with a lender like Multifamily.Loans to get you the best leverage and financing terms available.
Going Green in Multifamily
The Fannie Mae Multifamily Green Initiative was created to provide loans for properties investing in energy efficient, cost-cutting improvements and lifestyles. The Green Initiative program allows for an increase of 5% in loan proceeds as well as a 10 basis points (bps) reduction off the all-in interest rate.
Do You Need a Business Plan for Apartment Investing?
If you want to give yourself the greatest chance of succeeding in the multifamily investing game, writing an effective business plan is key. A business plan can clarify your goals and bring potential obstacles to your attention.
EB-5 Financing for Multifamily Real Estate Developments
While there aren’t millions of investors lining up, the program is certainly beneficial to a Chinese citizen who wishes a green card to live in the US.
Hard Costs vs. Soft Costs for Multifamily Construction
Learn the crucial difference between hard and soft construction costs in multifamily development and how they impact profitability. Read our expert guide now.
Freddie Mac® SBL Program
with this new program comes a new list of goodies and benefits for servicers and sellers. These benefits include a simplified pricing process, a simplified SBL insurance assessment, less documentation, a reduction in due diligence requirements and easier third party reporting. Did we mention, better pricing?
Due Diligence for Multifamily Investing
Before you make the leap and purchase a multifamily property, you’ll need to do some homework first. In multifamily industry, this is referred to as “due diligence,” and often consists of hiring third-party service providers to inspect and/or provide reports on various parts of the property to analyze its suitability as an investment.
How Cost Segregation Can Generate Massive Savings for Multifamily Investors
When it comes to investing in multifamily properties, investors generally want to take every reasonable measure to increase their returns. One of the most effective ways to do this is to reduce their tax bill via cost segregation, which massively speeds up the rate at which investors can claim tax deductions.
Buying Your First Apartment Complex: An Investor Guide
Demystify how to buy an apartment complex with our in-depth guide that covers everything from your financing options to your different holding strategies (among much more).
Coronavirus & Its Impact on the Multifamily Industry
COVID-19 is impacting the multifamily industry. As yields come in, spreads widen, and tenants feel pressure, what will happen to multifamily real estate and capital markets?
CMBS Spreads: What You Need to Know
A CMBS spread, also referred to as a CMBS credit spread, is the difference between the interest rate of a CMBS loan and the underlying index on which the interest rate is based on. Since the vast majority of CMBS loans are based on the swap rate, spreads can usually be determined by taking the interest rate of a loan and subtracting the swap rate.
Commercial and Multifamily Loan Origination in 2019
In commercial real estate, loan origination typically includes each step of the lending process, from initial application to disbursement of funds. According to the Mortgage Bankers Association (MBA), total commercial loan origination was a record $573 billion in 2018, an approximate 8% increase from the $530 billion of commercial loans originated in 2017, itself an 8% jump from the $491 billion in commercial originations reported in 2016.
CMBS Lenders vs. Life Companies: What You Need to Know
CMBS lenders and life companies often compete in the same space for large real estate deals. Both have significant advantages and certain disadvantages. For instance, life company loans typically offer lower rates and significantly better loan servicing, while CMBS loans are much easier to get approved for and offer benefits including interest-only periods (and even full, interest-only loans).
Association Profile: Apartment Owners Association of California, Inc.
The Apartment Owners Association of California, Inc. (AOA) is one of the larger apartment associations in California. The organization was created in 1982 by Daniel C. Faller, who currently serves as the president of the AOA. Like many apartment associations, it offers members access to educational resources and seminars, business consultations, forms, and a variety of discounted landlord services.
Association Profile: The Apartment Association of Greater Los Angeles
The Apartment Association Of Greater Los Angeles (AAGLA) is one of the largest apartment associations in Southern California. It is also one of the largest local affiliates of the National Apartment Association (NAA). The AAGLA, which has operated since 1917, is designed to help multifamily investors, developers, property managers, and other members of the apartment industry by providing networking, educational opportunities, and discounted landlord services as well as politically advocating on behalf of the local and national apartment industry.
CMBS B-Pieces and The Multifamily and Commercial Lending Market
CMBS loans are among the most popular types of financing for multifamily and commercial real estate, with approximately $77 billion in CMBS financing issued in 2018 alone. As many already know, CMBS loans are designed for securitization, meaning that one borrower’s loan will generally be grouped with many others to generate a commercial mortgage-backed security, which is then sold to investors on the secondary market.
Selecting a General Contractor for a Multifamily Construction Project
Choosing a general contractor is one of the most important decisions you’ll make. It’s essential to understand a contractor’s role, and what you need to know to select a qualified, professional contractor that will get the job done correctly.
Cash On Cash Returns: Calculator, Risks Involved
Agency Loans for Multifamily Properties: What Borrowers Need to Know
The government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, also known as the ‘agencies,’ provide some of the best loan terms on the market.
Apartment Lender Inspections: What Borrowers Need to Know
In some cases, inspections may occur before a borrower is approved to purchase a property, however, in most contexts, an apartment lender inspection is for the sole purpose of monitoring progress on a construction or substantial rehabilitation/renovation project.
What is the Opportunity Zones Program?
The Tax Cuts and Jobs Act of 2017 created a new tax incentive program to encourage capital investment in economically distressed areas of the country. Via the use of opportunity funds, corporations can attract investment into multifamily and commercial real estate, as well as stock or partnership interests in companies that operate in or do a significant amount of business in an Opportunity Zone.
Association Profile: Apartment Association of Orange County
The Apartment Association of Orange County (AAOC) is one of the largest apartment associations in the Southern California area. It is an affiliate of the National Apartment Association (NAA), as well as an affiliate of the California Rental Housing Association (CalRHA). Just like most apartment and landlord associations, The Apartment Association of Orange County provides members access to a variety of discounted landlord services, the ability to attend networking and educational events, easy access to forms, and certain other benefits.
Association Profile: California Apartment Association
The California Apartment Association, or CAA, is the largest apartment association in the state of California, as well as the largest state apartment association in the United States. The CAA provides a variety of benefits to members, including classes, events, and discounts on important services. It also advocates for political change on behalf of California’s apartment industry, both through direct outreach to legislators and via its political action committee (CAAPAC).
2019 Apartment Industry Statistics: What You Need to Know
If you’re planning to expand your multifamily investments this year, it’s important to have a good understanding of the current state of the industry. By doing so, you’ll be able to make more informed choices about where to invest, how to invest, and if you should invest at all. To help you gain a better appreciation of the apartment and multifamily market this year, we’ve provided some of the most essential apartment industry statistics below.
The Top 10 Agency Apartment Lenders of 2018-2019
In 2018, agency lenders Fannie Mae and Freddie Mac issued a combined $143 billion in multifamily loans. While Fannie Mae issued more than $65 billion in multifamily financing, Freddie Mac Multifamily issued approximately $78 billion in loans. Overall, Fannie Mae origination is slightly down from 2017, in which the agency closed more than $67 billion in multifamily financing. In contrast, Freddie Mac Multifamily saw a noticeable rise in originations, with an approximate $4.8 billion growth from 2017’s $73.2 billion, itself a nearly 30% jump from $56.8 billion in loans originated in 2016.