Small Apartment Buildings Serve Large Portion of Renters

Sponsored by Freddie Mac Multifamily

The Census Bureau has previously indicated that small apartment properties, those with 5 to 50 units, house up to 70% of renter households. Yet a disproportionate amount of multifamily financing still tends to go to larger properties. Despite the attractive credit profile of small multifamily properties and their owners — who tend to be individuals or small entity owner/investors — finding reliable and competitive financing has historically been a challenge for these borrowers.

Smaller multifamily buildings are vital to affordable housing. These units tend to have more bedrooms, fewer amenities and are more affordable – perfect for families of America’s workforce. Financing the abundant supply of existing Class B and Class C buildings that typically make up small multifamily housing is crucial.

Yet borrowers looking to finance small apartment buildings have faced many issues that have been less common in larger conventional multifamily lending. In the past, these borrowers have struggled to find lenders willing to finance a smaller building if the asset didn’t fall inside a major city. Once a lender was finally secured, the process and paperwork involved were usually not streamlined, which led to inefficiencies and delays. And finally, lending programs in this segment were inconsistent across lenders and regions.

To solve these challenges, Freddie Mac Multifamily created a dedicated program to finance small multifamily buildings with loans from $1 million to $7.5 million dollars. This financing is available throughout the country and offers flexibility for out-of-the-box deals and properties.

What Small Apartment Borrowers Are Looking for in 2019

1. Custom Solutions – Every building, every market and every deal is unique. Borrowers are looking for flexible financing that matches their properties.
2. Local Knowledge – The nuances in each community – the building types, economics and proximity to parks, stores and offices should all be factors in deal financing.
3. Efficient Processing – In today’s rate environment, borrowers are looking to make decisions on deals as efficiently as possible. Having a lender who can help them navigate through the process and reduces the administrative burden is key.

To learn more, visit mf.freddiemac.com/small-loans