It is an exciting time to invest in multifamily housing. Over the past several years, apartment construction has grown at a record-breaking pace.
2019 is shaping up to be another healthy year for multifamily, and for South Florida in particular. For example, in February 2019, Fannie Mae announced two significant changes to its Multifamily Small Loans Program, the second of which greatly impacts South Florida.
First, Fannie Mae doubled the maximum loan amount from $3 million to $6 million.
Second, four new eligible markets were added to the program. Miami is one of those markets. (The other three are Denver, Minneapolis, and Salt Lake City.)
If you are looking to invest in the multifamily market — whether in Miami or elsewhere — consider not only Fannie Mae’s program, but also Freddie Mac’s program. Here is an overview of each program:
|Fannie Mae||Freddie Mac|
|Loan Amount||Up to $6 million||Up to $7.5 million|
|Term||5 – 30 years||5 – 20 years|
|Interest rate||Hybrid ARM and fixed -rate options||Hybrid ARM and fixed -rate options|
|Minimum DSCR||1.25x||1.20x – 1.40x (varies based on market tier of property location)|
|Property size||5 units or more||5 units or more|
|Recourse||Non-recourse available||Non-recourse available|
|Official website for more information||Click here||Click here|
Cornerstones of both programs include customized loan structures, quicker loan closings, and competitive interest rates.
For instance, the fixed rate for Fannie Mae and Freddie Mac multifamily loans, with loan amounts less than $5 million, ranged from 3.44% to 4.93%, depending on the term (5-year, 7-year, or 10-year). These were the rates as of June 6, 2019, and Marcus & Millichap regularly updates the national averages for multifamily interest rates here.
For help shopping around for the best multifamily loan, read our guide, “Know your options when shopping for a commercial mortgage loan” here.
David A. Krebs is a licensed mortgage broker offering commercial and residential loan programs beyond your regular bank. Call us at 321-239-2781, click here to submit a message, or click here to book a free consultation.