Multifamily properties are the darlings of commercial real estate. They provide stong fundamentals and strong returns. There will always be a steady supply of renters from a wide variety of income levels. Unlike office real estate, which is subject to the vagaries of local economics, and industrial real estate, which can be devastated by changes in the business cycle, there are always tenants in search of apartments.
While shopping malls and strip malls become increasingly empty due to competition from ecommerce, new apartment complexes are being built right next door. All those Amazon shoppers may no longer go to the mall, but they will always need a place to live. Unlike other residential real estate, where finding buyers and renters can present a costly challenge, apartment managers are flooded with applicants. Even during the housing bust and great recession, demand for multifamily housing remained strong.
This means much lower risk for the investor and much higher returns on property values. More than that, multifamily developments provide a significant income stream. This income stream most often represents a healthy profit. The income more than covers the financing and maintenance costs.
A big reason is that funding for multifamily properties remains abundant and cost effective. Because of the profitability and low risk, lenders are willing to offer attractive loans. Further, the federal government provides programs designed to boost investment in multifamily homes—it wants to keep the supply in housing in line with demand. This is an important element of economic growth for any American city. Nowhere is this more the case than in the fast-growing cities and towns of Texas.
The Lone Star State attracts business and residents
Businesses are choosing to relocate to Texas in large numbers. Texas’s business friendly culture and philosophy means that companies want to do business in the Lone Star State. Low taxes, affordable real estate, and a great labor force means businesses can grow and expand. Texas understands that too much government regulation and taxation stifles businesses. Many companies are relocating away from overpriced, overregulated Eastern metro areas. They are coming to Texas to do more than just survive. They are coming the thrive.
With the increase in business comes an increase in jobs. Austin, for example, has become a haven for technology firms. Workers are attracted to the high salaries that go much further in Austin than places like New York or San Francisco. As workers come, the area becomes more attractive to employers. When the pool of qualified labor increases, businesses want to be in the region.
As workers flood into Texas’s metro areas and smaller towns, an opportunity is created for residential real estate developers. All these residents need a place to live, and many are in the market for apartments. Not only is the demand for apartments in Texas as giant as the state itself, the demand is economically diverse.
Apartments are needed for tech yuppies in Austin who want an urban dwelling that is cutting edge, and they are able and willing to pay for it. More middle class people across the state need safe, quiet, comfortable places where they can enjoy their free time and raise their children. Seniors need a supportive living environment when living on their own becomes too difficult, and low income workers need affordable housing, so they can maintain a decent standard of living.
Multifamily real estate investors in Texas are cashing in on all of these real estate market segments. The key to success is partnering with a financing company that knows how to get apartment financing in Texas and apartment financing in Florida.
Finding a lending partner
Texas real estate investors have many options for the type of loan they use to finance an apartment building. Many opt for Collaterilized Mortage Backed Securities, which offer highly https://www.capitalnetworkgroup.com/wp-admin/post-new.php#category-addattractive terms in certain cases. Traditional bank loans suit lending opportunities that meet more narrow criteria. Loans backed by Fannie Mae or Freddie Mac offer some of the most flexible loan terms and are often more likely to gain approval.
All of these loan options can be used for the different types of multifamily housing developments in Texas. Which type of loan to choose is unique to the borrower and the type of property. For example, some borrowers have more money down and can afford a higher monthly payment, which may make a bank loan more attractive. Traditional bank loans tend to have shorter terms, which means higher payments but also less interest overall.
However, many investors find that bank loans require too much down or montly payments that are unaffordable. Investors often need to keep cash on hand for expenses related to the investment. They also may find that their cash flow is too restricted by the payments the bank demands. Often, a loan through a Freddie Mac of Fannie Mae approved lender provides the loan option that fits the bill.
When seeking a multifamily housing loan, investors need to work with a ledning partner that knows how to sell loan approval to the lender. Experienced lending partners in Texas know the real estate market and the lenders. They can craft a loan solution that makes financial sense for the borrower and the bank. They build the proposal that fits lender criteria and convince lenders to approve it.
Fannie Mae and Freddie Mac
Both Fannie Mae and Freddie Mac are financial institutions chartered by the federal government. Their missions are bolstering the United States real estate markets by working with lenders to guarantee loans that fit into their parameters. They provide liquidity to the real estate markets by ensuring a sufficient supply of financing to meet housing demand. Without Fannie Mae and Freddie Mac, loan requirements would become too difficult and the economy would slow as the real estate markets cooled.
Fannie Mae provides the largest share of multifamily real estate loans. This predominance is due largely to the success of its Diversified Underwriting Servicing(DUS) program. Under the DUS program, Fannie Mae licenses lenders to provide loans. It chooses experienced lenders and provides them with criteria for multifamily residential loans.
DUS lenders are empowered to underwrite, approve, fund, and service loans. For this reason, DUS loans often result in fast approvals, especially compared to traditional bank loans.
Freddie Mac maintains a network of approved lenders. These lenders use Freddie Mac’s criteria to underwrite, approve, and fund loans. The lenders then sell these loans to Freddie Mac. Freddie Mac loans include all types of multifamily homes, from small building to large apartment towers, as well as new construction.
With the Texas economic boom in full swing, investors are eager to get in on the action. Cities across Texas are experiencing tremendous population growth. Demand from renters continues to increase and job seekers flood Texas towns and cities. Many workers look forward to relocating to Texas from other areas where real estate prices are unaffordable.
Businesses are relocating to Texas to escape onerous regulations and taxes. Because Texas has become a popular spot, offering not only jobs but high quality of living in beautiful, sunny state, companies find a ready workforce. Apartment financing in Texas and apartment financing in Florida provides the resources real estate investors need. With the right lending partners, real estate investors are finding Texas is a great place to do business.