Rental Housing Association of Greater Portland President’s Message
As discussed in my last message, the board had their meeting this May to consider disassociating from the Oregon Rental Housing Association. The pending decision was announced in the May 2010 newsletter as well as the April 2010 dinner meeting. I was happy to see the attendance of members (other than board members) at the board meeting who provided valuable input into the Board’s deliberation. Read More »
Government-sponsored enterprises Fannie Mae and Freddie Mac have been a lifeline for multifamily investors, providing liquidity that is sadly missing outside of the apartment realm. “That has softened the amount of value decreases in the sector,” says Dan Fasulo, managing director at research firm Real Capital Analytics. “For prime multifamily, we’re not seeing the type of 40 percent to 60 percent declines in value that we are seeing in the office, retail, and hotel sectors.”
CCIMs say the U.S. Department of Housing and Urban Development’s loan programs may soon overshadow Fannie and Freddie as the darlings of multifamily borrowers. Those programs, insured by the Federal Housing Administration, include 223(f) loans, which can be used to refinance assets, and 221(d)(4) loans for new construction.
Loan-to-value ratios can be as high as 90 percent of construction costs and typically amortize over the 40-year term of the loan, says Jeff Siebold, CCIM, an appraiser and owner of Siebold Group in Caswell Beach, N.C. “This is not about subsidized housing; it is about market-rate apartments,” Siebold says. “Some of the nicest class A or B properties that you see very well might have a 221(d)(4) loan as part of their program.”
Government-backed loans won’t work for every project, in part because they are limited to stabilized properties, according to Brad Miner, CCIM, a CB Richard Ellis associate in Phoenix.
Brokers say cash transactions also are mushrooming. Wealthy individuals concerned about inflation are increasingly interested in multifamily as a conservative investment vehicle, says Robert Vallera, CCIM, principal of Commercial Realty Advisors in La Jolla, Calif. Vallera contends that many investors worry U.S. fiscal policy will soon fuel rapid inflation. “I have closed more all-cash apartment transactions with private investors in the past year than in my prior 25 years of apartment brokerage combined,” he says.
