The Five Cs of Credit in the Apartment Building Mortgage Lending Business
“Loan underwriters often refer to the five Cs of credit when evaluating and underwriting loan applications. What are the five Cs and how do they affect mortgage lending on apartment properties? The five Cs are: capacity, capital, character, collateral and conditions. We will attempt to explain each of these items and their effect on apartment lending credit decisions.”
Source: The Five Cs of Credit in the Apartment Building Mortgage Lending Business
Vacancies have risen and more units are expected to hit the market in 2015. Despite this news, apartment fundamentals remain strong due to more people choosing to rent than to buy. Here is the latest video by REIS Reports discussing the topic in more detail:
via Brandon Turner, BiggerPockets.com
[April 24,2014] “On today’s episode of the BiggerPockets Podcast, we sit down and chat with a real estate investor who wasn’t seeing a lot of action in his business – until a friend challenged him to take his investing seriously and start treating it like a business….Our guest today, Tim Gordon, accepted the challenge…”
via BP Podcast 067: Overcoming Inaction, Direct Mail, and Becoming an Successful Wholesaler with Tim Gordon.
Have you been searching for an alternative to the ups and (mostly) downs of the stock market? Are you interested in the growing trend of using retirement funds to invest in real estate, tax liens, precious metals or other alternatives, but feel intimidated by self-directed IRAs?
National Education Specialist John Bowens from Equity Trust Company will provide an easy-to-understand overview of self-directed IRAs, which will include:
• How to tap into IRA and 401(k) funds to make more deals than you thought possible
• How investing with self-directed IRAs equals tax-free or tax-deferred profits
• How to possibly qualify for large tax deductions
If you’ve been thinking about taking control of your retirement savings, now’s the time to start!
via Beginners Guide to Self-Directed IRAs.
[CNBC, 04/02/2014] a lot of folks thought that the housing recovery would weaken rental demand and in fact, that sentiment hit the apartment reits pretty hard last year. investors were concerned about overbuilding. fast forward to the first quarter of this year. rental demand is still very strong. vacancies down 20 basis points to just 4% according to reit. rents continue to grow up over 3% from a year ago. they would be higher but landlords say that weak income growth is holding them in check. so with all that, it seems that investors have come back to apartment reits this quarter with a vengeance. the sector returned 12.75% in q-1 making it the top yielding of all commercial reit sectors.
via Apartment REITs returned to 12.75% in Q1.
By Michael Stoler, Commercial Observer
(MARCH 28, 2014) The residential rental asset class is one of the most sought-after investments by purchasers of commercial real estate. Investors from around the world, including private equity funds, real estate investment trusts and established long-time owners of real estate, all want to own this asset class, especially if the property is located in New York City.
The purchasers and the owners of this property class have been fortunate that the majority of commercial and savings banks, as well as Fannie Mae, Freddie Mac and Wall Street firms providing CMBS financing, are all very interested in financing rental apartments.
via Multifamily Lenders Scramble For Business | Commercial Observer.
By Summer Gell, Partner Engineering and Science Inc.
(MARCH 21, 2014) Multifamily housing investors’ options for financing sources have been shifting lately, and Fannie Mae’s recent major revisions to the Multifamily Selling and Servicing Guide–which went into effect in February 2014–are adding another layer of complexity to the multifamily lending landscape.
Fannie Mae’s Guide revisions included underwriting standard changes in addition to significant changes to the third-party engineering due diligence required for multifamily mortgage loans, more specifically the policies for Physical Needs Assessments (PNA, also called a Property Condition Assessment by other lenders) and Seismic Risk Assessments (SRA) for properties in high risk seismic areas.
via Charting a Course Through a New Multifamily Lending Landscape | Multi-Housing News Online.
The U.S. apartment market continued to see robust growth in 2013, but investors are keeping a wary eye on looming changes going into 2014, including the impact from rising supply, rising interest rates and the prospects of restructuring the nation’s two biggest government-sponsored enterprises (GSE’s) Fannie Mae and Freddie Mac.
via CRE Industry Faces Dramatic Changes in Multifamily Supply, Financing Environment – CoStar Group.
When supply increases; demand decreases. Buyers should remain sensitive to overpaying for multifamily properties in low cap markets, as the market continues to turn.
But as New York City’s “micro-apartment” project inches closer to reality, experts warn that micro-living may not be the urban panacea we’ve been waiting for. For some residents, the potential health risks and crowding challenges might outweigh the benefits of affordable housing. And while the Bloomberg administration hails the tiny spaces as a “milestone for new housing models,” critics question whether relaxing zoning rules and experimenting with micro-design on public land will effectively address New York’s apartment supply problem in the long run.
via The Health Risks of Small Apartments – Jacoba Urist – The Atlantic.
BY JANN SWANSONREITs, Sep 27 2013, 11:54AM
Commercial and multi-family mortgage debt increased by $24.5 billion in the second quarter of 2013, with $10.9 billion of that being debt in the multi-family sector. The Mortgage Bankers Association MBA said the increase in debt from quarter to quarter was 1.0 percent for all mortgage debt and 1.3 percent for multi-family. The aggregate outstanding commercial and multifamily debt at the end of the second quarter was $2.45 trillion; the multifamily portion was $875 billion.
via REITs, Pension Plans Increase Multifamily Debt Holdings.