Multifamily Minute Reader Reflections: What's the Most Important Part of Your Financing?
We surveyed our 40,000 subscribers to determine which aspects of multifamily loans are the most critical for their investment strategies.
Start Your Application and Unlock the Power of Choice$5.6M offered by a Bank at 6.1%$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1.4M offered by a Credit Union at 6.1%Click Here to Get Quotes!It's not a surprise that multifamily loans generally don't look as attractive as they did a year ago.
There are still some excellent financing options out there for your apartment building, but it greatly depends on what aspects of your loan package you consider the most important.
Our survey last week asked which part of a loan's term was the most important for you as a multifamily investor.
Survey Results
Interest rates took the top spot — no great shock — but it was selected by fewer than half of our respondents. Read on for the full results:
Loan characteristic | Percent of Respondents |
|---|---|
Interest rate | 36% |
Leverage (LTV, LTC) | 26% |
Recourse | 25% |
Term length | 5% |
Amortization | 3% |
Prepayment penalties | 3% |
Who the lender is | 0% |
Other | 2% |
Two things strike me as interesting here.
First, it seems nobody cares who the bank, credit union, debt fund, or any other lender is.
That tracks: With financing more expensive today than it was a year ago, investors need to go for the best deal they can find. Nobody's too worried if they go with a different lender than their "usual" go to — it's all about the bottom line. It makes sense, and it's a compelling reason to use our financing marketplace.
Second, not a lot of our readers are too concerned about prepayment penalties. Given that interest rates are higher right now, this surprised me a bit.
If you lock in a loan at a (relatively) high rate today, I would expect you would be interested in refinancing once interest rates come down. That means you may need to pay a prepayment penalty. Of course, that's probably less important than what's in front of you today — but it's worth thinking about.
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Our Previous Survey
Our previous question involved property management — namely, which are the most important qualities when you're selecting someone to oversee one of your apartment buildings.