Real Estate Lender · Jacksonville, FL · Member since 2015 · 86 posts · 51 votes
As a mortgage banker, I often get asked about the Freddie Mac Small Balance Loan Program for Multifamily Properties. Its a great program so here is an overview for people that are interested in learning more.
Freddie Mac likes to see some sponsorship experience in Multifamily as well as strong financial strength.
Prepayment Options: Standard Step Down or Yield Maintenance
A few things to note:
The sponsorship must have a minimum of 9 Months of Debt Service of liquidity and a net worth of at least the loan amount. Also, there are credit score requirements for the principals.
For an appraisal on a refi, they'll generally lean into the historical operations as their primary data points with support from comps on the income and expense side.
On an acquisition, they might lean a little bit more into a borrower budget if the operator has experience in the market, but they'll still look to comps for support. In a more rural area, they'll have fewer data points and, thus, less latitude to deviate.
In general, appraisers will get a little more aggressive in higher tier markets and for experienced operators.
Commercial Mortgage Underwriter / Broker · New York City, NY · Member since 2016 · 193 posts · 75 votes
10y
Mike Dymski depending on the loan term you can get 1 or 2 years relatively easily with the Freddie SBL. Funding the rehab is where you are going to have an issue. Call me next week if you want to talk in more detail.
Landlord/ Investor · Republic, MO · Member since 2015 · 41 posts · 30 votes
10y
I know this thread is a little old, but can you tell me how they determine value on their appraisals? Do they lean more towards comparables or income approach? Also do they have a floor on the size of the city/market the property is located in? I specialize in multi family in rural areas. Thanks!
Real Estate Lender · Jacksonville, FL · Member since 2015 · 86 posts · 51 votes
10y
Appraisers will use income approach and use market vacancy, cap rates, sales comps etc.. to determine value. In my experience, it is good to feed the appraiser any good info to make sure your value is achieved.
The program is nationwide, but if you are in a small rural market your LTV may be capped at 70%.
For an appraisal on a refi, they'll generally lean into the historical operations as their primary data points with support from comps on the income and expense side.
On an acquisition, they might lean a little bit more into a borrower budget if the operator has experience in the market, but they'll still look to comps for support. In a more rural area, they'll have fewer data points and, thus, less latitude to deviate.
In general, appraisers will get a little more aggressive in higher tier markets and for experienced operators.
Landlord/ Investor · Republic, MO · Member since 2015 · 41 posts · 30 votes
10y
What kind of rates for a 10 year lock at 70 LTV on a 30 year AM? Also for older properties, how stringent do they get on the inspections and cap ex needs? The property I have in mind is 33 years old, in overall good shape, but at 33 years I am sure they can find issues if they want to. Thanks guys!
Arlington, VA · Member since 2013 · 115 posts · 40 votes
10y
The new Freddie Mac Multifamily SBL loan program is incredible. I would absolutely recommend it to more established investors with higher liquidity positions.