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Financing
Multifamily Financing
No multifamily property can get developed, much less built and operated without credit, insurance or cash. Few owners or developers can fund such projects with money from their own pockets. This makes the task of financing of a multifamily property one of the most complicated aspects of the multifamily industry's project development process .
Financial Brokerage
Multifamily developers generally rely upon third party agents or Brokers to locate funding opportunities for their projects. Brokers can be found to secure financing in both the institutional and non-institutional markets. The key focus is often on Interest Rates.
Institutional Financing
Institutional lending is what most developers think of when considering the funding of multifamily projects. Banks, thrifts (savings and loan associations) and credit unions can offer this financing. Institutional lending can often require higher equity requirements.
Non-Institutional Financing
Non-institutional funding can be obtained through Private Equity in the form of individual or corporate investments through Bonds, Low Income Housing Credits, Mortgage-Backed Securities, New Markets Tax Credits, Real Estate Syndication or Venture Capital firms.
REITS / Hedge Funds
Many Real Estate Investment Trust and Hedge Funds are also involved in lending and providing equity for multifamily projects. REITs come in three varieties: Equity REITs, Mortgage REITs and hybrid REITs. Equity REITs own actual properties. Their operations earnings are primarily from rent. Mortgage REITS purchase mortgages made by others or may make mortgage loans directly. Mortgage REITs can invest in residential, commercial, land, farm or multifamily property mortgages. Hybrid REITS are just what the name implies - REITs that invest in both properties and mortages.
Government Loan Guarantees
The government also gets involved in financing of market rate and affordable multifamily housing through Government Insured Loans, Grants and HOME Funds. there are some basic differences between grants and loans. You are required to pay back a loan, often with interest. It is important to note that you are not required to pay back a grant, but there are very few grants available to individuals. Most grants are awarded to universities, researchers, cities, states, counties, and non-profit organizations. Loans are generally the best bet for individuals. HUD, through their 221d4 program is one of the most notable sources of mortgage insurance.


 
 
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