In the tightening of multifamily lending by local banks, the small apartment property has been the biggest victim. One million dollar plus properties are deliverable to Fanny and Freddy albeit under more rigid underwriting than in the pre-2008 market, so a lender can feel safe making this loan.  There seems to be a void however in the $250,000 to 1 million dollar financing.  There are a few "de novo" (new) banks that don't have problem portfolios and are able to lend in this area, based again on tougher criteria and heavily weighted by the strength of the buyer.  These lenders underwrite these loans mostly as an accommodation to borrowers with whom they want to establish depositor relationships- usually high net-worth individuals.

There seems to be a real lack of enthusiasm for the Class C properties that generally make up the lower price ranges.  Probably because this class has had the highest number of foreclosures. Unfortunately, in many cases this is not the fault of the property, but is the result of some pretty outlandish assumptions made by the underwriters of these loans in the pre-recession "frenzy". Priced correctly in the new market, some of these can be great investments.  Many are renovated and most are in areas that are heavily populated by renters, assuring a steady tenant base

.2-4 unit properties are financed with residential funds and now require investors to make at least  a 25% downpayment.  Fannie Mae and Freddie Mac set this guideline for loans deliverable to them, and lenders pass the requirement on to us. Although their regulations permit more loans to investors meeting certain criteria, we haven't found a lender that will lend if the borrower has four or more residential loans, including their residence. I have many clients who meet the higher criteria for additional loans but have found  lenders unwilling to underwrite above four. If you have found a source, please let me know!

Although there is a lot of generalized uncertainty today, it is also the time of the best real estate opportunities.  Interest rates are at incredibly low levels, allowing greater cash flows on properties.  This combination of low rates and low prices can't last forever.  Investments made in this market with locked in fixed rates will  probably the best opportunity most of us will ever see in our lifetime.

I continually search for multifamily  and other properties that I believe are excellent investments. These will generally not be listed by me or my company so there will be no obvious conflict of interest.  I try to mix it up with apartments, two to four family properties and even single family properties if they will show an obviously strong cash flow.  I will be posting limited information on these properties, enough to decide whether you would like to know more.  Also posted will be a confidentiality agreement.  Returning the signed CA to me  will get all of the information that I have on that property.  If we have worked together in the past, the CA will not be necessary.  

The best to all,
Dave