Five Advantages of Adding Fannie Mae Green Rewards to a Multifamily Loan
Since the Fannie Mae Green Rewards program launched in 2015, green financing has become a mainstay of commercial real estate. In addition to reducing the environmental impact of multifamily housing, the Green Rewards program creates a triple bottom line with increased cash flows, higher quality housing, and incentives for lower energy and water usage. With a high upside and little downside, the program is well worth multifamily borrowers’ consideration.
What is Fannie Mae Green Rewards?
It is a green financing add-on solution for Fannie Mae loans used for acquisitions, refinancings, and supplemental loans.
To qualify, borrowers must demonstrate that the improvements to their properties will reduce energy and/or water costs by at least 30%. No minimum investment per unit is required. All property upgrades must be completed within 12 months of closing.
Fannie Mae Green Rewards offers compelling financial incentives, including lower interest rates, higher loan proceeds, and increased property values.
The Advantages of the Green Rewards Program
As the local governments and real estate firms advance their sustainability goals, it’s clear that choosing green financing benefits the planet and investors, by providing:
- Lower interest rates: Borrowers who pledge to make energy- and water-saving improvements qualify for a reduced interest rate on their mortgage loans.
- Increased property valuation: Properties with environmentally friendly, energy/water-efficient features are often appraised at a higher market value than similar non-green assets.
- Additional loan proceeds: Based on your projected utility cost savings, unlock up to 5% more loan proceeds, which can be used to cover the upfront costs of improvements.
- Long-term utility savings: Energy and water efficiency upgrades can significantly reduce utility costs and operating expenses on an ongoing basis.
- Free energy and water audit: Fannie Mae provides a complimentary High Performance Building Report to assess your property’s efficiency and identify areas for improvement.
What Properties Qualify for Green Rewards?
Provided that owners are committed to achieving energy savings and/or water usage reduction improvements, a range of properties are eligible for the program, including:
- Conventional multifamily properties
- Affordable multifamily housing (more than five units)
- Cooperatives, seniors, military, and student housing
Arbor’s Green Financing is a Win-Win
By lowering interest rates and providing the capital needed to perform energy- and water-saving retrofits, Arbor’s Fannie Mae Green Rewards loans give borrowers the flexibility and incentives they need to make a sustainable building investment that will deliver strong returns over time.
Arbor has closed many loans with Green Rewards added in, such as a recent Fannie Mae bridge-to-perm loan that helped make environmentally friendly improvements to a multifamily community in Tallahassee, FL, significantly increasing the property’s value.
Go Green with Arbor
The business case for green financing has only grown stronger in recent years. It particularly makes sense when pursuing value-added property improvements, replacing outdated systems to reduce utility usage by at least 30%, or for assets with existing green building certifications. Arbor also offers green financing solutions with Freddie Mac and FHA Multifamily to help meet the specific needs of your project.
Contact Arbor’s experienced team of originators today to discuss how the Fannie Mae Green Rewards program can maximize the value and sustainability of your next multifamily investment.
Interested in the multifamily real estate investment market? Contact Arbor today to learn about our array of multifamily, single-family rental, and affordable housing financing options or view our multifamily articles and research reports.