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So what exactly is small balance multifamily? That depends on who you are asking, but we’ll give our definition here.
The small balance multifamily market is comprised of apartments that can be acquired with a small balance loan. A small balance loan is typically in the $1,000,000 to $5,000,000 size range (up to $7,000,000 in select markets), and usually pertains to apartment communities with 5 to 50 units.
Both small-cap apartments properties (5 to 19 units) and mid-cap apartment properties (20 to 50 units) can fall into the small balance spectrum. You will see small-cap and mid-cap terms used a lot by Chandan Economics, who will be providing exclusive research on these sectors.
Most news and research sites dedicated to multifamily are tailored towards institutional or regional investors, who are primarily interested in institutional quality (large and well-amenitized) properties that far exceed this price range. The small balance market has been underserved by both content and research, especially when you consider that nearly a third of all renters live in properties with between 5 and 49 units.
That’s where ALEX Chatter and our content partners come in. Our goal is to keep you informed on the best practices for investing, financing and running smaller apartment communities. So if you like what you see — and we think you will — be sure to sign up for Chatter updates or follow us on twitter.