Articles

Top 10 Markets for Undergraduate Apartment Renters

For undergraduate students nationwide, apartments fill the gap in campus housing. Off-campus housing offers a better value proposition in many markets, giving students more space at a competitive price. In other markets, students pursue apartments due to insufficient dormitory space. As colleges and universities acquire and build to keep pace with enrollment, the supply-demand imbalance has created new opportunities for multifamily real estate investment.

Investment

Not Waiting for Normal

Even with the market in flux, opportunities continue emerging for well-positioned investors. Historically, some of the best multifamily deals were closed in down cycles or during the upswing to normalcy. Arbor’s Special Report Fall 2024 details why the current economic climate is ripe for investment.

Current Reports

Single-Family Rental Investment Trends Report Q3 2024

The single-family rental (SFR) sector’s performance surged again last quarter, demonstrating its ability to thrive in all economic cycles. SFR construction continued its record-breaking ascent as CMBS activity blossomed. Arbor’s Single-Family Rental Investment Trends Report Q3 2024, developed in partnership with Chandan Economics, examines the sector’s fundamentals as would-be homeowners weigh the rent-vs-buy calculation.

Articles

Could Build-to-Rent Be a Solution to Housing’s ‘Missing Middle’ Problem?

Did you know that at the same time many renters navigate a housing market with limited affordable options, new apartment development continues to be held back by World War II-era zoning restrictions? In many localities, regulations introduced in the mid-1940s have choked the multifamily pipeline for decades, creating a “missing middle” that leaves low-income renters in a lurch.

Articles

Build-to-Rent Construction Continues Its Record-Breaking Ascent

Increasingly, single-family rental (SFR) operators have been relying on build-to-rent (BTR) development to bridge the housing gap, accelerating the momentum of SFR construction through 2024’s halfway point. Both total SFR/BTR housing starts and BTR’s share of all single-family housing starts reached new record highs in the second quarter, setting the stage for another banner year.

General: 800.ARBOR.10

Home | Freddie Mac | Student Housing Value-Add Loan
Download PDF
|email

FREDDIE MAC®

Student Housing Value-Add Loan

Arbor’s Student Housing product provides attractive terms and competitive prices for the purchase or refinance of properties that, because of construction and location, specifically cater to a student tenant base and may or may not be readily convertible to conventional multifamily housing.

  • Offers short-term, negotiable financing for upgrades of $10,000 to $25,000 per unit
  • Allows for a wide variation in borrower term and structure needs
  • Up to 50% of funds may be spent on unit interiors
  • Up to 75% of funds can be spent on exteriors
  • Budget can be adjusted up to 20% without additional approval
  • Interest-only and uncapped floating-rate loan
  • Eligible mixed-use properties are supported

Eligible Borrowers
  • Experienced borrowers who have successfully demonstrated expertise with comparable student deals.
  • 1.5x the standard minimum net worth and liquidity requirements for guarantors
Eligible Property Types
  • Properties with no more than 250 total units or 625 beds
  • Well-constructed properties requiring modest repairs
  • Market laggards that require capital infusion and new/improved management
  • Real-estate owned properties in receivership that are capable of improved performance
School Size 15,000 student enrollment minimum; this standard is greater than the student housing policy minimum of 8,000; properties must be within 2 miles of campus and have convenient access to campus by either public transit, shuttle or pedestrian access
Terms
  • Three years with one 12-month extension based on the borrower’s request and one optional 12-month extension based on Freddie Mac’s discretion
  • Floating-rate loan with full-term interest-only; no cap required
  • No lock out; borrower may pay off the loan at any time but must remit an exit fee of 1%; the exit fee will be waived if the loan is refinanced with Freddie Mac
  • Acquisitions and refinances; not assumable
  • Loan documentation at origination will include the Value-Add Rider, which will detail the terms/requirements of the rehabilitation
  • Required Escrows will include taxes, insurance, replacement reserves and Priority Repairs. A three-month debt service escrow is required for all transactions during the renovation phase. Upon completion of 40% of the renovation work and subject to DSCR requirement, 50% of the escrow may be released. Upon completion of 80% of the renovation work and subject to DSCR requirement, the remaining amount of escrow may be released. In addition to the completion requirements, the DSCR must be 1.25x or higher to qualify for release of escrow
  • For longer term ownership, cash-out is available provided a completion guaranty on budgeted improvements in an amount at least equal to the cash-out in place
Amount
  • Maximum loan-to-purchase/loan-to-value (LTV) ratio: 85%
  • Minimum amortizing debt service coverage ratio (DSCR): 1.20x
  • Sizing based on a 7-year sizing note rate
  • Appraisal must include as-is and as-stabilized values; underwriting must support a 1.35x DSCR and 75% LTV based on as-stabilized value supported by the appraisal
  • Standard Freddie Mac underwriting based on as-is income and expense
  • Refinance Test not required
  • No pro-forma underwriting of future performance
Rehabilitation
  • Rehabilitation must commence within 90 days of loan origination and be completed within 33 months
  • A scope of work is required; budget may range from $10,000-$25,000 per unit or $4,000-$10,000 per bed; the budget must allocate at least 25% to interior improvements
  • Budget can be adjusted by as much as 20% without additional approval; up to 50% of the budget may be spent on unit interiors
  • Completion Guaranty or rehabilitation escrow required; subject to Freddie Mac discretion
  • Borrower/Servicer reporting required.
At Loan Maturity/Refinance
  • Final engineer review of work completion and quality is required.
  • Refinance with Freddie Mac with no exit fee; otherwise 1% applies.
  • Freddie Mac will re-underwrite the loan to then current property performance.
  • One-year borrower extension option is available for a 0.5% extension fee, assuming no event of default
  • Additional Freddie Mac extension option is available, at Freddie Mac’s discretion, thereafter with a 1% extension fee
Fees Standard fees apply, including application fee and good faith deposit

V020623

ARBOR.COM | 800.ARBOR.10
Download PDF
|email

Request a Quote

Fill out a simple form and an expert loan originator will contact you shortly.