Current Reports

Single-Family Rental Investment Trends Report Q1 2024

On the heels of a strong 2023, the single-family rental (SFR) sector is positioned to expand even more in 2024. Build-to-rent (BTR) starts ticked up in the third quarter to reach 7.8%, another record high. With occupancy rates stable and lease renewal rent growth above historical averages, SFR has healthy fundamentals that will continue to support growth amid headwinds, Arbor’s Single-Family Rental Investment Trends Report Q1 2024, developed in partnership with Chandan Economics, shows.

Analysis

U.S. Multifamily Market Snapshot — Q4 2023

The U.S. multifamily market continued to show signs of slowing at the end of 2023, although demand remained robust, with high home prices leading younger generations of higher-income households to choose renting over homeownership.

Uncategorized

Arbor Recognized as Top Lender by Fannie Mae, Freddie Mac, and FHA in 2023

Arbor’s platform of diverse multifamily financing solutions and our strong industry relationships drive us to the top of the multifamily lender rankings year after year. Through decades-long partnerships with Fannie Mae, Freddie Mac, and FHA, our best-in-class team delivered results for our borrowers in 2023, propelling Arbor to the top of the partner rankings.

Current Reports

Small Multifamily Investment Trends Report Q1 2024

Small multifamily starts the year from a position of strength with normalizing expense ratios and healthy occupancy rates. After demonstrating resiliency amid headwinds, this subsector is ready to capitalize on any positive momentum in the financial markets. Arbor’s Small Multifamily Investment Trends Report Q1 2024, developed in partnership with Chandan Economics, examines and explains the key developments every investor needs to know.

General: 800.ARBOR.10

FHA® 231:

AGE RESTRICTED NEW CONSTRUCTION/SUB REHAB

Arbor provides FHA-insured, long-term, fixed-rate financing for new construction or substantial rehabilitation of seniors apartments restricted to age 62 and above. Applications typically processed as a two-stage application (preliminary application followed by firm application). HUD-experienced development teams may request “straight to firm” application, saving significant time by eliminating the preliminary application stage.

Loan Term & Amortization Construction loan period (interest-only), followed by 40-year permanent (fully amortizing); term not to exceed 75% of economic life
Maximum Loan Amount The lesser of:

  1. 85% of total eligible development costs (for market rate); 87% for LIHTC restricted; 90% for properties with at least 90% rental assistance; development cost includes value of land for new construction and as-is value of property for substantial rehabilitation
  2. FHA mortgage statutory per unit limits adjusted for local high cost factor or
  3. An amount that achieves a minimum debt service coverage: a) 1.176x DSC for market rate properties; b) 1.15x DSC for LIHTC restricted; and c) 1.11x DSC for properties having at least 90% rental assistance
Eligible Properties New construction or substantial rehabilitation for age-restricted properties (tenants limited to 62 years and over)
Eligible Borrowers Single asset entity (for profit or nonprofit)
Underwriting Occupancy Maximum economic underwriting occupancy of:

  • 93% for market rate properties (i.e., at least 20% market rate units, or LIHTC whose rents are < 10% below market rents)
  • 95% for LIHTC restrictions on at least 80% of units at rents at least 10% below market
  • 97% for properties having at least 90% rental assistance, or in-place rehabs with at least 90% occupancy and 90% LIHTC restricted at rents at least 10% below market
Tax & Insurance Escrows Monthly deposits required
Recourse Nonrecourse – construction and permanent
Commercial Space Maximum 25% of gross floor area and maximum 30% of effective gross income
Required Reports Market Study, Appraisal, Architect/Cost Review and Phase I Environmental; CPA reviewed financial or last fiscal year – sub rehab
Prepayment Typically 10% year one, declining 1% per year; other prepayment options available subject to market conditions
Assumable Subject to Arbor and HUD approval and payment of assumption fee
Good Faith Deposit Based on project type and loan size
Expense Escrow Yes – sufficient to cover Arbor’s expenses and third-party report costs
Origination Fee Negotiable
HUD Application Fee Nonrefundable; 0.3% of the loan amount; 0.15% of the loan amount due to HUD at pre-application submission; 0.15% at firm application
HUD Inspection Fee 0.5% of the mortgage amount for new construction; 0.5% of the cost of repairs for substantial rehab
Legal/Closing Fee Borrower pays Arbor’s counsel fee and miscellaneous closing costs
Rehabilitation Qualifications Repairs must exceed $15,000 per unit (adjusted for local high cost factor) or replacement of two or more major building systems
Davis Bacon Davis Bacon labor standards and wage requirements apply to construction and rehab work
HUD Mortgage Insurance Premium (MIP) Annual MIP rates

  • Market rate properties 0.70%
  • Affordable properties: 0.35%
  • Broadly affordable or energy efficient properties: 0.25%

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