The Banks are back: How Should Multifamily Lending Strategies Impact the Industry?
Banks are back stimulating the real estate market essentially in the multifamily sector. We highlight the remarkable growth in multifamily loans that been issued by commercial banks. Among all categories, none has grown faster than the multifamily over the last six years, as an overall lending share is now in a 20 year high. We examined evidence that the apartment sector isn’t giving any signs of reaching a “bubble crisis” status.
Nowadays, we see the bubble phenomenon far for the real estate industry, today’s climate has passed the recovery phase into the growth stage. “NOI growth, loan yields and cap rates all appear past peak levels, while apartment construction has surged to 25-year highs. At the same time, investor appetite for apartments hasn’t abated. Competition among lenders has picked up, returning some bargaining power back to borrowers.” (Property Management Insider)
To conclude, is recommended for multifamily owner or investors to reduce risk by refining acceptable characteristics for a multifamily loan, looking much more narrowly at geographies and classes most likely to grow NOI. Also, to seek more sophisticated benchmarking and forecasting data that’s owners or investors to see how an asset is positioned relative to the market or submarket. Property Management is the key of increasing NOI in the multifamily sector, since management could be the only key ingredient that could increase the NOI and bring clear results to problems.