Multifamily Apartment Cap Rates

Cap Rates for Multifamily Apartment properties are relatively flat for 2019 in this market. Averaging 4.60 for newer Luxury Metro properties, 4.87 for A Class, 5.24 for B Class, 6.02 for C Class and 6.40 for Value Added Acquisitions. With the economy adding more jobs and moderate wage increases rents are stable and vacancies are less than 5.00%. The continual increase in single-family home prices throughout 2018 has strengthened the demand for rental units. The volatility of the Stock Market has pushed more investors into US Treasury Bonds and Income Property Investments.

Multifamily Apartment Cap Rates

Rates as of: 04/26/2019

Description	Cap Rate
New Luxury Metro	4.60
A Class	4.87
B Class	5.24
C Class	6.02
Value Added Acquisition	6.40

With a stronger economy and the increase in jobs and moderate increase in wages, rents have remained strong on multifamily units but are trending towards being flat in 2018.The increase throughout 2017 in single family home prices have kept more working class families renting.On the flip side there were 1.2 million new homes created out of which 854 bought and 365,000 rented.The millennial’s are favoring renting A and B quality apartment units rather than homeownership. More Seniors are choosing to rent as well.These factors show that demand for rental units will continue to be steady.

Realpage has reported that absorption of existing rental units picked up in the 2nd and 3rd quarters of 2017.Currently there are many multifamily units being added to the market awaiting completion.This is expected to moderately increase vacancy rates. Multifamily permits have slowed in the last 2 quarters of 2017. With the increase of new apartment units the supply is slightly expected to be higher than demand resulting in a slight increase in market vacancy.

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Multifamily Apartment Cap Rates	Multiple Rental Property Loans/Financing	Non-Recourse Loan Interest Rates Today
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Apartment Loan Rates

Rates as of: 04/26/2019
For loans $1,000,000 and above

Fixed/Amortization	Rate*
5/30 Years	4.35% - 5.01%
7/30 Yrs	4.39% - 5.05%
10/30 Yrs	4.56% – 5.08%
15/30 Yrs	4.59% – 4.98%
30/35 Yrs	4.89% - 5.65%
Brdge/Rhab	4.75% – 9.95%

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Commercial Loan Rates

Rates as of: 04/26/2019

Loan	Rate	yrs/fixed
Apartments, Multifamily	4.19 – 5.55	5 - 30
Senior Housing	4.34 - 5.10	5 - 30
Student Housing	4.40 – 5.25	5 - 10
NNN/Credit Tenant	4.65 – 5.19	5 - 15
Bridge Loans	4.70 – 12.00	1 – 3
Self Storage	4.74 – 5.19	5 - 10
Retail/Office	4.76 – 5.25	5 - 10
Mobile Home Park	4.87 - 5.40	5 - 10
Hotels	5.16 – 8.24	5 - 10
Construction Loans	5.25 - 8.25	1 - 3

Reviews

Victoria Law

Terry Painter and the Business Loan Store saved my financial life in this last recession. He found me a great loan and a great deal.

~Victoria Law, Owner, ‘A’ Street Arts Building, LLC
Eric Allen

Dear ALS team,

I wanted to thank you for all your efforts and long late hours spent in helping us achieve successful funding for the purchase of the Castle Terrace Apartment complex. Seeking commercial financing during the financial crisis is no easy feat. We found the local lenders were unable to offer reasonable financing given their weakened position. With your diligence and knowledge of national multifamily lending sources, we were able to secure competitive long-term financing,

While the entire loan process was challenging to say the least, I feel your dedication and active process management made the difference in pushing the lender along to fast-track the underwriting process. I appreciate your responsive attention in keeping up with the dozens of details required to process the lender's request. I recommend that anyone seeking commercial financing should enlist your experience and guidance.

I will be sure to contact you for my next purchase or refinance.

Thank you!

Eric Allen
Managing Member, Castle Terrace LLC
Eugene, Oregon
Tom Smith

It looks like everything has gone through. You guys did an excellent job in making sure everything went smoothly. I have done a lot of financing throughout the years, and I can say this was the most efficient by far. I have some other projects on the table, and will be contacting you later this summer. I hope we can continue to do business. Thanks again for the great effort and your truly professional service!

~Tom Smith, Smith Mobile Homes
Peter Harris

I first used Terry on an 140-unit apartment complex in Dallas, Texas, after the initial commercial lender performed a disappearing act on me a few weeks before closing. I had gotten so tired of getting empty promises from other commercial lenders. Some promised low interest rates, low costs or quick closings, but nearly all failed to live up to expectations. I just wanted consistency, reliability and honesty. And that’s what Terry has delivered to me since 2004 and to the clients I have referred him since. Over the years, Terry has been my personal lending broker of choice for deals spanning from California, the Southwest, to the Midwest.

Terry has what I feel are three standout qualities that are rare in the commercial lending industry. First, his communication and availability are second to none. He keeps me up to date on the status of the loans at all times without me having to call him. And when I need a quick teleconference with the partners, buyers, sellers, etc., he’s there for me even on the weekends.

Second, Terry may not admit this, but he is a great teacher. What I mean by this is that no matter if you are a novice investor applying for your first commercial loan or a seasoned investor acquiring a value-add property, he breaks everything down in simple details for you. In all these years of apartment deals with Terry, I’ve never had to guess, nor was there any gray area in any part of the loan transactions from start to close. That says a lot considering the dynamics of commercial loans.

Last but not least, I have yet to find another commercial lender that will help you analyze your deals with his own inside resources, counsel you on setting up partnerships efficiently, recommend property managers, and most of all care if you are making a good investment or not.

Thanks Terry for being my lender, an adviser and a friend for all these years.

~Peter Harris, CEO, Co-Author of Commercial Real Estate for Dummies
David Karam

We are a family business that owns and operates commercial, multifamily and single-family real estate. We buy, broker and manage real estate for ourselves and selected clients. I met Terry Painter through my son-in-law Rob Powell. Rob introduced us to Terry to help us refinance a shopping center that we own. We had just been rejected for financing on this center through another very experienced broker. It was October 2008, and the economic downturn was all over the news, daily. Everyone was saying that there was no financing available, and I was resigned to being held up by the lender we were with at the time.

Terry stated confidently, but humbly, that he thought he could get the financing for us. He did it, and he is now the first person we contact when we are considering a purchase. Terry’s contribution is not limited to the financing; he is a significant asset in the due diligence process. I cannot stress enough the contribution that Terry makes toward our process of buying and financing.

Thank you Terry.

~David Karam, CCIM
Rob Powell

I am a commercial real estate investor. Over the years I have invested in different types of commercial and residential assets. There is so much that goes into getting a deal done ... but I think the most critical is the financing. To be more specific, the most critical member on your team is your mortgage broker or lender.

I met Terry Painter six years ago, and he has closed the loans on most of my deals. Terry is a critical member of my team. Terry has not only made me money but also saved me in doing bad deals, therefore saving me money. Terry has helped me put deals together, as well as being the glue to keep deals together.

I go to Terry first for all my real estate projects, because he is not your typical commercial mortgage broker. When I talk to Terry about a project, I always seem to learn something about financing and real estate. Terry educates me about my project, not the other way around. If you have done a few deals that require financing, then you know what I mean. It is a waste of time and money when you have to educate your mortgage broker. I love the fact that Terry knows more than I do.

There have been times where I will just call Terry up for advice regarding an asset, and Terry will go above and beyond to help me even when there is nothing in it for him.

Terry Painter is my mortgage broker and my friend, and I highly recommend his services. If Terry can’t finance your deal ... it is probably a deal you should not be doing.

~Rob Powell, Cedar Crest, New Mexico
Linda and Dr. Cornell

Dear Terry,

As you know, we refinanced our apartment complex, Leisure Manor, this year because the loan had matured. We have been working with this property for years to bring it to the level of performance we require but we have faced one challenge after another in the process. All those issues, of which you are aware, contributed to the difficulty we had in getting a new loan.

We wanted to thank you for all your help through the loan process. As you know it was difficult, with a number of unexpected turns that slowed completion of the process. We went through the course of seven months (of changes, conferences, furnishing documentation, and committee decisions, changes of banks, redundant submissions, etc.) with much less discomfort than expected due to your presence and considerable help.

We so appreciate your perspective, insight, and willingness to extend yourself as you did to to assist us when we did not know what to do. Without you we would not have completed this process. Several times in the process we were very impressed by how much progress you were able to achieve when we could not get through to bank personnel. You and the staff at Apartment Loan Store, Business Loan Store moved heaven and earth to make the loan happen, and we have been very grateful for your expertise, professional demeanor, humor and support. Your understanding of how to think about things we were told - or not told - and what we needed to do next helped us greatly to make productive decisions. That in turn has helped us further develop our longer vision in regard to our business, which we appreciate.

Overall, while we found the challenges daunting at times, what we learned was useful. We are glad to know we do have the support we need, when we need it, as you showed us several times during the course of obtaining our loan. We are moving forward with confidence, and feel great knowing you and Sharon particularly, as well as others, (Peter Harris especially) are ready and able to assist and advise as needed.

Thank you again for all your help, patience, and for being available with a smile in your voice through a trying process! We look forward to continuing our acquaintance, and wish you a wonderful summer.

Sincerely, Linda and Dr. Cornell

		Stabilized Property Acquisitions					Value-Add Property Acquisitions
		CAP Rate			AD Over 10-Yr Treasury		Expected Return on Cost			AD Over 10-Yr Treasury
Property Type Sector	Class/ Segment	H1 2017 (%)	H2 2017 (%)	Change (bps)	H1 2017 (%) EOP 1.49	H2 2017 (%) EOP 2.45	H1 2017 (%)	H2 2017 (%)	Change (bps)	H1 2017(%) EOP 1.49	H@ 2017 (%) EOP 2.45
Office CBD	ALL	6.61	6.63	2	512	418	8.22	8.24	2	673	579
	AA	5.19	5.24	5	370	279	-	-	-	-	-
	A	5.95	5.99	4	446	354	7.12	7.10	-2	563	465
	B	6.85	6.84	-1	536	439	8.02	8.03	2	653	558
	C	8.61	8.64	3	712	619	9.83	9.8	6	834	744
Office Suburban	ALL	7.64	7.76	11	615	531	9.21	9.33	11	772	688
	AA	6.20	6.31	11	471	386	-	-	-	-	-
	A	6.96	7.07	11	547	462	8.06	8.18	12	657	573
	B	7.97	8.13	16	648	568	9.20	9.27	7	771	682
	C	9.30	9.46	16	781	701	10.45	10.60	15	896	815

Industrial ALL	ALL	6.72	6,73	1	523	428	7.71	7.74	3	622	573
	A	5.48	5.54	5	399	309	6.34	6.41	8	485	396
	B	6.59	6.52	-7	510	407	7.53	7.53	0	604	508
	C	8.13	8.16	4	644	571	9.31	9.33	3	782	688

Retail Neighborhood Community	ALL	6.94	7.12	18	545	467	7.92	8.14	22	643	569
	A	5.62	5.66	4	413	321	6.59	6.85	26	510	440
	B	6.83	7.03	20	534	458	7.81	8.00	19	632	555
	C	8.39	8.68	29	690	623	9.36	9.58	22	787	713
Retail Power	ALL	7.36	7.54	18	587	509	8.25	8.47	22	676	602
	A	6.11	6.16	5	462	371	7.21	7.31	10	572	486
	B	7.30	7.47	16	581	502	8.06	8.40	34	657	595
	C	8.70	9.03	33	721	658	9.52	9.74	22	803	729
Retail High Street
	A	4.23	4.37	13	274	192	-	-	-	-	-


Multifamily Infill	ALL	5.26	5.32	6	377	287	5.95	6.03	8	446	358
	A	4.60	4.67	8	311	222	5.34	5.41	7	385	296
	B	5.15	5.20	5	366	275	5.78	5.87	9	429	342
	C	6.06	6.12	6	457	367	6.75	6.81	7	526	436
Multifamily Suburban	ALL	5.67	5.74	7	418	329	6.33	6.45	11	484	400
	A	5.01	5.10	10	352	265	5.62	5.71	9	413	326
	B	5.53	5.61	8	404	316	6.16	6.26	10	467	381
	C	6.48	6.50	2	499	405	7.22	7.37	15	573	492

Hotels CBD	ALL	7.85	7.91	6	636	546	-	-	-	-	-
	LUXURY	6.83	6.92	8	534	447	-	-	-	-	-
	FULL SERVICE	7.55	7.62	8	606	517	-	-	-	-	-
	SELECT SERVICE	7.94	8.01	8	645	556	-	-	-	-	-
	ECONOMY	9.10	9.11	1	761	666	-	-	-	-	-
Hotels Suburban	ALL	8.39	8.44	5	690	599	-	-	-	-	-
	LUXURY	7.42	7.50	7	593	505	-	-	-	-	-
	FULL SERVICE	8.07	8.14	7	658	569	-	-	-	-	-
	SELECT SERVICE	8.46	8.53	7	697	608	-	-	-	-	-
	ECONOMY	9.59	9.58	-1	810	713	-	-	-	-	-

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Multifamily Apartment Cap Rates

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Victoria Law

Eric Allen

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