HOUSINGNEWS REPORT
CHANGING SEASONS OF OPPORTUNITY
The Multifamily Market There is a similar story happening in the small-balance multifamily sector. Rent growth continued in Q2 2018, focused in the aforementioned secondary U.S. markets that can often be overlooked but have rode the economic growth of the previous years. These areas, just like our home market of Greenville, South Carolina, have attracted jobs from numerous domestic and international corporations. This job growth spurs rapid development of both single family and multifamily development to accommodate the influx of new residents. This combination of job growth, dropping unemployment, and rents continuing to rise nationally provide an opportunity for the stabilization of smaller multifamily developments. The late ‘70s and early ‘80s saw the biggest boom for small balance multifamily new construction. In the last 20 years, small balance multifamily construction has decreased drastically while single family and large 50- plus unit building construction have increased. The timing of this new construction is important. There is a large segment of available small
The Season of Opportunities There has never been a better time to be a real estate investor. The expanding credit available for all levels of investors beyond the traditional community banks is allowing for amazing growth and return opportunities. Multiple lenders now offer investor-minded programs for single family rental portfolios, construction to rental, and small- balance multifamily. This access to capital has allowed investors to branch out to promising markets throughout the country. They are no longer solely reliant on documentation and guideline restrictions of local banks or large institutional lenders, as private lenders now are actively providing competitive programs that are more convenient to close. As the leaves turn and the temperature moderates, we’re excited about the growing opportunities for real estate investors and see great promise for the seasons ahead. We’re in a great season of opportunity for our industry, and at Lima One Capital we’re looking forward to partnering with real estate investors to take full advantage of the many terrific opportunities.
balance inventory in need of value- add renovation. Investors are finding outdated properties, taking out bridge financing, completing meaningful updates, and getting the property fully leased. At that point, the Freddie/Fannie small-balance takeout comes into play. Roughly 85 percent, or $23.8 million, of the current small-balance multifamily stock (2 to 49 units) was constructed before 1990. Small and medium multifamily housing between 2 and 49 units account for 21 percent of the national housing stock. Small and medium multifamily housing between 2 and 49 units account for 54 percent of all rental units. That’s more than large The focus on small-balance is not coincidental. We have seen success from our borrowers who have targeted existing 5- to 50-unit multifamily developments. Still-favorable acquisition costs paired with attractive cap-rates and consistent demand are a homerun for the savvy real estate investor. We view this as a prime growth space in the rental investor industry. multifamily (50-plus units), SFR (1 unit) and mobile home rentals units combined.
2.6%
SINGLE FAMILY RENTAL OWNERS BY PROPERTIES OWNED
6.5%
JEFF TENNYSON
4.0%
Jeff Tennyson is CEO of Lima One Capital based in Greenville, South Carolina. Lima One is an institutionally backed lender that is able to lend to large-scale and small-scale investors, including first-time investors. Lima One originates first-mortgage loans to real estate investors on non owner-occupied investment properties and small balance multifamily properties nationwide.
100+ 11 TO 100 6 TO 10
8.5%
3 TO 5
1 TO 2
78.3%
11
SEP 2018 | ATTOM DATA SOLUTIONS
Made with FlippingBook Online newsletter