6D — November 13 - December 10, 2020 — Financial Digest — Lenders Directory — M id A tlantic Real Estate Journal
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By Pat Jackson, Sabal Capital Partners, LLC The Resilience of Multifamily
A
l l eyes are on the multifamily sector as the pandemic contin-
these trying times, multifamily demand has remained strong. Additionally, little will need to be reimagined about the sector once the pandemic passes, un- like office and retail – which are both undergoing a major upheaval as working from home becomes more widely accepted and e-commerce de- mand replaces brick and mor- tar. This unwavering demand for apartments will bring the sector to a recovery sooner than other real estate types, with perhaps the exception of industrial. Evictions There is significant nation - al conversation around evic- tions currently, with renters and landlords alike concerned about what the future may hold. A federal nationwide eviction moratorium imposed through the CDC prevents owners from removing tenants for the non-payment of rent, providing they meet certain requirements such as loss of in- come, significant medical bills, etc. In response, the National Apartment Association (NAA) joined a lawsuit brought by four individual landlords as- serting the moratorium is both illegal and unconstitutional. While the federal eviction mor- atorium does offer some clarity for both renters and landlords,
many of whomwere navigating potentially conflicting local and state regulations, there are still numerous unknowns. Many are concerned about what will happen to tenants when evictions eventually occur, as the federal moratorium is set to expire at the end of 2020, and what landlords will do to ensure their debts are paid in the meantime. Rent Collections Apartment List research shows that more than 30% of apartment renters in the U.S. owed back rent in September, which is nearly identical to August’s number. However, it’s not as dire of a situation as it may seem. Half of those renters currently owe less than $1,000 to their landlords and only 5% owe more than $2,000 – debts that could potentially be repaid if a pending stimulus package with another round of checks or enhanced unemployment benefits goes through. Addi- tionally, rent collections have been much stronger than many predicted at that beginning of the pandemic. The NMHCRent Tracker shows that 90.6% of apartment households paid their rent as of Oct. 20, which is only a 1.8% decrease from the same time in 2019. Despite the challenges created by the pandemic, a large majority of
tenants continue to pay their rent.
Clearly, the affordable hous- ing crisis in the U.S. is a seri- ous concern. However, it also equates to higher demand for existing workforce and afford- able apartments. Add in the number of renters potentially seeking a lower cost option due to COVID’s impact on the job market, and workforce and affordable housing demand will only continue to rise. This makes existing apartment properties catering to lower in- come Americans an attractive investment opportunity. While concerns over an un- stable economy, eviction mora- toriums and rent collections remain, the strong demand for workforce and affordable hous- ing, coupled with multifamily being essential, bodes well for the sector – which continues to remain resilient. Pat Jackson is founder and CEO of Sabal Capital Partners, LLC., a single- source commercial real estate lender. Sabal is a proud partner to both Fred- die Mac and Fannie Mae in the agencies’ respective loan programs, financing workforce and affordable multifamily properties na- tionwide. The company also offers multifamily property finance through its CMBS debt offering. MAREJ
Strong Workforce Housing Demand
ues, the next round of stim- ulus remains u n d e c i d e d a n d n e w s o f ev i c t i on moratoriums continues to hit the press. Whi le some
Even before COVID-19 hit the U.S., the lack of affordable housing supply was a serious concern. The current pandemic has only amplified the problem, with layoffs, furloughs and decreased work hours leaving more renters struggling to afford their rents. According to the National Low Income Housing Coalition’s Out of Reach 2020 report, the aver- age renter, whose hourly wage is $18.22 (or $5.74 below the national two-bedroom hous- ing wage and $1.34 below the national one-bedroom housing wage), does not earn enough to afford a modest rental home. In the first quarter of 2018, only 9% of new, unsubsidized apart - ments rented for less than $1,050 per month and only 4% rented for less than $850 per month, according to the 2019 State of the Nation’s Housing Report: Lack of Affordable Housing by Harvard Univer- sity’s Joint Center for Housing Studies. The same report also shows that the number of low- cost apartments with monthly rents below $800 declined by a remarkable 4 million between 2011 and 2017, including 1 mil- lion in 2017 alone.
Pat Jackson
renters are in fact experiencing difficulties paying rent, the sec - tor remains resilient, especially in comparison to other sectors such as hospitality, office and retail where the distress is much more substantial. While multifamily is experiencing some setbacks, it is undoubt- edly an essential asset class and is expected to ultimately weather COVID-19. Here are some of the key factors when looking at the apartments sector: Housing is Essential Unlike many other sectors, housing is necessary. With people spending more time in their homes due to social dis- tancing measures, apartments are more of a focus than ever. Whereas hospitality, retail and office have all struggled immensely due to business closures, and have proven to be less fundamental during
Tom MacManus, President Money360 offer speed, flexibility, and certainty in every transaction
Tom MacManus President Money360 Headquarters: Ladera Ranc, CA Years in field: 35+ years Area of Interest: Nationwide bridge loans.
Most noteworthy transaction or project this year: Bridge Loan in Dallas Texas
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Mortgage Loan Brokers What is your most note- worthy transaction or project this year? Bridge Loan in Dallas Texas Where do you think your largest growth area is and why? The $5-30MM loan sector is a bit underserved as many of
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