The Current and Coming Window of Opportunity for Multifamily Investors.

By sonoran • April 22nd, 2009

Investors in small multifamily properties, 2-4 units, have a window of opportunity now and for at lease another 6-12 months.  Prices are very attractive and there are many options where cash flow can be substantial.

What is difficult is financing.  You need that 20-25% down plus healthy reserves and very solid credit, plus not more then 3 other leveraged properties.

The larger properties 5+ units and especially mid sized and larger properties with commercial financing will have that window open up in the coming year as loans come due and are unlikely to be renewed.

At the same time it will be difficult to finance these properties, though cash buyers will be in a very good position to buy well positioned properties.

The commercial real estate market is in the early stages of its own “mother of all bear markets” as it does not have the same political constituency as the housing market. The securitized lending done for most commercial transactions is in the deep freeze and it will be years before banks have the capacity (capital) to refinance many of the notes coming due in the next 24 months. Retail centers are the hardest hit as job losses cut consumer spending and rents have begun to plunge taking property values down below recent purchase prices. With high leverage that was normal a few years ago most owners will soon have no equity and non-recourse loans will allow them to walk away. Unlike residential lenders commercial lenders are not prepared to take back shopping centers, office buildings and land and will soon need to hire many out of work bankers to help manage and liquidate the properties.   (Early Warning Wire )
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