There has been a significant shift in the capitalization of real estate acquisitions. Primarily, assumable debt has become a method of choice. When money was cheaper, assumable debt had no advantage because better loan terms were always available. There is also a re-emergence of seller financing. Other sources like Wall Street’s commercial- backed securities are being decimated. Some believe it will eventually come back in a scaled back form. More and more national banks are not making loans due to tighter lending standards and lack of liquidity from bank to bank. Regional and Community banks tend to favor existing relationships. They like to make loans closer to home and can be a good source of financing in today’s market. Life insurance companies have benefited from the credit crunch and are lending on quality deals. The deals are typically larger in size and in primary markets. Government sponsored agencies, Fannie Mae and Freddie Mac remain major sources of financing in the multifamily primary and smaller markets. Even in constrained capital markets, money is available when matched with the right product.
Source: Sperry Van Ness|RealSite Commercial Group