On Solid GroundMultifamily Commercial Mortgages

By: Amir Maloumi

Reducing your mortgage payment even by a small amount makes a big impact on your bottom line.  With recent drops in interest rates, owners of multifamily apartment buildings have been able to reduce their monthly payments by refinancing their properties.

Some apartment owners are reluctant to take advantage of refinancing because they remember the savings and loan debacle in the 1980’s, where commercial properties were overfunded to the extent that the S & L industry crashed.  Many investors and borrowers lost their shirts in the crisis.  Owners who remember the savings and loan scandal are concerned that history could repeat itself.

Another reason owners are reluctant to refinance is that they are unsure of the current rental market.  Home ownership in the US is booming, and apartment owners are concerned that the bottom could drop out of the rental market. 

Some owners are also concerned that the current real estate bubble is bursting.  They look around and see that residential investors who have been flipping properties are getting stuck with houses that they can’t afford, and can’t sell.  They are afraid that when the whole real estate house of cards comes falling down, apartment owners could get caught in the fall.  Some may be considering selling, rather than refinancing.

None of these fears are valid, though.  Rental occupancy rates remain high.  New renters are entering the market all the time (kids grow up and move out of mom and dad’s home).  These new renters cannot afford home ownership, especially in the current market.  In addition, the residential real estate market is destabilizing, and that favors the rental market.  Renting is simply a better choice for some people.

Some rental properties have been converted into single family properties, too.  These apartment to condo conversions have actually compressed the apartment rental market, so that there are fewer apartments available.  So, even in a market that favors home ownership, apartment buildings are a stable investment option.

Commercial and residential real estate do not follow the same cycles, either.  Commercial real estate, and especially multifamily real estate, is not prone to “boom and bust" cycles.  There is no multifamily real estate bubble.

Multifamily dwelling financing is the biggest sector of the commercial lending industry.  Lenders are eager to invest in multifamily apartment buildings, especially those with five or more units.  Tenants may move out, but new ones move in, and occupancy rates remain relatively steady. 

With interest rates down, this is a good time for apartment building owners to refinance.  The residential lending industry is stable, and lenders view you as a good investment.  Refinancing helps you improve your bottom line, and gives you a better return on your investment property.  It just makes good financial sense to take advantage of this market and refinance your apartment building.  You’ll save money and improve your bottom line every month that you pay a lower interest rate on your mortgage.

Information on multifamily commercial financing can be found by visiting

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