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Big rush on multifamily properties is unleashed
“One of the bigger trends we’ve noticed is the big rush when it comes to lenders like KDM or individual investors, are multifamily property types,” Llorente said. “Another new underserved market that’s opened up has been the smaller balance, smaller multifamily investment properties.”
Like any savvy lender, KDM is capitalizing on the trend: “Right now, we’ve opened up a new program to service this underserviced market,” he said. “We do loan amounts now between $20,000 and $5 million. That’s to help service not just single-family homes, but your duplexes, triplexes, 10-unit buildings, your smaller, suburb apartment buildings that, believe it or not, in the last 10, 15 years have been somewhat underserved because those products don’t qualify for Fannie, Freddie small balance loan amounts.”
The interest is not limited to just investors, Llorente said. “Yes, from both sides,” he replied when asked of the appeal. “Individual investors are devoting more time in finding those properties and the people who lend the money – the big investors, insurance companies, banks – have more interest to actually fund those acquisitions.”
Llorente theorized on the sector’s increasing popularity among investors, saying there are just so many 200- to 500-unit properties available to buy. “The low-hanging fruit that’s still available to purchase at reasonable prices are the investor single-family homes, duplexes and triplexes that haven’t really gotten the love they should have gotten in the last few years.
He’s seen the trend manifest in his own backyard: “We’ve been noticing here in Miami as we’re starting to see high-end duplexes, people acquiring those properties and putting in pools, a third floor and making them more high end. Obviously, they’re going to be rate-sensitive, but given the direction rents have gone in, rents are in a position where they absorb moderately higher interest rates.”
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