Written byAllison Herrera
When it comes to financing your multifamily property, securing a $5 million loan can demand just as much of your time and effort as securing a $100 million loan. If you’re a borrower looking to finance multiple properties, portfolio financing – multiple loans processed simultaneously or a single loan covering multiple properties – should be an essential part of your financing strategy.
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There are benefits to financing your properties as a portfolio – from cost savings for third party reports and attorney fees to more negotiating power and potentially lower interest rates.
Clients often ask, “Can I leverage existing equity in my portfolio for a cash out transaction?” says Allison Herrera, Walker & Dunlop Senior Director. “My response is almost always the same – of course! A portfolio execution can actually incorporate several different types of loans. Some properties may only need a rate and term refinance, others may be used to cash out equity for future investments or fund renovations while others may need acquisition financing. We can accomplish all of these things in one single portfolio execution.”
If you tell us what your goals are for your portfolio, we will tailor a solution that will make the most sense – loan terms, prepay, and timing of execution will be structured based on your exit strategy.
When seeking financing guidance for both large and small transactions, you need a local expert who not only understands the trends and rates in your area but is a true multifamily expert. Our dedicated SBL team knows the small-to-middle-market multifamily sector inside and out and we’re getting deals done.
In 2022 so far, our team has financed 22 portfolios, $233 million in total financing encompassing over 3,000 multifamily units nationwide - from the Pacific Coast and Rocky Mountains to the Southeast and Mid-Atlantic.
“We’re a direct Freddie Mac and Fannie Mae lender with market experts from coast to coast, and are continuously developing technology to streamline the process. We’re a one-stop shop in a growing space,” said Walker & Dunlop Senior Analyst Cameron Devine.
Our team recently financed a portfolio in New England. Read on for highlights from the transaction.
When a sponsor approached our small balance lending team to finance an eight-property portfolio, the opportunity had “everything going for it,” said Managing Director Jared Sobel, who had worked with this sponsor from his very first multifamily deal. The properties met Fannie Mae’s affordability and mission goals providing much-needed workforce housing in a submarket with rising rents.
Yet these advantages didn’t make the journey easy. There’s no room for error when navigating the details and locking in rates, particularly in a rising interest rate environment where speed to close can make a drastic difference in your all-in rate. Fortunately, our team is an experienced market leader ranked as the #1 lender with Fannie Mae and #4 lender with Freddie Mac. Sobel himself has been in the SBL space since its inception in the mid-2010s.
“The product is always evolving and deals are not one-size-fits-all so you need to know the exceptions, the waivers, who to talk to—and if you haven’t done a million things correctly, you will not get financing. You need to be working with market experts and people who know what they’re doing,” Sobel said. He noted that with Walker & Dunlop “you’re getting a publicly traded company bringing an institutional mentality to the private capital space.”
This experience and attentiveness paid off. “We ended up in a spot that was beneficial for production, credit, and the client,” Sobel said: $19.9 million in Fannie Mae financing for the eight properties, then another deal for the same sponsor in the same market.
“The more deals we do with them, the more we learn about them, and the more we’re able to grow a relationship and yield results,” Sobel added.
On the East Coast and across the nation, “We approach $1 million deals with the same commitment as a $100 million deal,” Devine said. “We’re interested in building relationships to grow as our clients grow.”
Our team of small balance lending professionals has the experience, technology, and resources to seamlessly structure your portfolio deal. For financing support or questions about the process, contact our team.