Get an update on typical leverage and pricing for multifamily bridge loans. In this guide, I’ll share what I’m seeing from the private lending companies (aka hard money lenders) in our network as of June 2024.
Maximum Leverage for Multifamily Bridge Loans
Private lending for multifamily properties with five or more units is still challenging in 2024, and the situation hasn’t changed a whole lot since 2023. There are still a lot of lenders that offer bridge loans for multifamily properties, but the leverage is still very conservative. Where in the past, private lenders would go up to 75% loan-to-value (LTV) on multifamily, they’re now down to 65% LTV in most cases. That’s for both a purchase or refinance. For a purchase, the borrower needs to bring in about 35 % cash, and for a refinance, the maximum LTV is 65% of as-is value. And most lenders are not offering any cash out.
If you see a private lending company advertising a loan-to-value of more than 65% for multifamily, I’d be a bit skeptical. It could be in cases where the lender is going to require that the borrower put up additional collateral. Or it could be a situation where the borrower has tons of liquidity and tons of equity in other properties, and it’s not going to apply to most multifamily investors.
For multifamily value-add projects, I’m not finding a lot of lenders that are considering them at this time. The ones that are, again, are just being very conservative with the loan of value. So the borrower has to have a lot of equity, they have to have a huge down payment, and they have to provide a lot of capital towards the rehab budget.
Some private lending companies offer long-term loans for multifamily properties, but only between 5 and 10 units, and up to $3,000,000. In those cases, the loan-to-value could be 75%, but this is typically a 30-year loan with a 3 -year prepay or a 5 -year prepay. These loans require a 700+ FICO score, 1.2+ DSCR, and seasoning of at least 6 months.
For private lending companies that offer loans only on commercial real estate, I would always see that their multifamily guidelines were a bit looser than other asset classes in the past. The leverage would be 75% for multifamily versus 65% for other asset classes, and pricing would be a bit lower than the other asset classes. Now what I’m seeing is the pricing and the leverage is on par across all the core commercial property types (mainly industrial and retail).
Interest Rates for Multifamily Bridge Loans
For multi -family properties in California, we have one lender on our platform that offers interest rates of around 8.5 % for a 4 -year term. All other California lenders are around 9% to 10.5% for multifamily properties with terms up to 2 years. In other states, most lenders are in the range of around 11% and up to 13% interest at this time, and all of them charge points (origination fees) of at least 1.5%.
As of mid -2024, private lending for multifamily properties is still challenging with lenders being more cautious and more conservative than ever. And I believe it will continue this way until the end of 2025. That said, there are lots of lenders out there that still provide bridge loans on multifamily properties throughout the country.
How to Find Multifamily Bridge Lenders
If you’re ready to search for a lender for a multifamily deal, use our website as a resource. All the private lending companies listed on the site have a very detailed profile that shows their lending guidelines, and you can contact each lender directly. There are two options for using our platform.
Option 1: Browse Lenders
Search on our site for direct lenders. All lenders have a very detailed profile with information about their lending guidelines, rates, fees and much more. Make contact with each out directly by email, phone call, or visit their websites. First select ‘Multifamily Bridge’ as the loan type, then enter the state where the property is located.
Option 2: Create a Loan Request
Fill out a questionnaire with information about your financing needs. You can then browse lenders and invite a few of them to view your deal. Or ask us for recommendations; we’ll review it and invite a few select lenders that we feel may be a good fit.
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