The Multifamily Math Isn’t Adding Up Anymore

 

 

We’re entering a quiet shakeout in the multifamily market.

A lof of buildings purchased post 2020 were financed with 5 year terms and longer amortization periods. These notes are coming due.

Suddenly, the numbers no longer work.
Cash flow? Negative
Refi terms? Much tighter
Exit options? Shrinking

This is when assets continue to move behind the scenes, off-market, at adjusted valuations, with creative deal structures.

I’m seeing it happen now.

Here are the 3 tips for multifamily owners facing the refi cliff.
1) Run the math early. Don’t wait to get term sheets.
2) If the traditional refi doesn’t pencil, time to get creative. Consider Pref Equity, JV Partners, or Mezz debt to fill the void. Look into seller financing or blended rate refis. Talk to knowledgeable debt fund people like Sean Kelly-Rand
3) Get ahead of the narrative. If you must bring in some equity, do it while you still have some leverage. Communicate early and often with your lender. There could be an extension considered.

If you’re an owner navigating this moment, you’re not alone.

Let’s talk. 📲 chris@fitzpatrickre.com

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