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Multifamily Deals Face Underwriting Hurdles

CHICAGO-Multifamily rental housing remains an attractive sector in this market but Marcus & Millichap senior vice president Greg A. Moyer cautions brokers to pick their sellers wisely and beware of more conservative lenders.

By Mark Ruda | Updated on June 19, 2001

CHICAGO-The laws of supply and demand continue to make multifamily rental housing arguably the most attractive property sector in this market. Still, Marcus & Millichap senior vice president and regional manager Greg A. Moyer adds some cautionary words.

“The one thing we’re fighting right now is underwriting,” Moyer told a meeting of the Real Estate Investment Association. “The lenders have become more conservative about current rents and expenses, especially fuel bills.”

Lenders, buyers and entrepreneurs also are concerned about leasing velocity, Moyer says, even though the vacancy rate across the market continues to hover around historic lows. Interest rates also are in the 7% range, though Moyer says he’s noticed a bit of a rise over the last 90 days.

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