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How Investors Pull Off Affordable Housing Deals

While most lending sources have stayed out of the affordable housing game, the agencies are fulfilling the tremendous demand to fund affordable housing deals.

As demand for middle market and affordable housing increases—especially considering that the multifamily niche typically has the lowest vacancy rates in the asset class—investor demand for the product type increases. However, it requires a tailored loan product to make the deal, in many cases. While most lending sources are staying out of the affordable housing game, the agencies are fulfilling the tremendous demand to fund affordable housing deals.

“The agencies have remained mission-centric in looking to maintain or create continued affordable housing across the country,” Jeff Erxleben, regional managing director and EVP at Northmarq Capital, tells GlobeSt.com. “So, you have to talk about the agencies. Those are the gorillas. Each one is doing $70 billion in round numbers. They are really the market marker, and part of their mission is affordable housing. They see if as serious stuff, and they want to make sure they are getting creative about creating.”

The agencies have been so committed, in fact, Erxleben expects to see more loan products this year focused on affordable housing deals. This will allow investors to take advantage of acquisition opportunities for affordable housing. “I think that you will see new product development come out from both Freddie and Fannie throughout 2018 that will help support the demand for affordable,” he says. “I think that investor demand in terms of opportunities to go into affordable deals will remain strong. Part of that is largely supported by liquidity on the debt side, which will be supported by Freddie and Fannie.”

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Kelsi Maree Borland

Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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