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Andrew LaSalla
Andrew LaSalla II is one of the most trusted financial consultants in the residential and commercial lending business. With over seven years of of property loan underwriting experience, Andrew's sole focus is helping clients successfully navigate complex financial laws, terms, rules, paperwork, and transactions necessary to secure loans for new construction, purchase, or refinancing of multifamily, healthcare, affordable housing and student housing properties. Whether it's HUD, FHA, or MAP loans, Andrew is committed to tailoring financial solutions for every client he serves.
Refinancing your multifamily apartment project can help you secure a better deal and make the most of your investment. In fact, refinancing can benefit owners in multiple ways. Some of the most common reasons for refinancing include:
- Reduced interest rates
- Reduced monthly payments
- Improved loan term and increased cash flow
Why Refinance Now?
Currently, the market offers great opportunity to multifamily apartment owners. For many, it is the perfect time to refinance existing loans, as interest rates are historically low, due to the ongoing pandemic.
Interest rates are likely to rise as the economy strengthens and recovers. There is little upside to waiting if refinancing is an option you wish to consider. Refinancing a property while the asset has significant equity can allow you to consider other investments and make capital improvements.
With rates being so low, a significant rate decrease is less likely than the risk of a rate increase.
Refinancing and Balloon Payments
There are many properties with loans due to mature over the next several years. If you have a balloon payment coming up, it may be beneficial to refinance and incur a pre-payment penalty. The long-term benefits of refinancing and securing improved interest rates will likely make up for the penalty over the long term. Investors that wait until the pre-payment period is over and the balloon payment is due may find themselves paying an interest rate of one to two percent higher, potentially equating to hundreds of thousands of dollars spent in excess interest.
Risks Associated With Waiting to Refinance
If the economy does not recover quickly, borrowers may have a hard time refinancing their projects in the future, as lending programs become stricter with their requirements and guidelines. Other risks include decreased occupancy and reduced asset value. These concerns can lead to lower proceeds and, in some cases, the inability to refinance a balloon payment when the loan matures.
In difficult times and a seller’s market for debt, less capital is usually available and loan terms and interest rates are less favorable. If you have a property that is high in occupancy and the value is significantly higher than when you purchased it, now could be a great time to lock in a low interest rate and cash out equity to distribute to the investors in your ownership group.
Which Loan Is Right For Me?
The New Year presents the perfect opportunity for investors to lock in an agency loan with a 10 or 12-year fixed rate, amortized over 30 years. Alternatively, a long-term holder of the asset will find a 35-year fixed rate fully amortized HUD/FHA loan is a great choice.
Contact LSG Lending Advisors Today
The benefits of refinancing a multifamily apartment project at this time are clear. By reducing the interest rate and extending the loan term, there will be a reduction in mortgage payments, and savings can be used for capital improvements and other property upgrades. Contact LSG Lending Advisors today to learn more and book an appointment with our team.