Multifamily Housing Development & Insurance

Overview

FHA's multifamily loan programs provide insurance that assists both the private and public sectors to finance the construction, purchase and rehabilitation, or the refinancing of rental housing projects, condominiums, and cooperatives.

NAR recognizes the need to maintain the viability of federal multi-family housing programs and to increase the availability and affordability of rental housing. Without federal involvement, such financing can be difficult to find in the private market.  Especially for low-income renters, and in communities experiencing economic distress, such financing is often unavailable in the private market.  We encourage the removal of policy and program disincentives that inhibit owner participation in the development of new rental housing or the preservation of existing safe and affordable rental housing.

Political Advocacy

Current Legislation/Regulation

None at this time.


In-Depth

Find NAR's letters, testimonies, bill updates, and more on the NAR Federal Issues Tracker


Legislative Contact(s):

Megan Booth,
mbooth@realtors.org
202-383-1222

Joe Harris,
jharris@realtors.org
202-383-1226

What is the fundamental issue?

FHA's multifamily loan programs provide insurance that assists both the private and public sectors to finance the construction, purchase and rehabilitation, or the refinancing of rental housing projects, condominiums, and cooperatives.

I am a real estate professional. What does this mean for my business?

Affordable rental housing is the first step on the housing ladder for many Americans.

NAR Policy:

NAR recognizes the need to maintain the viability of federal multi-family housing programs and to increase the availability and affordability of rental housing. Without federal involvement, such financing can be difficult to find in the private market.  Especially for low-income renters, and in communities experiencing economic distress, such financing is often unavailable in the private market.  We encourage the removal of policy and program disincentives that inhibit owner participation in the development of new rental housing or the preservation of existing safe and affordable rental housing.

Legislative/Regulatory Status/Outlook

The need for affordable rental housing continues to be great. In recent years, FHA’s role in the multifamily market has increased dramatically – nearly 4 times its size from just several years ago. As lenders remain slow to provide financing for construction loans, FHA is the primary source of construction for multifamily developers and owners. FHA has implemented a number of new procedures and requirements for its multifamily loans. They have strengthened underwriting by changing ratios and increasing documentation. They have also implemented a number of oversight and risk-management provisions. As demand continues to be high, we urge FHA to look for ways to streamline procedures.

High rise construction costs are significantly different than garden-style apartments. Yet the loan limits for the two are nearly the same. Because the so-called “elevator” limits are so low, many urban areas have not had any properties endorsed with FHA multifamily insurance in the last several years. We urge Congress to pass legislation to increase the elevator loan limits for multifamily to assure all our nation’s families can find affordable rental housing.

NAR Committee:

Federal Financing and Housing Policy Committee

References

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Before you search elsewhere, take advantage of the research we've already done for you. Formerly known as Field Guides, References tabs contain links to external articles, titles from the NAR Library eBooks collection, websites, statistics, and other material to provide a comprehensive overview of perspectives on each topic. EBSCO articles (E) are available only to NAR members and require a password.


The Basics

Multifamily Outlook 2016, (Freddie Mac, Feb. 2016).

Multi-family residential, (Wikipedia, Feb. 24, 2013).

Multi-Family Properties: The Basics, (Realty Times, Mar. 24, 2009).

Multifamily Housing, (U.S. Department of Housing and Urban Development, n.d.).

What is MULTIFAMILY HOUSING?, (The Law Dictionary, n.d.).

Top Ten Tips for Landlords

  1. Screen potential tenants using a written rental application
  2. Document the important facts of the agreement with a written lease
  3. Establish a fair system of setting, collecting, holding, and returning security deposits
  4. Stay on top of maintenance and make repairs when requested
  5. Provide secure premises
  6. Provide adequate notice before entering the rental space
  7. Disclose environmental hazards
  8. Choose and supervise your property manager carefully
  9. Purchase liability and other property insurance
  10. Try to resolve disputes with your tenants without lawyers and lawsuits

Source: Top Ten Tips for Landlords, (NOLO, n.d.).

Landlord Investment Tips

  1. Have a property management firm screen your tenants
  2. Require that your tenants have renter's insurance
  3. Make sure your property is protected for vandalism due to the tenant not taking care of the rental
  4. Make sure you have insurance that covers you for fair rental loss
  5. Make sure you have adequate limits of liability

Source: Landlord Beware: Advice to Protect You and Your Investment, (Realty Times, July 18, 2005).

Trends

Luxury 348-Unit Multifamily Community Sells for $72.5 Million in Hot San Fernando Valley Market, (Multifamily Biz, Sept. 22, 2016).

Banks Slow Multifamily Lending Even as GSEs Step on the Gas, (CoStar Group, Aug. 24, 2016).

New Apps to 'Virtualize' Apartments of the Future, (Multifamily Executive, July 26, 2016).

Deal or No Deal: Can Airbnb and Multifamily Firms Work Together?, (Multifamily Executive, Feb. 24, 2016).

Top Five Multifamily Investment Markets, (National Real Estate Investor, Feb. 18, 2016).

Strong Demand from Baby Boomers to Continue to Drive Multifamily Home Construction, (National Association of REALTORS®, Sept. 22, 2015).

Multifamily Energy Retrofits Bring Big Savings, (REALTOR® Magazine, Sept. 4, 2015).

The Top 5 Underserved Multi-Family Markets, (Commercial Property Executive, June 22, 2015).

Investing in Multi-Family Property

NMHC 50 List Highlights Unrelenting Nationwide Demand for Apartments, (National Multifamily Housing Council, Apr. 6, 2016).

Fannie and Freddie Reward Affordable Housing Properties, (National Real Estate Investor, June 23, 2015).

The Case for Investing in Multifamily Housing, (Institutional Investor, May 27, 2015).

Six Reasons Why Investing in Multi-Family Housing is a Smart Move, (Cash Flow Diary, Oct. 2014).

Buying a Multi-Family Investment Property, (Reality Times, Aug. 20, 2014).

Due Diligence: Purchasing Multi-Family Investments, (REIClub, June 20, 2014).

Don't Rule Out Multifamily Investments, (REALTOR® Magazine, May 2014).

Property Management

Tips for Transitioning Apartment Communities into Operational Brilliance, (Property Management Insider, Aug. 1, 2016).

Top 9 Property Management Blogs You Should be Reading, (Updater, May 22, 2016).

How to Start a Property Management Company, (Buildium, Oct. 15, 2013).

How To Manage Your Multifamily Property Manager, (Theresa Bradley-Banta Real Estate Consultancy, n.d.).

Multi-Family Property Management, (Landlord Station, n.d.).

Tips for Buying and Managing Multi-Family Real Estate, (Fidelity Bank, n.d.).

How Do I Manage a Multifamily Housing Complex?, (SFGate, n.d.).

Useful Websites

Marketing and Leasing: Multifamily Properties, (Realtor.org). — NAR’s education matrix.

Multi-Housing News — Provides current news and statistics about the multi-housing industry.

National Apartment Association — A trade association for the apartment housing industry.

National Association of Residential Property Managers® — A trade association for residential property managers.

National Multi Housing Council — Provides a forum for insight, advocacy and action for members and the community.

Property Manager — Sells property management software, and shares perspectives and best practices to help manage your property management business.

Books, eBooks & Other Resources

eBooks.realtor.org

The following eBooks and digital audiobooks are available to NAR members:

The Complete Guide to Buying and Selling Apartment Buildings (Adobe eReader)

The Complete Guide to Real Estate Finance for Investment Properties: How to Analyze and Single-Family, Multifamily, or Commercial Property (Adobe eReader)

Complete Landlord and Property Managers Legal Survival Kit, (Kindle, OverDrive, Adobe eReader),

The Complete Real Estate Encyclopedia, (Adobe eReader)

Every Landlord's Legal Guide (Adobe eReader)

Happy About Apartment Management: 30 Years of Expert Tips and Advice on Multifamily Property Management (Adobe eReader)

Insiders Tips to Operating a Successful Property Management Company, (Adobe eReader).

Multi-Family Millions: How Anyone Can Reposition Apartments for Big Profits, (Adobe eReader).

Opportunities in Property Management Careers, (Adobe eReader).

Property Management Kit for Dummies®, (Adobe eReader)

Property Manager, Community Manager, Real Estate Manager - How to Land a Top-Paying Job: Your Complete Guide to Opportunities, Resumes and Cover Letters, Interviews, Salaries, Promotions, What to Expect From Recruiters and More!, (Adobe eReader).

Rich Dad's Advisors®: The ABC's of Property Management, (Kindle, OverDrive, Adobe eReader).

Streetwise Landlording & Property Management, (Kindle, OverDrive, Adobe eReader).

What Every Landlord Needs to Know: Time and Money-Saving Solutions to Your Most Annoying Problems (Adobe eReader)

Books, Videos, Research Reports & More

The resources below are available for loan through Information Services. Up to three books, tapes, CDs and/or DVDs can be borrowed for 30 days from the Library for a nominal fee of $10. Call Information Services at 800-874-6500 for assistance.

Principles of real estate management, (Chicago, IL: Institute of Real Estate Management, 2011). HD 1394 In7rm

The completeLandlord.com ultimate real estate investing handbook, (Hoboken, NJ: Wiley, 2009). HD 1382.5 L49

Buy it, rent it, profit! : make money as a landlord in any real estate market, (New York, NY: Simon & Schuster, 2009). HD 1394 C39

7 Secrets to Successful Apartment Leasing: Find Quality Renters, Fill Vacancies, and Maximize Your Rental Income, (Chicago, IL: McGraw-Hill, 2006). HD 1384 C91

Every Landlord's Legal Guide, (Chicago, IL: Nolo, 2006). HD 1394 St4e

Complete Guide to Buying and Selling Apartment Buildings, (Chicago, IL: John Wiley & Sons, 2005). HD 1377 B46

Practical Apartment Management, (Chicago, IL: Institute of Real Estate Management, 2005). HD 1394 In7pr Ed. 5

The New No-Nonsense Landlord: Building Wealth with Rental Properties, (New York, NY: McGraw-Hill, 2003). HD 1394 J76


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The inclusion of links on this page does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.

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