Freddie Mac officially entered the single-family rental space this week as Berkadia announced the closing of the very first affordable single-family rental financing through Freddie Mac Multifamily for TrueLane Homes, a leading owner of single-family rental homes.
The financing totalled $11,092,000 for a 10-year, fixed-rate loan secured by 195 homes and a duplex. The homes were located in nine different metros and six different states. The financing also stands out due to the fact that all of the units are affordable for families earning at or below 100 percent of the median income. For families earning at or below 80 percent of the median income, that affordability percentage is still over 90 percent.
Anthony Cinquini, Managing Director at Berkadia, said, “The single-family rental space has a gap in liquidity and affordability, which Freddie Mac is well-positioned to fill as evidenced by this transaction. We’ve been working closely with our partners at Freddie Mac to devise a lending platform that applies the discipline of our multifamily lending standards to single-family home rentals. This includes detailed and thorough underwriting of the borrowers and homes at origination and throughout the term of the loan, which promotes the long-term sustainability of the rental homes.”
The single-family rental market is poised for growth going forward, with a Harvard University study reporting that 53 percent of households earning less than $35,000 rent their housing, and that that number increases to over 60 percent for households earning less than $15,000. According to that same Harvard study, single-family homes now account for 39 percent of the nationwide rental stock. However, the continued lack of affordable housing on both the purchase and rental sides of the equation is creating opportunities for the savvy investor.
David Leopold, VP Targeted Affordable Sales & Investments at Freddie Mac Multifamily, said, “We’ve said from the beginning that the goal of our single-family rental pilot is to increase the availability of affordable rental housing in communities across the country, and this transaction does exactly that. All of the homes in this transaction will remain affordable for working families, with over 90 percent affordable for low- and very-low income families.”
Berkadia was the first Freddie Mac seller or servicer to obtain the National Single Family Rental Designation from Freddie Mac Multifamily. The designation allows Berkadia to sell and service loans secured by single-family rental properties nationwide to Freddie Mac. This is the first such transaction.
“We support the local community by investing capital to rehabilitate affordable single-family rental homes in working-class markets,” said Alan True, Founder and CEO of TrueLane Homes. “The deep knowledge of affordable housing at Freddie Mac and Berkadia and their mission to encourage borrowers like us to continue to provide housing to working-class individuals will impact the industry for years to come.”
Investors interested in the single-family rental market should take note of Five Star’s 2018 Single-Family Rental Summit, set to unfold March 19-21, 2018, at the Renaissance Nashville Hotel in Nashville, Tennessee. The three-day Summit will feature top subject matter experts and skilled SFR practitioners leading discussion panels and training sessions related to property acquisition and management, financing, strategies for small, mid-cap, and large investors, and new developments related to technology and professional services. You can find more information by clicking here.