Current and upcoming transactions in Northern California suggest rental property owners are preparing for or beginning a wave of refinancing, as low vacancies drive strong performances.
Rent growth has reached 6 percent for some standard properties in the region, Marcus & Millichap reports, as some higher-quality housing outperforms 2007 rent levels, according to GlobeSt.com.
“The market is extremely tight and cap rates are very aggressive for both stabilized assets and for value-add properties,” a Marcus and Millichap spokesperson told the news source. “Owners with loans coming due in the next two years or less are looking to refi now and are realizing that if rates move up more than 30 or 40 bps, it is well worth paying the prepay penalty to refi now.”
Investors may be able to refinance into low rates in the current conditions, the news source notes, although those same circumstances mean competition in the area may be significant. Rental managers, in the meantime, should benefit from the rent growth being experienced, which suggests the multifamily competition may not be meeting all the area’s rental housing demand.