New Programs Might Benefit Smaller Investors

National Real Estate Investor recently reported that Fannie Mae and Freddie Mac are initiating programs which provide long-term financing for smaller investors in single family home rentals.

As investors consolidate their portfolios, agency lenders are there to help. Fannie Mae and Freddie Mac have both announced programs that provide long-term financing at competitive interest rates to help investors refinance and acquire SFR properties—in some cases potentially building up portfolios large enough to attract the interest of the largest companies, like Invitation Homes or American Homes 4 Rent.

Investors of all sizes have been expanding their portfolios of single family rentals recently and the newly announced programs from Fannie and Freddie are likely to help drive that trend forward.  Some experts cited in the National Real Estate Investor article refer to the programs as a “game changer” because among other things, they allow owners of smaller portfolios to find financing with competitive fixed interest rates and terms as long as 10 years.  Previously these kinds of investors had to rely on bank loans with shorter terms and higher interest rates.

The New York Times reported last year that “Freddie Mac wants to provide tens of millions of dollars in financing to midsize landlords…”

In all, Freddie Mac could provide up to $1 billion in financing or loan guarantees to smaller firms that buy single-family homes and operate them as what it considers affordable-housing rentals, a company official said in an interview. Some nonprofit housing groups might also be eligible for financing.

If you are a smaller to mid-size real estate investor that is interested in single family homes, perhaps you should investigate these new programs more closely to see if they fit your situation and help you reach your goals.

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