Tag Archives: MultifamilyInvesting

Why Slower Rent Growth Doesn’t Mean the End of Multifamily Investing

by: Adam Horowitz

The U.S. multifamily market, once the golden child of commercial real estate, is entering a new phase in 2025. After years of rapid rent growth, the pace has slowed. National averages show rents flattening or even declining in some overbuilt markets. The culprits are clear, a surge of new supply in key metros, rising affordability pressures for renters, and more cautious household formation in the face of economic uncertainty. For value-add investors, who often rely on rent increases to power returns, this shift requires a recalibration. The opportunity is still there, but success now demands sharper strategy, disciplined underwriting, and creative capital solutions.

Capital markets have also turned more challenging. Debt is more expensive, lenders are cautious, and equity partners are scrutinizing deals with greater intensity. Sponsors pursuing value-add plays are finding capital stacks harder to assemble, especially when projected rent growth is modest. This is precisely where Lever Capital Partners can provide an edge. Lever specializes in helping sponsors structure financing solutions tailored to today’s environment, including senior loans, preferred equity, rescue capital, and bridge debt. With deep relationships across private credit funds, non-bank lenders, and institutional investors, Lever delivers not just capital access but also strategic guidance on structuring deals that align with the current risk climate. Whether it is filling a capital gap on a repositioning deal or securing equity for a complex turnaround, Lever helps sponsors navigate today’s more selective and sophisticated capital landscape.

Despite the slowdown in rent growth, opportunities remain, but they are more market and asset specific than ever. Sunbelt markets like Austin, Phoenix, and Atlanta, which absorbed a flood of new deliveries in recent years, are seeing softening rents. In contrast, Midwest cities and certain urban infill locations with limited new supply are holding up better. For value-add investors, the key is to shift focus from relying purely on rental upside to identifying properties where operational improvements, repositioning, or expense management can drive value. Upgrading amenities, improving tenant retention, and enhancing management efficiency are strategies that can deliver returns even when rents are stable. In today’s environment, true value-add means more than riding market momentum, it requires hands-on execution.

Winning capital and closing deals in 2025 will depend on how well sponsors adapt to these new realities. Lenders and investors are demanding conservative underwriting assumptions. Rent growth projections must be realistic, exit cap rates stress tested, and business plans credible. Sponsors who can demonstrate a clear, operational path to improving net operating income (NOI) rather than simply banking on market appreciation will stand out. Moreover, capital providers are looking for meaningful sponsor equity and a track record of execution, not just financial engineering. Deals must be structured with alignment between sponsor and capital partner, and offers must come with certainty of closing. In this environment, having a vetted network of capital partners and an advisor like Lever Capital can make the difference between winning and losing competitive or distressed bids.

The multifamily sector remains a cornerstone of CRE investment, but the playbook has shifted. For value-add investors, the path to returns is now through disciplined underwriting, selective asset and market targeting, and creative, well-structured capital stacks. Lever Capital Partners stands ready to help sponsors meet this moment, providing not only access to capital but also the strategic structuring expertise required in today’s slower growth market. Those who adjust their strategies to the current landscape and partner with the right capital advisors will find that opportunity still exists, even amid the cooling rents. In fact, for those prepared to adapt, this period may prove to be the foundation for the next cycle of outperformance.

Multifamily Real Estate Is Changing FAST – Here’s How to Profit in 2025!

by: Adam Horowitz

The multifamily real estate sector in 2025 presents both challenges and opportunities. Investors must navigate financial distress, shifting rent trends, and evolving market dynamics. However, those who take a strategic approach can capitalize on emerging opportunities and position themselves for long-term success. This article explores the key factors influencing multifamily investments this year—why to invest, what to consider, where to focus, and when to act.

Partnering for Success in Multifamily Investment

At Lever Capital Partners, we understand the complexities of today’s housing market. As industry leaders in multifamily financing, we provide tailored solutions to help investors, developers, and property owners navigate market fluctuations with confidence. Whether you’re acquiring new properties, developing rental communities, or optimizing your portfolio, our expertise ensures you secure the most competitive financing for long-term growth.

Why Invest in Multifamily in 2025?

The multifamily sector is experiencing significant financial distress, which presents both risks and opportunities. Community banks have reported a 12-year high of $6.1 billion in delinquent loans, while the CMBS multifamily distress rate has climbed to 12.9% as of January 2025. Although acquiring distressed properties at deep discounts is not always straightforward, these conditions indicate a market where well-researched investments can yield strong returns.

Despite short-term volatility, multifamily properties remain a resilient asset class. Rising demand, improving affordability, and strong long-term fundamentals continue to make them attractive to investors.

Key Considerations for Investors

With an increasing supply of multifamily properties hitting the market in 2025, competition is intensifying. This may lead to stagnating rents in some areas, making market selection more critical than ever. Investors must conduct thorough research to identify locations where demand outpaces supply. Additionally, higher interest rates impact borrowing costs and deal structures, making strategic financing essential to maximizing profitability.

Top Markets for Multifamily Investment

Selecting the right markets is crucial for optimizing returns. Some of the most promising cities include:

  • Chicago, IL – Affordable pricing, a diverse economy, and a large population base create long-term stability.
  • San Diego, CA – High rental demand and a limited apartment supply ensure steady market conditions.
  • Columbus, OH – Affordable investment opportunities and ongoing infrastructure improvements enhance its market appeal.
  • Austin, TX – A booming tech economy and rapid population growth continue to drive rental demand.
  • Indianapolis, IN – Strong job growth and an affordable housing market make it an attractive investment choice.
  • Boston, MA – Economic stability is reinforced by key industries in education, healthcare, and technology.
  • Southwest Florida – Rapid population growth fuels sustained rental demand, particularly in key coastal cities.
  • Baltimore, MD – A strategic location and economic diversification create compelling investment opportunities.

When to Invest: Timing the Market for Maximum Returns

Several key indicators suggest that 2025 could be an ideal time for multifamily acquisitions:

  • Continued Demand Despite Increased Supply – While new developments are entering the market, strong demand persists in key areas, supporting rent growth and occupancy rates.
  • Improved Rent Affordability – Rent affordability has increased over the past 18 months, making multifamily housing more accessible to tenants.
  • Stable Employment Rates – With unemployment remaining below 5%, rental income streams are expected to remain steady.
  • Favorable Interest Rate Outlook – The 10-year Treasury yield and federal funds rate are expected to stabilize near 4% by the end of 2026, creating a more predictable financing environment.

Seizing Opportunities in the 2025 Multifamily Market

By staying informed on market conditions, selecting high-growth locations, and strategically timing acquisitions, investors can unlock the full potential of the multifamily sector in 2025.

For those looking to maximize opportunities in this evolving landscape, Lever Capital Partners offers expert guidance and tailored financing solutions to ensure long-term success.

Will Renting Still Be More Favorable Than Buying Across Major Metros by the End of 2025?

by: Kayla Refoua

As housing affordability remains a pressing issue in the U.S., many prospective homeowners are reevaluating whether buying a home is still within reach—or if renting will continue to be the smarter financial choice. With home prices, mortgage rates, and wage growth increasingly out of sync, renting is likely to remain the more viable option for many Americans in major metropolitan areas through the end of 2025.

At Lever Capital Partners, we recognize the challenges and opportunities presented by today’s housing market. As experts in the multifamily sector, we provide tailored financing solutions that empower investors, developers, and property owners to navigate the evolving real estate landscape. Whether you’re acquiring new properties, developing rental communities, or optimizing your investment portfolio, our strategic approach ensures you secure the most competitive financing for long-term success.

Affordability Challenges: Rising Home Prices and Mortgage Rates

The cost of buying a home has climbed beyond what the average household can afford. The median home price now exceeds affordability levels by more than $70,000, making homeownership increasingly difficult. This issue is compounded by:

  • High Mortgage Rates: While interest rates may stabilize or decline in 2025, they are still significantly higher than the ultra-low rates seen in previous years.
  • Housing Supply Shortages: A lack of available homes, particularly starter homes, continues to drive up prices.
  • Rising Construction Costs: Increased material and labor costs make building new homes more expensive, limiting supply expansion.

These factors have led to a significant decline in housing affordability. In 2019, 94% of U.S. counties had homeownership options within reach of median-income households. By 2024, that number had dropped to just 63%. Without a major shift in supply or affordability, many potential buyers will remain priced out of the market.

Renting: A More Practical Choice for Many

While buying a home is often seen as a long-term financial investment, renting continues to offer several advantages in the current economic climate:

  • Lower Upfront Costs: Unlike homeownership, which requires a large down payment and closing costs, renting typically demands a lower financial commitment.
  • Flexibility: Renters have the freedom to relocate without the burden of selling a home, which is especially valuable in uncertain economic times.
  • Less Financial Risk: With rising property taxes, insurance costs, and maintenance expenses, renting can provide more financial predictability.

Even if mortgage rates decline slightly, home prices remain high, making it difficult for many renters to transition into homeownership. As a result, the demand for rental properties—especially in urban centers—will likely remain strong.

How Investors and Lenders Are Responding

The shift toward renting is not going unnoticed by real estate investors and financial institutions:

  • Investors are focusing on multifamily housing as rental demand stays high, particularly in expensive metropolitan areas where homeownership is out of reach for many.
  • Lenders are introducing new mortgage products to attract buyers, anticipating opportunities when affordability improves. However, until housing supply increases, these efforts may have limited impact on shifting renters into homeownership.

By the end of 2025, renting is expected to remain the more favorable option for many individuals, particularly in major metropolitan areas where home prices continue to outpace wage growth. While homeownership will always be a long-term goal for some, economic conditions suggest that renting will still be the more practical and affordable choice for a significant portion of the population.