Will Fannie & Freddie Always Be There for Apartment Owners?

By Michael Kelly
President of Caldera Asset Management

Historically there have been very few “certainties” that we live by in the apartment business. One “certainty” has been the existence of Fannie & Freddie providing attractive financing for the acquisition and refinancing of apartment communities. As Congress struggles with the debt ceiling debate and budget issues, the markets have started to reconsider another of the lifelong investment “certainties” of a U.S. Treasury Triple “A” rating. This made us think about what an apartment world would look like if the apartment side of Fannie /Freddie were downsized in an overall Government budget reduction. We fully believe that the Agencies will be in the market for some percentage or with some smaller backstop, however, they may not always be the 900 pound gorillas as they are now.


> Click to Continue

Even though there are very few new apartment communities being built, the supply of rental products continues to grow due to investors buying up blocks of foreclosed single family homes. They subsequently rent them to people who would have historically needed to rent in typical apartment communities. This has brought a diverse group of investors into this field, including a business associate of ours who buys foreclosed single family homes at an average of 40 units per month, and rents them out.

> Click to Continue