Lending on SFRs vs traditional MF

Looking at Debt Yields for recent Single-Borrower SFRs vs some Freddie Mac MF securitizations and the Debt Yields on the SFRs are much lower than the traditional MF deals. 

I'm talking about sub-5.00% vs. ~7.00% 

Can someone explain why investors are willing to accept much lower DYs on SFR deals than good ole Freddie Mac K-deals, which are like the lowest risk RE deals that exist and have proven track records through multiple downturns???

Comments (4)

Mar 9, 2022 - 3:02pm
Alt+A+W+G, what's your opinion? Comment below:

Investors in SFRs can easily get 4%/30-yr money.  That's not different than MF or SF detached financing.  

The underwriting is virtually identical other than you might have the option of selling SFRs off as SF detached homes.  

I even called KBRA analyst and asked this same question.  Their best answer was investors like the granularity of SFRs b/c there's not 10-20 very big transactions that make up the vast majority of the typical MF CMBS pool.  While I get what they're saying, I don't see how that should change the underwriting and allow more leverage on SFR deals than MF

Sep 22, 2022 - 12:46pm
I quit this site because of censorship, what's your opinion? Comment below:

Officiis et optio quia ducimus repudiandae provident. Veniam qui repellat reiciendis enim.

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