The biggest change has been the preference for assumable loans for buyers and borrowers, particularly since lock-in rates for the long term have virtually disappeared and lender changes at the 11th hour are becoming more widespread, according to local professionals. Jonathan Morris, president of Dallas-based BMC Capital LP, says "borrowers don't want to take out loans that aren't assumable because it could get worse." And almost always these days, he says borrowers are asking if loans have assumable components, a question that often didn't arise before.

The only word of caution is "lenders have the right to qualify," Morris adds. "Lenders are looking very carefully at who's taking over that debt. It's not just an assumption as it used to be."

Peter Harnett, associate partner for Hendricks & Partners in Dallas, has hawked a 136-unit asset, shackled by an assumable $2.7-million loan, which was on the market nearly a year and lost three contracts on the road to a closing. Timber Ridge Apartments at 1405 Elite Circle in Arlington ultimately was bought by Ocho Flores Inc. of San Jose, CA. The winning contract came after Parodi Timber Ridge Ltd. of Alameda, CA cut $105,000 from the ask.

Hartnett says the assumable loan--a deal requirement--kept would-be buyers at bay until recently. By then, the new owner was well into the assumption process.

"An assumption used to be not preferred," Hartnett tells GlobeSt.com. "Now, they are almost easier to get done because of the new difficulties in getting debt these days. Lenders are not able to re-trade and spreads are not fluctuating." Another incentive for an assumable loan, he says, is lenders have stopped locking in interest rates weeks in advance of closings.

"A real estate broker has to become a mortgage broker too," Hartnett says, explaining why some professionals prefer to steer clear. "But, I'm finding assumptions are kind of the thing right now."

Timber Ridge's new owner got an 88%-leased complex with value-add in a moderate rehab and the most gain from bringing in a fee-management group to replace the California seller's private overseer. The class C-plus complex's 13 buildings, built in 1980 on 4.2 acres, are filled with one- and two-bedroom units averaging 665 sf. Monthly rents average $467.

The assumable loan has a 30-year term and 6.25% fixed-rate interest. And by Hartnett's calculation, the pro forma is 9.81%. Concessions were burning off as the deal pushed toward the closing table, he explains. "Just getting the occupancy up and professional management in there, he's going to do well with this," he predicts.

Irvine, CA-based Bascom Group, reaching 9,000 units in Dallas/Fort Worth, bought the 320-unit Warwick Apartments at 3330 Webb Chapel extension in the Bachman Lake area of west Dallas. An assumption wasn't the hurdle to clear, but the capital markets' turmoil did play into with the deal.

Just three weeks before the closing, a lender backed out due to its deep ties to the CDO market. Ryan Akins, Bascom's regional director in Dallas, says Capmark Finance Inc. stepped in, allowing the deal to close without a hitch.

"The debt market's current inability to price risk coupled with the serious deferred maintenance at the property led our first lender, who was dependent on the CDO market, to back out at the 11th hour," Jerry Hess, Bascom's acquisitions manager, says in a press release. "Ed Zimbler, Adrienne Miller and McKay Major at Capmark, our most active and dependable lender in Texas, were able to step in at the last minute and close the deal irrespective of the turmoil in the debt market."

Bascom spent $4.8 million or $15,000 per unit to acquire the 6.83-acre Warwick Apartments, also a 1980s-era project, and will pump another $3.2 million into upgrading it and addressing deferred maintenance. The 11-building, class B complex, bought from CWCapital LLC of Dallas, has 318 one-bedroom units and a pair of two-bedroom apartments for a 528-sf average. Monthly rents are $422, which Bascom estimates can be hiked 13% in the first year, post-renovation. At closing, Warwick was 68% leased in a submarket, where 90% or more is the norm.

Akins believes the capital markets upheaval will translate into more opportunity for him. "Because less qualified buyers will be shut out of the market, there's going to be an opportunity for buyers like Bascom to step in and acquire properties at a lower price," he says.

Akins says Bascom isn't averse to loan assumptions, but it all boils down to interest rates: it has to be lower than what his team can achieve with its usual floating-rate bridge financing. "For buyers who are driven by leveraged deals, assumable financing doesn't look any more attractive than it did two months ago," he adds. "For a company like Bascom with strong relationships and strong balance-sheet lenders, we don't really have to change anything we're doing. Smaller shops with less attractive track records are going to have trouble finding attractive financing."

Apartment Realty Advisors' Chris Epp, vice president of the four-month-old Private Client Services Group, says there are now "premiums being placed" on deals with assumable loans. "It's good to know what you're getting your hands on," he adds.

ARA Dallas founder Brian O'Boyle set up the new group, with Epp at the helm, to focus on properties with 150 units or less. "Brian saw a ton of opportunity in that market to catch market share for ARA," Epp says. So far, the group has picked up nearly 700 units in eight listings and closed two sales as inroads into the class B and class C multifamily sector, where Hartnett and Bascom's team excel.

Epp says the capital markets' upheaval didn't factor into its second closing because the Cerritos, CA-based buyer inked an off-market deal on an all-cash basis in just three days. In working a $5.6-million listing for the 206-unit Clusters Apartments at 3130 Webb Chapel extension, he sold the 72-unit second phase at 3202 and 3202 Norwalk St. and 3222 Community Dr. to one of his prospects. Cramer Properties Inc. of Dallas is the seller of the mid-1980s development.

Key to the fast-paced decision was "it was an integral piece to his portfolio," Epp says of the 90%-leased asset, all one-bedroom units.

"We are still seeing continued demand for multifamily properties. The deals that are under contract, with money hard and financing approved are going to happen," Epp says. "It will be interesting to see what happens three months down the road with deals that we're currently marketing."

Hartnett estimates half of his listings are now carrying assumable loans. The key to a "successful assumption," he explains, is an equity requirement of 20% or less and "a rate commensurate with what's currently going on in the market."