After a decade of favorable conditions, multifamily investors are facing a new reality in 2025. Fantastic rent growth and low interest rates led to a market investors could capitalize on. Now, financing has become a more mature conversation, guided by a different set of rules and a greater focus on creative structuring and risk mitigation.
That’s according to Syeda Hashmi, senior director at Walker & Dunlop’s small balance group. “We refer to the last two years as the ‘great tightening,’” says Hashmi. She says that understanding these shifts can help multifamily investors make smarter moves in the months ahead.
A More Strategic Use of Debt
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According to Hashmi, many small operators entered the market during a period of rapid growth, making moves and leveraging equity based on instinct. However, that approach no longer works in the current environment, which includes softening rent growth and $900 billion in upcoming loan maturities.
“We’re not operating in an environment where growth is riding shotgun anymore,” says Hashmi. “It’s a totally new playbook, and one of the biggest shifts I see is operators hedging their risks. They’re passing up deals because the metrics just don’t make sense to them.”
Hashmi says this is especially true in markets like Los Angeles, where many seasoned operators have built sizable portfolios and are used to buying during downturns. These investors, often working with simple capital stacks made up of personal or family equity, are now saying no to many deals.
“The end goal for the foreseeable future is risk management rather than growth,” she says. “Investors are asking, ‘Can I make money on this in five years?’ and often deciding they can’t.”
She also notes that many borrowers want to talk about optionality—in other words, how easy it is to get out of a loan in the future—because no one really knows where the market is headed.
Fixed-Rate Debt and Affordable Housing Incentives Gain Momentum
Fixed-rate debt has recently gained new traction. Hashmi notes that interest in longer-term financing has increased since last year’s election cycle, as borrowers look for stability in an uncertain environment.
She also explains there’s growing awareness around affordability-driven incentives through agencies like Fannie Mae and Freddie Mac. In high-cost markets such as Los Angeles, developers are using zoning tools like density bonuses and adding more affordable units to unlock rate reductions.
“Over the past couple of years, I’ve had a handful of borrowers who really understand this strategy and have written it into their playbook,” says Hashmi. “And really, it’s a double win; good for the borrower and the community.”
However, if there’s one theme that has defined the past two years, it’s that financing conversations are shifting, Hashmi says. Investors are spending more time thinking about their exit, scrutinizing risk, and choosing lenders with a long-term view. Moving forward, that advisory partnership will play an even bigger role, as multifamily investors look for insight into what’s ahead and when it makes sense to be more cautious.
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