California · Multifamily
California multifamily financing.
Bridge, construction, renovation, and stabilized debt for apartment buildings across Los Angeles, San Francisco Bay Area, San Diego, Sacramento, and Orange County. Business-purpose financing from $1M to $50M+.
By David Hodara ·
6+
Active metros
$1M-$50M+
Loan range
Stabilized
Pre-1995 units in LA/SF
7-14 days
Typical bridge close
California multifamily market context
California is the largest multifamily market in the US by total stock and one of the most complex from a financing perspective. Rent control (Costa-Hawkins exemptions, AB 1482 statewide cap, local ordinances in LA, SF, Oakland, San Jose), high property taxes effectively capped by Proposition 13 mechanics on long-held assets, and seismic compliance all shape underwriting.
California multifamily lenders price for rent control exposure (units built before 1995 are subject to local stabilization in many cities), tenant protection regulations (just-cause eviction, relocation assistance), and the recent slowdown in net domestic migration. Class A new construction has slowed; value-add and existing stabilized are the most active segments.
Typical loan products for California multifamily
Each deal gets routed to the product structure that fits. Most multifamily deals in California use one of the following.
Bridge loans
Short-term financing to acquire, reposition, or stabilize an apartment building before refinancing into permanent debt. 7-10 day close, 8-12% IO, up to 80% LTV.
Construction loans
Ground-up multifamily development financing with draw schedule tied to milestones. Up to 85% LTC, 12-24 month terms.
Renovation loans
Acquisition + rehab in a single facility for value-add multifamily. Up to 90% of purchase price and 100% of rehab cost.
California multifamily FAQ
How do California rent control rules affect multifamily underwriting?
Pre-1995 units in cities like LA, SF, Oakland, and San Jose are subject to local rent stabilization with annual increase caps (often 3-8%). AB 1482 caps statewide rent increases on most other rental units. Lenders underwrite with the actual rent cap structure, which materially limits NOI growth assumptions vs. Sun Belt comparables.
What's typical leverage on California multifamily bridge?
70-75% LTV on stabilized, 65-70% on value-add or transitional. Coastal markets (LA, SF, San Diego) typically price tighter than inland (Sacramento, Inland Empire). Rent-controlled properties may price 5-10 bps wider due to NOI growth limits.
How does Proposition 13 affect property tax in multifamily underwriting?
Proposition 13 caps annual assessment increases at 2% on long-held properties, creating a tax basis disconnect when properties trade. New buyers see assessments reset to market value, often a 30-50%+ step-up in property tax. Lenders underwrite to the new assessed value, not the seller's historical tax bill.
Are seismic retrofit requirements relevant for California multifamily lending?
Yes, especially in LA (mandatory soft-story retrofit ordinance) and San Francisco (mandatory wood-frame soft-story retrofit). Lenders verify compliance status pre-close and may require retrofit reserve holdbacks on properties that haven't completed required upgrades. Construction lenders increasingly require seismic risk assessments on new development.
Other California asset classes
Got a California multifamily deal? Send it over.
Term sheet inside 48 hours, or a fast no so you can move on. Business-purpose CRE financing only.