Source: Boston Real Estate Investors Association
If tenants don’t apply to have records sealed, they will still be publicly available.
A new law was recently signed by Governor Healey in Massachusetts that aims to protect tenants from the negative impact of eviction records. This law, part of the Affordable Homes Act, allows tenants to seal certain eviction records from public view and prevents these records from appearing on credit reports. It will come into effect on May 5, 2025.
What This Law Means for Tenants and Landlords
The goal of the law is to help tenants find housing without being blocked by past eviction records, which can be caused by financial difficulties. Tenant advocates believe this will reduce housing discrimination, but landlords are concerned. They often rely on eviction records as a key part of tenant screening and fear this change could make it harder to assess renters. Some landlords may respond by requiring higher credit scores or income levels for applicants.
Under this new law, the tenant has to take action to get their eviction record sealed. If they don’t apply to have it sealed, it will still be publicly available. But once a tenant does apply, the process of sealing the record is quick and easy, and landlords might not even know the record was sealed.
Different Rules for Different Types of Evictions
Here’s how the law handles different types of eviction cases:
No-Fault Evictions
A no-fault eviction happens when a tenant is evicted for reasons unrelated to their behavior, such as when a landlord decides to sell the property. In these cases, tenants can apply to have their record sealed. If the landlord doesn’t object within seven days, the court will approve the request without a hearing.
Non-Payment of Rent
For cases where tenants were evicted for not paying rent, they can apply to seal their record if they have had no evictions in the last four years. The tenant also needs to prove that financial hardship was the reason for the non-payment. Again, the landlord has seven days to object, and if they don’t, the court will automatically seal the record.
Evictions for Serious Issues (At-Fault Cases)
Evictions involving serious lease violations, such as criminal activity or property damage, are called at-fault cases. Tenants can apply to have these records sealed if they have been eviction-free for seven years. If the landlord doesn’t object within seven days, the court will typically seal the record. For certain criminal-related evictions, the court will need to hold a hearing to make sure sealing the record doesn’t compromise public safety.
Dismissed Cases or Tenant Wins
If a tenant wins the eviction case or the case is dismissed, the tenant can immediately apply to seal the record. The court will seal the record without notifying the landlord or holding a hearing.
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Impact on Credit Reporting Agencies
This law also imposes new restrictions on credit reporting agencies. They will no longer be able to include sealed eviction records in their reports. Additionally, if an eviction record is not sealed but is still included in a report, the agency must specify the type of eviction, whether it was no-fault, non-payment, or for cause. These changes will make it difficult for credit agencies to report eviction information accurately, and many may stop reporting eviction records altogether in Massachusetts.
Changes to Rental Applications
Landlords in Massachusetts will now have to include a new disclosure in their rental applications. This allows tenants with sealed eviction records to legally answer “no record” when asked about evictions.
What Happens Next?
The law won’t be in effect until May 2025, giving the courts and credit reporting agencies time to adjust to these new rules. Landlords and rental agents will also need to update their processes. There’s still some uncertainty about how the law will be enforced and how smoothly things will run once it’s live, but for now, this new law represents a major change in tenant rights in Massachusetts.
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Why Multifamily Syndication is Perfect for Generational Wealth
As high-net-worth individuals and families think about building generational wealth, they are looking for ways to create a legacy that spans decades. With the largest wealth transfer in history currently underway—estimated at $68 trillion over the next 25 years—today’s investors are exploring ways to diversify their portfolios beyond traditional stocks and bonds.
While single-family real estate and commercial assets are common choices, multifamily syndication is emerging as a powerful vehicle for creating long-term financial stability for future generations.
Multifamily syndication allows passive investors to pool their resources and invest in large real estate assets without the complexities of property management. This strategy not only offers impressive returns but also provides significant tax advantages, steady passive income, and scalability—key factors for those looking to build a lasting financial legacy.
Here’s why multifamily syndication is the ideal choice for those looking to secure generational wealth.
Why Multifamily Syndication is Perfect for Generational Wealth
1. The Largest Wealth Transfer in History
Over the next few decades, the U.S. will experience the largest inter-generational wealth transfer in history, with Baby Boomers passing down trillions in assets to Gen Xers and Millennials. As younger generations inherit this wealth, many are looking for new, strategic ways to grow and preserve it. Multifamily syndication fits perfectly within this context, offering a secure, scalable investment opportunity.
Unlike volatile stock markets, multifamily properties offer stable, consistent returns. These assets are less susceptible to the sharp fluctuations seen in traditional investments, making them ideal for those looking to protect their wealth for future generations. Rental income provides reliable cash flow, while the long-term appreciation of the properties increases the value of the investment over time.
2. Passive Income and Professional Management
One of the biggest draws of multifamily syndication is its tax efficiency, which is a significant advantage over traditional investments. Here are some key tax benefits:
- Depreciation: Investors can claim depreciation on the property’s value, which can offset the rental income and reduce taxable income.
- 1031 Exchange: Syndication allows for a 1031 exchange, where investors can defer capital gains taxes by reinvesting the proceeds from one property into another. This process can be repeated indefinitely, enabling your wealth to grow tax-deferred over multiple generations.
- Stepped-Up Basis: When you pass a property to your heirs, they benefit from a stepped-up basis, meaning the property’s tax basis resets to its market value at the time of inheritance. This drastically reduces the capital gains tax burden for your heirs if they choose to sell the property.
These tax strategies enable you to grow your wealth efficiently and ensure that a significant portion of the returns can be passed down to future generations, free of large tax penalties.
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3. Stability and Appreciation in the Multifamily Sector
Multifamily assets offer a compelling combination of stability and long-term appreciation. Rental properties, particularly those in growing markets, have a history of appreciating in value over time. As demand for housing remains strong, multifamily real estate continues to be a reliable investment that both provides immediate returns and appreciates steadily over time.
This stability is particularly important in times of economic uncertainty. People will always need a place to live, and multifamily assets benefit from a diverse tenant base that reduces risk. For investors thinking about legacy planning, this steady appreciation and reduced volatility make multifamily syndication a much more attractive option compared to riskier commercial real estate or the unpredictability of stock markets.
4. Diversification and Scalability
Multifamily syndication also offers an opportunity to diversify your portfolio. By participating in syndications across different geographic regions and property types, you can reduce exposure to localized risks. Moreover, syndications allow you to invest in large, institutional-grade assets that would typically be beyond the reach of individual investors. This scalability means you can build a substantial portfolio of real estate assets without the need for direct management.
By diversifying your investments, you protect the wealth you’ve built, ensuring that future generations benefit from a well-rounded, resilient portfolio.
The Future of Multifamily Investing: Preferences Are Changing
It’s not just about financial returns anymore. As Gen X and Millennials inherit wealth, they are bringing new preferences to the investment landscape. Today’s younger investors are interested in impact investing—they want their money to make a difference beyond profits. Multifamily syndications offer the perfect balance between financial returns and social impact, particularly when investing in affordable housing or sustainable real estate developments.
With Millennials showing increased interest in alternative investments, including real estate, multifamily syndications are well-positioned to cater to the needs of a new generation of investors who value both financial growth and positive societal impact.
Final Thoughts
As the landscape of wealth management evolves, multifamily syndication stands out as one of the most effective ways to build generational wealth. Its combination of passive income, tax efficiency, and long-term stability makes it an ideal investment for high-net-worth individuals looking to create a lasting legacy.
By leveraging multifamily syndications, you can secure your family’s financial future, ensuring that the wealth you’ve built continues to grow and benefit future generations. Whether you’re planning for your children, grandchildren, or beyond, multifamily syndication offers the perfect pathway to long-term financial security.
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By Patrick Marin-Finn
Securing a commercial loan for an apartment building can be a complex process, but understanding the typical requirements that banks look for can help streamline your application and increase your chances of approval. Whether you’re a seasoned investor or just entering the commercial real estate space, meeting the specific criteria set by commercial lenders is crucial to securing financing. Here are some of the most common requirements banks have for lending on apartment buildings.
1 Property Type and Purpose
The first consideration for any commercial loan is the type of property being financed. Banks typically focus on well-maintained, income-producing buildings. The loan application will be evaluated based on the property’s ability to generate consistent rental income, which serves as the primary source of repayment. In addition to the property’s size, banks will evaluate its
location. Properties in high-demand rental markets or areas with strong economic fundamentals are seen as less risky investments for lenders, which may also lead to more favorable loan terms.
2 Down Payment / Equity Requirements
One of the major factors commercial banks consider when lending for apartment buildings is the borrower’s equity contribution. This down payment, also known as the equity investment, is seen as a sign of the borrower’s commitment to the investment. Some banks may adjust these requirements depending on the borrower’s experience and the specific characteristics/income of the property.
3 Liquidity Requirements
In addition to the down payment, commercial banks often require borrowers to have a certain level of liquidity on hand. This ensures that the borrower can cover unexpected costs, such as repairs, vacancies, or other financial setbacks, during the loan’s term. As a rule of thumb, banks typically expect borrowers to have liquid assets equal to around 10% of the loan amount available. This liquidity requirement helps mitigate the risk of default in the event of unforeseen issues that might impact the property’s cash flow. For example, if you are securing a $5 million loan, you might need to have $500,000 in liquid reserves, such as cash, stocks, or other easily accessible assets. Having sufficient liquidity demonstrates financial stability and reassures lenders that you can manage the property effectively.
4 Experience in Real Estate
Commercial lenders place significant importance on the borrower’s experience in real estate investment, particularly when dealing with multifamily properties. Lenders are more likely to approve a loan for an investor with a proven track record of managing similar properties successfully. This includes experience in acquiring, managing, and operating apartment buildings. If you’re a new investor, banks may still lend to you, but you might need to bring on a more experienced co-investor or property manager to strengthen your application. Lenders will also evaluate the level of management expertise you have in place for the property. Having a reputable property manager or management company can be a key factor in getting the loan approved.
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5 Creditworthiness and Debt Service Coverage Ratio (DSCR)
Your credit score is another critical element in securing a commercial mortgage. While commercial loans are generally based more on the property’s income potential than on the borrower’s personal credit, a strong credit score still plays a role in determining the loan’s interest rate and terms. Most banks prefer borrowers with a credit score of at least 680, though higher scores may be required for larger loans or more competitive terms. Another important factor is the Debt Service Coverage Ratio (DSCR), which measures a property’s ability to cover its debt payments. Banks typically look for a DSCR of 1.20 or higher, meaning the property
generates at least 20% more income than is required to cover debt payments. A higher DSCR indicates that the property is more likely to generate consistent cash flow, which reduces the risk for the lender.
6 Appraisal and Property Inspection
Before approving a loan, banks will require an independent appraisal of the property. This appraisal determines the market value of the apartment building and ensures that it is worth the loan amount. In addition to the appraisal, lenders may also request a property inspection to assess the condition of the building, identifying any potential maintenance issues that could affect the property’s long-term value.
CONCLUSION
Securing a commercial loan for an apartment building requires careful planning and preparation. Understanding the key requirements from commercial banks—including liquidity, down payment, experience, and financial metrics like creditworthiness and DSCR—can help ensure a smooth loan application process. If you’re unsure about meeting these requirements or navigating the commercial loan landscape, it may be helpful to work with a commercial mortgage broker who can guide you through the process and help you find the best financing options for your needs.
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