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America's landlords collect the rent. But a growing number are having trouble keeping up with their own mortgage bills.
The warning signs are showing up in apartment mortgages tied to two of the biggest names in U.S. housing finance: Fannie Mae (OTCMKTS: FNMA) and Freddie Mac (OTCMKTS: FMCC).
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The strain is particularly stark at Freddie Mac. Its multifamily serious delinquency rate — measuring loans at least 60 days past due — reached 0.64% in August, up from 0.48% a year earlier. According to an analysis by the Mises Institute (1), that puts the rate above its Great Recession peak and at its highest level in more than two decades.
Fannie Mae's rate stood at 0.57%. Although that was down from 0.68% a year earlier, it remained more than double its December 2022 reading of 0.24%.
Those percentages may look small. But for property owners, falling behind on a mortgage can expose a much bigger problem: the income an investment generates no longer supports the debt used to finance it.
And an enormous amount of debt is approaching its due date.
Apartment landlords face more than $1.8 trillion in debt coming due over the next decade, including roughly $757 billion through 2028, according to Mortgage Bankers Association data reported by The Wall Street Journal (2). Investors borrowed heavily when rates were low. Now, refinancing can mean confronting a much more expensive bill.
As Sean Burton, chief executive of the multifamily firm Cityview put it, "The chickens are coming home to roost for a lot of people."
Consider the arithmetic. A hypothetical $10 million loan carrying 3% interest costs $300,000 a year in interest alone. At 6%, that becomes $600,000 — before principal payments, repairs, insurance, or other expenses.
The building hasn't doubled in size. The owner hasn't gained another tenant. But the annual interest bill has doubled.
Unless income rises enough to close that gap, the owner needs another way to make the numbers work.
The strain is already severe in some corners of the market. In a separate report (3), the Journal highlighted one pool of apartment mortgages issued in 2021 that was already 53% delinquent.
That figure applies to one troubled pool, but it's a troubling reminder of how quickly investments can unravel when the debt becomes unaffordable.
Americans who lived through 2008 know how destructive housing distress can become. And if borrowing costs rise further, refinancing could become even harder for owners already struggling to keep up.
For everyday investors, the question is how well your own finances could withstand more turbulence. If much of your wealth depends on property values holding up or investment income arriving uninterrupted, it may be time to strengthen your defenses.
A safe haven for 'bad times'
When storm clouds gather over the markets, gold often steps back into the spotlight — and for good reason.
The precious metal isn't a claim on a landlord's rental income, a company's profits, or a government's promise to repay its debt. And unlike fiat money, it cannot be created at will by central banks.
Those qualities help explain why investors often seek gold during economic turmoil, market turbulence and geopolitical uncertainty.
Ray Dalio, founder of Bridgewater Associates, has repeatedly highlighted gold's role in building a resilient portfolio.
"People don't have, typically, an adequate amount of gold in their portfolio," he told CNBC last year. "When bad times come, gold is a very effective diversifier."
The market has already taken notice. Over the past five years, as inflation continued to erode the value of paper currency and investors looked for protection outside traditional investments, gold has climbed 122%.
Other prominent voices see further potential. JPMorgan CEO Jamie Dimon has said that in this environment, gold can "easily" rise to $10,000 an ounce.
One way to invest in gold that can also provide significant tax advantages is to open a gold IRA with the help of Goldco .
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, thereby combining the tax advantages of an IRA with the protective benefits of investing in gold , making it a compelling potential option for those wanting to ensure their retirement funds are diversified during rough economic times.
Goldco offers free shipping and access to a library of retirement resources. Plus, the company will match up to 10% of qualified purchases in free silver .
If you're curious whether this is the right investment to diversify your portfolio, you can download your free gold and silver information guide today .
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Tap your equity without selling your home
When property owners come under financial pressure, selling can become a necessity rather than a choice. And in a difficult market, that could mean accepting an offer they would otherwise reject.
If you're a homeowner who needs cash for a major expense, accessing some of your equity could give you another option — without putting your home on the market.
That's where a home equity line of credit, or HELOC, comes in. It's a revolving line of credit that leverages the equity in your home as collateral, so that you can borrow and repay funds as needed — similar to a credit card.
AmeriSave offers a flexible HELOC that lets homeowners borrow against their equity as needed during a draw period, making it useful for renovations or debt consolidation. The application is mostly online and available in most states.
It's a good fit for borrowers who want convenience and flexibility rather than a large lump-sum loan upfront. You can draw funds only when you need them, so it's useful for ongoing or unpredictable costs. Interest is charged only on what you use and you repay the balance over time. It's essentially a flexible credit line secured by your home, delivered through a mostly online application process .
Don't settle for the first mortgage offer
The trouble facing apartment landlords is a reminder that the price of a property is only part of its cost.
How you finance it matters, too.
Whether you're considering refinancing or need a mortgage for a purchase, you don't have to accept the first offer.
Freddie Mac recommends shopping around and getting quotes from three to five lenders to secure the best possible mortgage rate . Even a small rate reduction can translate into significant savings over the life of a loan.
To make this process easier, places like the Mortgage Research Center (MRC) can help you quickly compare rates and estimated monthly payments from multiple vetted lenders. By entering basic details — such as your zip code, property type, price range and annual income — you can view mortgage offers tailored to your needs and shop with confidence.
Earn rental income without the landlord headaches
As the debt squeeze facing apartment owners shows, being a landlord is no walk in the park.
And financing costs are only part of the challenge.
Managing a property involves finding and screening tenants, collecting rent and handling maintenance and repair requests (out of your own pocket) — and that's assuming you can save enough for a down payment and get a mortgage to buy the property in the first place.
The good news? You don't need to buy a property outright — or deal with leaky faucets — to earn rental income today. Crowdfunding platforms like mogul offer an easier way to get exposure to this asset class.
As a real estate investment platform offering fractional ownership in blue-chip rental properties , mogul gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.
Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide for you. In other words, you gain access to institutional-quality offerings for a fraction of the usual cost.
Each property undergoes a rigorous vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Offerings often sell out in under three hours , with investments typically ranging between $15,000 and $40,000 per property.
Sign up for an account and browse available properties here to start investing today.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines .
Mises Institute ( 1 ); The Wall Street Journal ( 2 ), ( 3 )
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
