California apartment owners are facing one of the toughest financing environments in decades. For years, historically low interest rates made acquisitions and refinancing manageable, with many owners locking in long-term debt at rates that kept cash flow strong. But as loans mature today, owners are being forced into a very different reality: refinancing often means paying two or three times more in interest than before.

Why This Matters Now

If your loan is coming due in the next 12 to 24 months, the impact could be significant. Higher debt service can wipe out cash flow, create negative leverage, or force you to inject fresh equity just to secure financing. Some owners are already finding that refinancing into today’s rates results in monthly payments so high that operating margins nearly vanish.

The Perfect Storm of Costs

This refinancing shock isn’t happening in isolation. Insurance premiums have soared, property taxes remain heavy, and everyday maintenance—whether it’s plumbing, roofing, or appliances—costs more than ever. Add debt service that has doubled or tripled, and the numbers simply don’t balance. What once looked like a reliable investment can quickly turn into a financial squeeze.

The Leverage Crunch

Lenders are also tightening their standards, requiring higher reserves and lowering loan-to-value ratios. Deals that once financed at 70–75% are now coming in much lower. That means owners and buyers must bring significantly more cash to the table. For housing providers, this translates into less leverage, weaker returns, and diminished incentives to expand or reinvest in properties.

What Owners Need to Do

If your loan is coming due soon, don’t wait until the last minute. Start conversations with your lender early, run scenarios with your CPA or financial advisor, and be realistic about whether you’ll need to contribute additional equity. As a real estate broker, I have long-standing relationships with lenders who understand the nuances of these challenges and, in some cases, can provide access to some of the lowest rates currently available—helping owners explore solutions they might not see on their own.

One strategy many owners consider is an interest-only adjustable-rate mortgage (ARM), which can reduce monthly payments by covering interest only, providing crucial breathing room for cash flow while longer-term financing options are evaluated. While rates can adjust upward after the initial period, owners may still be able to secure competitive rates—particularly through lenders familiar with these complex refinancing situations.

Another key approach is negotiating directly with your lender to extend your current loan. Even a short-term extension can give you valuable time to prepare, stabilize your property, or position yourself for refinancing under better terms. The key is not to wait—approaching your lender early strengthens your negotiating position and helps avoid being forced into a distressed sale. Acting now ensures you maintain control and flexibility, rather than reacting under pressure when the loan maturity looms.

Exploring these tools now—rather than scrambling at maturity—will give you the flexibility to decide whether to refinance, restructure, or even sell on your own terms.

The Bigger Picture

This financing environment is testing the resilience of housing providers across California. Owners are being asked to carry higher costs while their ability to adjust rents is restricted by law. That’s not sustainable. It’s a reminder that investors are not the problem—they are the backbone of the housing supply. Without their willingness to take risk and provide capital, there would be fewer apartments available for California residents.

Bottom Line

The rising cost of financing isn’t just reshaping numbers on a balance sheet—it’s reshaping the future of apartment ownership. For those with loans coming due, the time to act is now. The owners who prepare, adapt, and make proactive decisions will be best positioned to weather this cycle and emerge stronger when conditions improve.

Written by Mercedes Shaffer, Broker

Mercedes Shaffer is a multifamily broker with REAL, and If you have questions about buying, selling or doing a 1031 exchange, her team serves LA and Orange County and can be reached at 714.330.9999, InvestingInTheOC@gmail.com, or you can visit their website at InvestingInTheOC.com  BRE 02114448