New to Multifamily...Why is some financing so much better?

[Steve A.]

Hey apologies for the vague title, but I am new to looking at investment grade multifamily properties, coming from 1-4 unit properties. These 1-4 units of course have fannie/freddie loans available at 4.xx interest rates, 30 yr am, 30 yr term. When I began looking at 20-40 unit apartment buildings in my price range, I have so far found the financing options to be very poor. I found a lender who does a 30 yr am, 30 yr term surprisingly but the rate is roughly 8%. I found another whose rate is 7% but this is a 5 yr ARM. I don't mess with ARMs, balloons, interest only, or any other funny business. In my situation currently, the loan would be a partial doc... thinking this might be the issue I inquired about it, but full doc only drops the rate maybe 0.5%. How does anyone make any money, in the current environment of low cap rates, where finding an 8 cap is not easy, with 8% interest rates? Just banking on paydown/appreciation? My priority is cashflow and this kind of financing ruins it.

However I am also getting involved in some syndications, and when I look at these deals the syndicators are getting rates sometimes in the 3's.  These are some sort of government loan programs.  I am thinking maybe they are only available to properties of a certain number of units or price range?  Does anyone know the cutoff between these awful 8% rates and the favorable 4% rates?  I need to start looking at properties that will qualify for the lower rates...it doesn't make sense to invest directly otherwise.