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Rental Property Financing

Financing for an investment property in Utah

Tags: Investment property loans
Wednesday, May 02, 2018
by Jeff Meierhofer

     The Madison Group (TMG), a leading source of commercial real estate financing nationwide, arranged the $1,700,000 financing for the purchase of an investment property in Park City, Utah. The property consists of four luxury condos to be used as seasonal rentals. The finalized terms of this loan were 5% interest rate, 5-year term, and a 30-year amortization. 

     The borrowers were a group of investors looking to buy individual rental condo units in Park City. The properties were in the process of being built so timing was important in order to be able to provide the loan when the certificate of occupancy was issued. The properties are well located at the base of the Park City Mountain Ski Resort Canyons area. 

     Among the challenges for arranging the financing, the properties had not yet been built, so they did not have any rental history. They are also in an area with a large number of other rental properties, which could cause competition for the different units.

     It was necessary to time the appraisal and closing for the loan to meet the seller's obligation of funding shortly after the certificate of occupancy was issued. The loan was made to an LLC with two of the individuals signing personally. They received an aggressive rate at 5%, with a 30-year amortization. This will provide maximum cash flow. The loan has a limited prepay in case the borrowers decide to sell one or more of the units.

     “I can say that not every lender wants to make a loan on recently finished non-warrantable rental condos,” said Jeff Meierhofer, TMG’s director of Finance. “The first seven lenders we contacted declined the loan based on that information, but we were able to find the right fit for the borrower. The units are very nice units in a great area, so our lender could see through that.”

The financing was arranged by Jeff Meierhofer at The Madison Group.