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The Madison Group Arranges $3,400,000 Bridge Loan on Multi-family Purchase in Utah

Tags: Multifamily Financing Experts_Another successful closed Loan
Monday, Jan 15, 2018
by Angela Kesselman

The Madison Group (TMG), a leading source of multi-family financing nationwide, arranged $3,400,000 in loan proceeds for the purchase of two apartment buildings in Salt Lake City, Utah.  The borrower’s goals were to do a maximum leverage loan on properties that had a good potential return on investment. TMG secured the financing with a 3-year bridge loan with a fixed rate of 4.75% at 75% loan-to-value ratio.

The two apartment buildings are former student housing facilities in the popular Sugar House area of Salt Lake City.  They were previously part of the Westminster College housing portfolio.  The buildings are considered to be in a great, hot market location, and have low vacancy rates. One building has five one-bedroom, one-bath units and 10 two-bedroom, one-bath apartments.  The other building has 15 one-bedroom, one-bath apartments.  Both buildings feature on-site laundry facilities and off-street parking. The buildings needed some remodel work in order to increase below market rents and improve the investor’s cash flow.

The challenges for the TMG team for completing the transaction included: one of the properties had no financials available; the debt service coverage was lower than required underwriting guidelines; and the properties were under contract at below market capitalization rates.

The Madison Group was able to put together a successful transaction for the buyer by securing an interest only loan at 75% leverage along with additional funds for repairs of the property.  The interest only option allowed the borrower to debt service the loan with the current income in place, while making repairs to the units.  Once the repairs are completed and the owner is able to establish historical financials, the property will be eligible for conventional financing. 

 The buyers originally came to us seeking a Fannie Mae loan,” said Angela Kesselman, TMG’s associate director of finance.  “Due to the restricted cash flow, the loan dollars were constrained significantly.  We approached one of our local lenders who agreed to provide a bridge product, which offered max proceeds, interest only payments, and the repair money for the project.  We feel confident that this property will perform well for the client moving forward.”

The financing was arranged by Angela Kesselman at The Madison Group.

The Madison Group (www.madisongroupfunding.com) is a commercial loan broker and consultant specializing in financing for investor properties nationwide. TMG provides flexible and reliable capital for real estate acquisitions, refinances, and re-capitalizations for a variety of property types including:  multifamily, mobile home parks, credit tenant NNN net lease, office, retail, industrial, self-storage and other commercial properties in the United States.  Established in 2001, The Madison Group’s intention is to provide highly competitive loan products through its superior capital market expertise and quality sources of capital.  TMG works efficiently and effectively to get the transaction closed and funded.

The Madison Group can be reached at 435-785-8350 or by emailing Angela Kesselman at angela@madisongroupfunding.com.