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Owner-user Financing

The Madison Group Arranges $1,700,000 loan for a Daycare Center in Utah

Tags: owner-user financing, SBA loans
Monday, Jun 25, 2018
by Angela Kesselman
The Madison Group (TMG), a leading source of owner occupied financing nationwide, arranged the $1,700,000 refinance of a 12,350 square-foot daycare center in Utah.  The borrowers requested a loan to refinance out of existing SBA loans on an owner-user office space. TMG secured the financing with a 10-year fixed rate of 5.5% and a 20-year amortization at 80% LTV.

The daycare center has been in business for many years and produces excellent income. The real estate holding company also realizes a nice profit.  The property, which was built for this tenant in 2008, is in a great location and could be used as an office. The owners desired to get out of the existing SBA 504 loan and obtain long-term conventional financing.

The owners needed an 80% non-SBA refinance in order to cover the closing costs.  Although the property could be used as an office with some small modifications, it is considered special use.  Most lenders will only allow 75% LTV on this type of transaction.

“We were able to place the loan with a lender that offered 80% financing with a good long term rate,” said Angela Kesselman, TMG’s director of Finance.  “The borrowers were able to close without bringing any cash to the table.  They no longer have to pay mortgage insurance either, which was required on the SBA loan that was paid off."
“We secured a great long-term loan for this client that had a specific need.  Our knowledge of the local marketplace allowed us to quickly analyze the transaction and find the right lender,” Kesselman said.
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Self Storage Financing

The Madison Group Arranges $1,753,000 Refinance of a Self-Storage Property

Tags: self storage financing, mini storage loans, commercial investment financing
Wednesday, Jun 20, 2018
by Jeff M
The Madison Group (TMG), a leading source of self-storage financing nationwide, arranged the $1,753,000 refinance for a self-storage facility in southern Utah. The property consists of 347 units and RV parking. The borrower was interested in a cost effective bridge loan to recapture equity with no prepayment penalty, allow time for stabilization, and allow for a portfolio refinance of this and two other properties in the next year. The finalized terms of this loan were 5% interest-only rate with a 3-year term.

This is a self-storage facility with 347 self-storage units.  It is a modern, steel construction facility initially built in 2005 that needed updating and better management when purchased in 2017.  The borrowers added a 28-space covered RV structure. The property is now fully enclosed, with gated keypad access, and has an on-site office and caretaker apartment where a couple lives functioning as a full-time office manager and maintenance person.

The property was acquired at a discounted cash price on a 4-day escrow and close with private money. All improvements since purchase have also been financed with that same private money source and rolled into the single first lienholder position.

All of these changes will result in increased income and controlled expenses, and will lead to a stabilized net operating income within six months. The borrowers will then have TMG provide a 3-property, non-recourse loan for the long-term investment.

Challenges of the transaction included:  
A tertiary market
Property in lease up
Short time period of ownership.

Solutions arranged by TMG that made this a great loan:
Utilized the in-place income 
Closed in less than 30 days
Recapitalized borrowers for other projects
No pre-pay penalty.

“The borrowers have a great long-term plan for this and their other local properties,” said Jeff Meierhofer, TMG’s director of Finance. “We knew it needed to be a two-step process to help them achieve their long term goals. The loan allows them to get a non-recourse loan in the next year for their long-term strategy.”

The financing was arranged by Jeff Meierhofer at The Madison Group.
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Mobile Home Park Loans

Loan for $3,825,000 Mobile Home Park purchase in Kansas

Tags: mobile home park financing, MHP loans, nonrecourse loans
Wednesday, May 30, 2018
by Angela Kesselman

The Madison Group (TMG), a leading source of mobile home park financing nationwide, arranged the $3,825,000 loan for the purchase of a mobile home park in Wichita, Kansas.  The borrower, a repeat client of TMG, needed to satisfy a 1031 exchange and requested a long term loan on an underperforming park. TMG secured the financing with a 5-year fixed rate of 5.75% and a 30-year amortization with two years of interest only payments.

The buyer was selling another park and had chosen this as the replacement.  The park is located in an excellent neighborhood of Wichita and is surrounded by country clubs and $300-400,000 homes.  The only competition is a neighboring park, which is 100% occupied.  This 360-pad park currently has occupied homes on only 140 pads in the park.  The buyer will begin to add homes as soon as she closes on the park and plans to add tenants quickly.  The park has an excellent upside, as it is being sold at the existing occupancy.  It should perform very well with this buyer’s experience in turning around this type of Mobile Home Park.

All the homes in the park are park owned and rented to the occupants.  This creates a challenge for most lending institutions, as they typically underwrite off of pad rents.  TMG was able to find a bank that would use the income from the existing pad and home rents to achieve the debt service coverage required.  TMG also was able to structure two years of interest only to help mitigate the mortgage expenses while the property is being stabilized.

The buyer can cash flow the property ‘as is’ with the interest only payments and will quickly move to increase the cash flow in this well located park,”  said Angela Kesselman, TMG’s Associate Director of Finance
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Student Housing Financing

Refinance of $2,600,000 for Student Housing Project in Utah

Tags: student housing financing, student housing refinance, commercial loans for student housing
Thursday, May 24, 2018
by Jeff Meierhofer

The Madison Group (TMG), a leading source of financing for student housing nationwide, arranged the $2,600,000 refinance for a 9-building student housing project in northern Utah. The borrower was interested in maximum long term cash flow and an aggressive fixed rate. The finalized terms of this loan were 5.04% interest rate, 12-year term, and a 30-year amortization. 

The refinance is for nine buildings with a total of 27, 3-bedroom units. The buildings, which were newly constructed between 2015-2017, are in a great location, close to schools and commerce.  The rental market in the Logan, Utah area has been, and continues to be very strong. The housing units have been upgraded and are 100% occupied.

As this is Phase 1 of the property and Phase 2 will be built adjacent to it, the necessary access and easements needed to be secured. A clubhouse will be built during Phase 2 and it was necessary to get the lender and underwriter to allow funding before the amenities were completed.

TMG worked with the title company, the legal professionals and the lender to secure acceptable easements between Phase 1 and 2.  The lender did not take title to the phase 2 land, which allows the borrower to build with a lender of the borrower’s choosing.

“Securing the financing took longer than expected,” said Jeff Meierhofer, TMG’s Director of Finance.  “In my next life I may consider being an attorney so I can get legal documents faster! But all parties stayed focused and the borrower got a great rate fixed for 12 years.”

The financing was arranged by Jeff Meierhofer at The Madison Group.  435-785-8350

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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.