Rental Property Financing
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.