Transaction Description: The borrowers were in need of a loan that would allow them to get construction funds to rehab the property and then have that loan turn into a long-term fixed product. The finalized terms are 4.5% interest rate for 10 year fixed term with a 25 year amortization. The loan is a 75% LTV. The rate was locked in at closing so the borrower did not have rate risk moving forward during their construction period. The advancing term loan allowed the borrowers to utilize funds to rehab and refit the property for their needs.
Property Description: The borrowers purchased the 2 acre property with a small warehouse and office. Location was excellent but the quality the property was in need of major renovation to meet their needs for their future business operations.
Challenges: The critical feature of the loan was to allow the borrowers to purchase the property in a separate entity name and to keep their business operation off the loan. This allowed them to keep their credit line free for their business operations, while leasing the property from an entity that was separate from their business. They also wanted to lock into a long-term rate during the rehab process to avoid future rate risk.
Solutions: The Madison Group was able to creatively solve the borrower’s needs by working with a lender that allowed separation of the business from the property. This helped the borrowers to be able to increase their business operations without the debt load of the property. The loan was structured so that the rate was fixed from the time of funding to secure an excellent rate for a fixed term of 10 years.
The financing was arranged by Jeff Meierhofer at The Madison Group.
The Madison Group 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 and Jeff Meierhofer can be reached at 435-785-8350 or by emailing Jeff at jeff.m@madisongroupfunding.com.