How I Made Money with My Hard Money Land Loan
These stories are based on actual loans made by Montegra borrowers who made money in the method described using our funds. The actual writing has been done by Montegra.
Spring of 2009 was the beginning of the “bad times”. The great recession was deepening – real estate values (along with most other asset values) were dropping rapidly and banks were under pressure from the Feds to call loans on certain classes of collateral. If there ever was a time not to have a “land loan,” then this was it! My family and I had spent years assembling a large tract of infill land near an RTD stop in south central Denver. The key parcel of this infill was a 6 acre tract of land financed by a local bank that was now on the ropes, and the lender for this parcel was under more pressure from the FDIC. The bank told us that they would not renew our loan and that there was a possibility of foreclosure if we didn’t pay them off prior to the maturity date. We could not find another bank to pay off this loan and were faced with the potential loss of the keystone piece of our infill development.
I was introduced to Bob through a mutual acquaintance, who told me about Montegra’s long history of funding private money loans and its great reputation in the community derived from its 40+ year operating history in Denver. Bob was receptive to our request and began immediately underwriting our $900,000 loan request. His appraisal team valued our land at $3,000,000, and within less than 30 days Bob funded our loan taking out the bank.
Our payments were interest only with no amortization and we had no difficulty in making them. Since the original funding in 2009 we had additional capital needs and asked Bob for “cash out” funding which he was able to do several times. These cash infusions were critical to help us keep current with loans on our other properties through these tough times. Over the next couple of years, Montegra at our request significantly increased the amount of principal in this loan to keep pace with its increased appraised value. We were able to use these additional funds to support some of our other properties and to finish up final marketing plans for our large parcel. No other Colorado hard money lender that I know (and I know most of them) would have been as easy to work with as Bob and Montegra.
Now for the best part! As the demand for multi-family land has picked up – particularly multifamily land that is properly zoned and in close proximity existing light rail access – according to our Realtor our land value has now more than doubled from its $3,000,000 appraised value in 2009 and we are now exploring selling the property and locking in a substantial capital gain.
Our ability to refinance our land in 2009, when no one but Montegra believed in it, has had a very happy result. This good outcome has only been possible through Bob’s willingness to believe in me and our parcel of land. Bob renewed our loan several times and increased it in amount when we requested it. If there was such a thing as a “Lender of the Year” award I would nominate Bob and Montegra for it in a heartbeat. Private money lending doesn’t get any better than this.
This blog was written by Bob Amter, President of Montegra Capital Resources, LTD., a Colorado hard money lender. Bob has been in the private capital lending business for 41 consecutive years.