High-Leverage Colorado Hard Money Acquisition Loans
Montegra has created a special program that allows purchasers of commercial real estate in Colorado to obtain up to 80% loan-to-appraised-value loans if the buyer has been savvy enough to find an undervalued property.
Here is an example of how our High-Leverage Acquisition Loan program works:
- A buyer finds a “good deal” to buy a commercial property for $1,200,000. The buyer would like to leverage the property for as high an LTV as possible so the buyer approaches Montegra for a loan and Montegra agrees to lend up to 65% of the property’s appraised value. Montegra’s appraiser assesses the current market value of the property at $1,500,000 even though the purchase price is set at $1,200,000. Because Montegra controls our own source of funds, we are able to use the higher appraised value to determine the loan amount. Federal regulations stipulate that banks must use the purchase price if it is lower than the appraised value and, thus, the buyer is unable to fully reap the profits of finding a good deal.
- Unhampered by such regulations, Montegra agrees to lend approximately 65% of the $1,500,000 appraised value which comes to $950,000. This amount is actually 80% of the actual purchase price ($1,200,000), so the end result is that the buyer only needs to bring $250,000 in cash to the closing. Montegra is able to do this because the loan amount still fits within our 65% LTV ratio lending requirement. In this way, the buyer has an opportunity to potentially receive a larger loan amount than they could perhaps secure from an institutional lender that restricts him or her from benefiting from a property with an appraised value that is substantially higher than its purchase price.
This high-leverage loan program is especially beneficial for buyers of commercial real estate who have a lease/option to purchase. Having leased the property, perhaps for several years, they now have the right to purchase it at below-market value, so Montegra’s flexible lending requirements are made to order for them.
Please contact Montegra to discuss your potential high-leverage acquisition loan request with one of our representatives.