Colorado Value Added Loans
When a buyer plans to purchase a commercial property and make improvements to increase its profitability and income stream, they need a lender who understands their goal and is interested in working with them to achieve it. Banks often see these types of real estate investments as high risk, but private capital lenders recognize that the borrower is creating a more valuable property and are willing to structure the loan to fit the project, rather than making the project fit the loan. This type of loan is typically referred to as a “value-added loan” and is one of the many types of private capital loans in which Montegra, as a local private capital lender, specializes.
Colorado Private Money Lenders
Borrowers who want flexibility and creativity in their lending options should think bug but act local. Local private capital lenders, such as Montegra, are familiar with the Colorado commercial real estate market and will know when to give a borrower credit for purchasing a property for less than its fair market value. While Federal regulations mandate that banks use the lesser of purchase price or appraised value to determine the loan amount, Montegra is able to use the greater of the two.
Structuring Loans for Colorado Borrowers
Value added loans can be especially beneficial to borrowers who have found a building that is only partially leased (or even completely vacant). It can be extremely difficult to obtain financing from a traditional bank or institutional lender because their debt service coverage requirements restrict them from being able to share a borrower’s vision for a high-vacancy property. By contrast, Montegra is willing to look beyond the current occupancy rate and envision what a property will be worth once it has been stabilized. Montegra’s representatives work with borrowers to structure a value-added loan that fits their needs. These loans often include an “interest reserve” as part of the initial loan amount that is sufficient to pay all or part of the loan’s interest until the property is leased up and becomes self-sufficient.
To learn more about value-added loans that Montegra has funded for commercial properties in Colorado, check out our recent closings. For more information about Montegra’s value added loans and how they can help you with your commercial real estate investments, contact us at 303-377-4181.