Fractured Condo Financing
Financing For Fractured Condos and Wholly Owned Condo Communities
Ever since the residential real estate, and condo boom of 2005, fractured condos have been a hot topic, an exciting opportunity, and incredibly difficult to finance because the concept didn't exist until the real estate market collapsed. Fractured condos fall outside of the realm of standard residential communities for a lot of reasons, some being the percentage of the community owned, HOA issues, and of course valuations (cost vs income analysis). Unfortunately, Fannie Mae, Freddie Mac, and CMBS loans aren't options for fractured condo communities, even if the condos aren't in fact fractured and the entire association is owned and managed by one owner.
As such, we have worked diligently over the years to build a platform for financing fractured condos and have built an investor network geared towards these types of projects. Traditional lenders are still fighting to understand how they work, and sell the concept to board members, but because of continued risk aversion (although risk in this case is only perceived) traditional lenders are still backing away. Certain private equity groups however, have learned the business and are comfortable evaluating the properties and making the loans.
Depending on the properties, their location, and, quite importantly the strength of the sponsor, the following are general terms.
LTV: Up to 70%
Term: 3, 5, 7 years fixed
Rate: 4.40% - 5.75%
Amortization: 25 years
If you are looking to finance your fractured condo, or wholly owned condominium community, click below for a free quote.