Financing a Multi-Family Land Acquisition

Providing financing for a multi-family development in Provo, Utah.

We recently received a call from a real estate developer who was in the process of assembling land for a multi-family development in Provo, Utah. The parcels were near the FrontRunner Rail Station and part of the assemblage had already been paid for. Our borrower had two other properties on the block under purchase contract and was nearing the deadline when the bank they were going to use to finance the acquisition informed them they could not proceed.

Because substantial due diligence had already been prepared for the bank, we were able to assess the potential loan quickly. We informed them that while we could not loan as much as the bank would have, we could issue a loan of $2,050,000 which was 37% of our estimate of the combined parcels they were pledging (the property they already purchased was unencumbered so we required it to be pledged).

This one-year loan carried a 12% interest rate and paid a 2% origination fee.