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Strata loans in Canada

Get financing for your strata.  We can provide strata loans in Canada including Toronto, Montreal, Vancouver, Calgary and other areas, as well.  Just fill out our form.

 

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CondoAssociation.com now lends to small associations

CondoAssociation.com can now lend to condo associations anywhere in the US with a minimum of 13 units.  The ability to provide HOA loans to smaller condo associations is unprecedented, until now.  Our HOA loan minimum requirement still remains $100K

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HOA loans for repairs and improvements

Repair projects are expensive for HOAs and condo associations.  Especially, if owners have recently seen increased fees.  

Some of the most expensive repair projects include paving of roads, roofing and siding projects, along with replacement of windows and HVAC systems.

An HOA loan can be a better alternative to assessing owners.

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HOA loans in Florida

We can provide HOA loans in Florida. Some use of proceeds include repairs from water and wind damage, along with a wide array of capital projects.
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Where can I get a loan for my condo association?

Condo association loans or HOA loans are specialized, because the loan is secured with cash-flow from assessments, rather than real property. There are a limited number of lenders who understand HOA loans. They can be tricky to underwrite unless the association is fairly current with owners paying fees and assessments on time.

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HOA loans can be cheaper than PACE financing for energy efficiency upgrades

Is your HOA or condo association considering a PACE loan for energy efficiency upgrades?  Consider an HOA loan instead.  PACE stands for Property Assessed Clean Energy.  Projects can include water, wind, solar and many other upgrades, retrofits and replacements.  An HOA loan can be much cheaper than a PACE loan.
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HOA and Condo Association loans are cash-flow based

HOA Loan Security

As stated earlier, the community association usually does not own any real property on which a second mortgage position can be taken to collateralize a capital improvement loan. While some loan officers have chosen to ignore the community association as a borrower because of the absence of such collateral, a loan officer who thoroughly understands the structure of the community association should nevertheless be able to obtain adequate security for the loan. Financing capital improvements that involve large investments in equipment, such as the replacement of a heating and air conditioning system, provides the lender with security if the lender takes a security position in the equipment and files a Uniform Commercial Code (UCC) secured transaction financing statement.

For HOA loans not involving equipment, the lender can take a security interest in the assessments to be paid by the owners of units. This security interest may also be perfected by filing a financing statement in accordance with Article 9 of the UCC. While lenders might seek a pledge or security interest in all assessments to be received by the association for the term of the loan, lenders should be aware that certain expenditures such as insurance will be required of the association by state law.

Therefore, it would not be fair or perhaps even possible for an association board of directors to pledge all the assessment income. The HOA lender, however, can easily require that an association's budget have a line item equal to the debt service on the loan and have it pledged. As has also been mentioned, many lenders have required associations to conduct all their banking with the lender during the term of the loan, and the lender obtains a perfected security interest in such condo association's bank accounts.

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Cash flow requirements for HOA loans

Our last two HOA Board of Directors have been looking for some time at an HOA Loan as an option for a $1M required renovation. I'm trying to get an idea if there is a standard monthly income (assessment) to debt payment ratio (similar to the 28% used for personal mortgages) to give some guidance. Our property management company came up with an initial offer but the ratio was 44% and seemed excessively high to be sustainable for 10 years to us. Can you give me an idea on the usual ratio so we can start looking again?

I can tell from your question that your former Condo Association Boards have been approaching banks that have no understanding on how to lend money to a community association. Believe it or not, there are banks that are specialized in providing such HOA loans. You might also want to know that the community association industry has proved to be the safest market for a bank to lend to.

The approach that you reference of a ratio of assessment income to debt payment ratio is not the right approach. Community association loans are looked at on a cash flow basis. The view is what the the impact to the annual budget will be. In essence, how much larger a check will a unit owner will need to write each month.

Let me give you a very rudimentary example. An association has 100 units that are paying $250 per month. They have a break even budget. So, the annual and monthly income is: 300,000 / $25,000.

A $1.0 million HOA loan at 6.25% for 10 years causes a monthly loan payment of $11,228. That means that the monthly amount amount due from each unit owner is $112.28. So, their new annual/budget is: $434,736 /$36,228.

This is a very simple representation. Each community has different needs and structures. The loans are very much tailored to the association.

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Advantages of Funding Community and Co-op Projects With HOA Loans

The advantages of obtaining hoa loans to meet capital improvement needs include:

  • If funds are needed immediately for a capital improvement project, a co-op loan can help avoid a one-time special assessment fee, which some unit owners may not be able to afford.
  • A co-op loan may minimize increases to member assessments, spreading the repayment over a longer period of time.
  • A co-op loan will allow the association to receive more competitive bids on improvements, since all the repairs can be done at the same time.
  • A co-op loan can allow the association to maintain a healthy reserve account for other emergencies.

Thanks to these new co-op, condo and HOA loan packages, associations facing major capital improvements have other options for raising money instead of simply passing these unpopular assessment increases on to members.

Learn more about condo association loans or HOA loans.

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HOA Loans for Financing Projects

Residents of a condo association building faced a quandary. Ignored, old and failing pipes in the building could burst at any moment and cause severe water damage. The fix, however, came with a hefty $1 million price the condo association didn't have.

And because the condo association had no real collateral, its condo board members wondered who would loan them the funds to make the overdo repairs.

Contractors are now repairing the plumbing. In the meantime, the HOA loan is allowing the individual condo owners to pay for the repairs over a 10-year span instead of having to come up with a large HOA assessment.

The HOA loan or condo association loan allowed the group to do all the repairs at once, rather than do it themselves or spread the work out over time. HOA loans or condo association loans are finding that this market niche can provide a significant source of business, although it does come with a unique set of challenges, HOA loan providers warn.

A Growing Market HOA Loan Market

It's little surprise that banks would be interested in working in this homeowners association market given its numbers. In 2006, 286,000 community associations governed more than 23 million housing units across the United States, with roughly 57 million residents, according to the Community Associations Institute.

These condo associations and HOAs spend significant money, too. The Community Associations Institute estimates that the annual operating revenue for allcommunity associations in the United States is more than $41 billion, which condo associations spend for goodsand services-including repairs and maintenance-to keep their condominium buildings, townhouse communities and subdivisions running.

Condo Association Loan Challenges Homeowners associations, HOAs and condo associations are supposed to condo reserve money tomaintain and upgrade the common areas of their condo associations and HOAS. In condominium buildings, this can mean upgrading hallways and replacing condo building roofs. In townhouse communities or housing subdivisions itmay mean sidewalks and parks. The problem is mosthomeowners associations and condo associations donot do this properly. Its estimated that 90 percentof all condo associations do not condo reserve enough money to handle repairs. That's why the condo associations need Condo Association Loans or HOA Loans to replace that leaky roof or crumbling driveway.

The one piece of collateral a condo association or HOA has is the legal right to levy condo unit owners in the formof condo association assessments or monthlycondo fees. Holding this right this condo assessment right as collateral, HOA loan providers or condo association loan providers could put a receiver in place to collect monthly condo assessments or condo fees to pay back the HOA loans if the condo association were to default. Because of this, the HOA loan interest rates may be a bit higher.

Condo Association Loan providers must also be preparedto contend with a revolving voluntary condo boards. But might just create an opportunity to put some of HOA loan providers and condo association loan providers small businesses lending skills to work.

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HOA & Association Lending Nationwide

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  • Experienced HOA Lenders
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  • Competitive rates
  • Flexible terms

Some loan uses include:

  • Repairs & Improvements
  • Restorations
  • Capital purchases
  • Reserve funding
  • Refinancing of current debt obligations
  • Litigation funding

General Requirements:

  • Minimum of 13 units
  • Minimum loan amount of $100K
  • Association must have a low delinquency rate

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