At HOALendingXchange.com, we endeavor to make the timeshare loan process as simple as possible. Our greatest focus will be on determining if your timeshare complex is managed well. We also will be looking for stability and consistent cash flow, and whether or not the loan could be repaid without straining the capacity of the association through its owners.
Our inquiry process requires submitting project information, details about the association (including a financial history), and a plan on how the loan will be repaid. You also will need to provide current year budgets with year-to-date actual results. Data on the aging of assessments is critical, as is the balance of unsold inventory and the velocity of inventory turnover.
A budget proposal reflecting the routine needs of the community for operating costs and regular maintenance with the added level of proposed debt service is necessary. Pay close attention to the collection record of your assessments. If these charges show an inappropriate number of delinquent intervals or frequent charge-offs, this is a red flag. The delinquency level that we are looking for is only of the interval or club owner paying the association’s assessments and other charges, not in the mortgages of owners to their creditor. The inventory of unsold intervals is of interest because it may suggest the level of marketability of the resort and therefore the stability of the cash flow. A professional life cycle analysis of common elements has hopefully been prepared and its recommendations implemented. Insurance coverage is also an important matter. The bank will be looking at your policy to determine if there is prudent coverage of risks, especially in storm-prone areas.
The structure of the timeshare loan is important. Keep in mind that your project costs will most likely increase. Keep the term of the loan as short as possible – most loans are typically between seven and ten years. Most importantly, it is likely that you will have to increase the budget to support the debt servicing need. Recognize that the complex is continuing to age and other extensive projects will always need to be addressed. The association board would be wise to have paid off this debt before the next large project appears. Otherwise, the new assessment cost will compound on top of what you’ve already financed. This situation is not just straining, it will cause high assessments that depress your property values.
Visit HOALendingXchange.com today. Simply fill out our inquiry form and our skilled lenders can structure a productive package for your association in conjunction with the rest of your professional team. The process may seem complicated, but it’s a good option for your association for necessary upgrades and future growth.