Refinancing expansive properties: $750k cash-out on a 20-acre property for Canadian investor

Our client, a Canadian entrepreneur with a keen eye for real estate investment, faced a unique predicament. He owned a $2.4 million multi-unit property in Colorado's scenic mountains, far from any standard property. Seeking to leverage his equity for further property investments, he turned to Milo for refinance options tailored to foreign nationals.

This distinctive 20-acre property, located just outside Aspen, boasted four individual units, each offering a short-term rental experience. Envision an Airbnb paradise, where renters can opt for separate or combined rentals, generating a prospective monthly income of approximately $20k.

However, refinancing this type of property presented certain hurdles. It's essential to understand that most lenders focus more on the home rather than the land when considering financing. This is because properties with extensive acreages cater to a niche market with a more limited demand compared to standard residential properties. As a result, they carry a higher risk due to their lower liquidity.

Similarly, Milo typically refrains from approving loans for properties with such large acreages due to these associated risks.

But, the significant potential income from the short-term rentals and the client's intention to use the cash-out refinance for additional investments motivated us to devise a viable solution.

With the Debt Service Coverage Ratio (DSCR) refinance loan, we were able to approve a $750k cash-out on the property. This type of loan considers a property's ability to service its debt using the income it generates3. In this case, the substantial short-term rental income offered ample assurance for the loan's feasibility.

In conclusion, we managed to navigate around the intricacies associated with the property's substantial acreage and short-term rental aspects. We not only helped our client achieve his objective of additional investment capital but also established a loan arrangement that would be more than covered by the property's income.

Do you own a property that doesn't fit within traditional lending parameters?

At Milo, we specialize in managing unique situations and can help you navigate the process. Schedule a meeting with a Milo loan consultant today!

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.