When a homeowners association faces a major repair bill, the default solution is often a special assessment: divide the cost among owners and collect a lump sum. But that process can take months to organize, and even after a vote passes, some owners cannot pay their share on short notice. According to Jack Miller, principal at Gelt Financial, most boards do not realize borrowing against future dues is an option until they are already stuck.
Gelt is one of the few private lenders that finances associations directly, an area Miller says has almost no competition because most lenders are not set up to underwrite this type of deal at all. Unlike a mortgage on an individual property, an association loan is not secured by real estate. There is no traditional collateral and no personal guarantees from board members or owners. Instead, Miller explained, the loan is secured by the association’s ability to pass a special assessment or raise condo dues to repay it over time. That structure means the association borrows against its own income stream, not the building itself. Once the loan closes, the board typically still passes an assessment, but repayment is spread out and the immediate repair gets funded right away.
The biggest obstacle Miller sees is not financial—it is personal. He described a recent case involving two elderly board members, ages 88 and 92, who served as president and treasurer of a 40 to 50 unit association. Both were retired schoolteachers and reluctant to raise dues because they knew every homeowner personally and did not want to ask neighbors for more money. Miller’s response was direct: if you own your home, repairs need to get done regardless of how uncomfortable the conversation is. Boards that avoid raising dues often end up with a bigger problem later, when a roof leak or failed window becomes an emergency instead of a planned repair.
Not every association needs outside financing. Sometimes individual owners fund their own share of a special assessment directly rather than paying a lender’s rate. Miller pointed out that one owner might reasonably ask why they should pay Gelt’s rate when they could cover their portion themselves, and for owners who can afford that, it is a fair question. Where private lending makes the most sense is when the board needs the repair funded now and cannot wait for a lump sum assessment to clear.
Gelt is not able to help every association. Deals involving existing debt on the property typically do not work, since Gelt wants to be the first lender in, and associations that have let a problem grow too large sometimes need more repair work than makes economic sense to finance. Miller’s advice to boards is to get ahead of the timeline rather than wait for a crisis. Associations should plan major repairs a year in advance and build relationships with banks and other traditional lenders first, since that financing is typically cheaper. Private lending exists as the option for boards that have already tried that route and still need a way to get the work done.
Gelt Financial LLC is a national private lender and distressed debt buyer with over 37 years of experience across commercial and investment real estate. Operating in 37 states, the company provides bridge financing, foreclosure bailout loans, and non-performing loan acquisitions for real estate investors, operators, and institutions.
