While we were working on getting approval from the County to build, we had started talking to banks about giving us a construction loan. On previous projects in Utah, banks had loaned us 80% loan to value to build. And the value amount had been based on the appraised value of the finished build. These appraisals had come in high enough that after we had acquired the land, we didn’t have to come up with any more money to build, the bank came up with everything. In other words, the land had counted for the 20% we had to come up with.

So I came into this new Colorado project thinking that we’d get a similar deal. I learned quickly that since this property was off grid and only had “seasonal access,” only local banks were interested, and they would only lend 50% loan to value. That would have been OK if the value was the appraised value, but it was the construction cost, yikes! We were definitely not expecting to have to come up with 50% of the construction cost. We actually ended up finding a local bank that said they would loan us 75% of the build cost, only to have them flake when we actually applied.

I was crushed, we had gone through the county approval process only to get stopped by not being able to get the money. It had always been pretty easy to get constructions loans for builds before, why was this so difficult. The next thing we tried to get the money through 2^nd mortgages on other vacation rental properties we already own, but couldn’t get enough as banks consider these to be risky collateral. After a couple of frustrating months of trying to figure this out, one day I wrote out the whole situation into a Chat GPT prompt and asked what I should do. Chat GPT gave me the normal options, then it said that I should try an agricultural bank. Agricultural bank!?! This isn’t going to be a farm?!? Well, I gave it a shot, I called an agricultural bank and told them the story, then they asked me if I was a farmer. I told them I wasn’t, but my brother has some cows. To that they said, I think we can make this work….

Next Post, Bank Hell Part 2!!!!! You thought the pain was over but it wasn’t!!!