When a homeowners association (HOA) faces a major repair, the default solution is often a special assessment—dividing the cost among all owners. But that approach can take months to organize, and some owners may not be able to pay their share on short notice. According to Jack Miller, principal at Gelt Financial, many boards are unaware that borrowing against future dues is even an option until they are already stuck.
Gelt Financial is one of the few private lenders that finances associations directly. Miller says this niche has almost no competition because most lenders are not set up to underwrite such deals. The structure is unique: 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, the loan is secured by the association’s ability to pass a special assessment or raise condo dues to repay it over time. In effect, the association borrows against its own income stream, not the building itself. Once the loan closes, the board typically still passes an assessment, but instead of collecting a large lump sum from every owner at once, the repayment is spread out and the repair gets funded immediately.
The biggest obstacle Miller sees is not financial but 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 were 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, the repairs need to get done regardless of how uncomfortable the conversation is. Boards that avoid raising dues because they live alongside the people they would be charging often end up with a bigger problem later, when a roof leak or a 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 just cover their portion themselves, and for owners who can afford to do 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 be planning major repairs a year in advance and building 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.
