Condo Inventory Loans Explained: Unlocking Equity in Unsold Units

Ricardo Rios

Most brokers and borrowers know the standard CRE loan categories: bridge, construction, CMBS, agency. Fewer are familiar with the condo inventory loan, a specialized financing product that solves a specific and increasingly common problem: a condo developer who has completed construction but hasn’t sold all the units yet, and whose construction loan is maturing.

Understanding this product opens a real opportunity for brokers. Condo inventory financing is a niche with meaningful demand, limited competition on the lending side, and deal sizes that can range from a few hundred thousand dollars to $10M+.

What Is a Condo Inventory Loan?

A condo inventory loan, sometimes called a condo sellout loan or unit inventory loan, is a short-term bridge loan secured by a portfolio of unsold condominium units in a completed (or nearly complete) project. It is specifically designed for the period between construction completion and full unit sellout.

Here’s the situation it solves: A developer has finished building a 20-unit condo building. They’ve sold 14 units. Six remain. The construction lender, who was only in the deal to fund completion, wants out. They’re not in the business of sitting on a partially-sold building for another 12–18 months. The developer needs to refinance those six units with a lender who is willing to hold the position until the remaining units are sold, releasing collateral as each closing occurs.

That’s the condo inventory loan.

How the Structure Works

The mechanics differ from a standard bridge loan in one important way: the release clause.

Because the underlying collateral is individual condo units that will be sold off one by one, the loan must include a provision for the lender to release each unit from the lien upon its sale, typically in exchange for a minimum paydown on the loan (the release price). This release price is usually set at a small premium to the pro-rata loan balance to ensure the lender’s position stays covered as collateral is removed.

For example, on a $6.5M condo inventory loan secured by 10 units, the lender might set a release price of $700K per unit. As each unit sells, the developer pays $700K to the lender, which releases that unit’s lien so the buyer receives clean title. This continues until the portfolio is sold out and the loan is repaid.

Who Needs a Condo Inventory Loan?

The typical borrower profile is a real estate developer who:

• Has completed or nearly completed a condo project
• Has an active sales program underway
• Faces a maturing construction loan that needs to be paid off before all units are sold
• Can demonstrate a credible sellout timeline, typically 12–24 months on the remaining units

Markets where this product is most common: New York City and the surrounding metro area (where condo development is dense and construction lenders are aggressive about exit deadlines), Miami, Los Angeles, Chicago, and other major markets with active condo pipelines.

What Lenders Underwrite

Condo inventory lenders evaluate the deal differently from a standard bridge loan. The key underwriting factors:

1. Sell-Out Value and Pace

The most important number is the aggregate sellout value of the remaining units at realistic market pricing, not the developer’s optimistic projections. Lenders will look at comparable sales, current absorption rates in the building and the submarket, and the pricing history of units already sold. If the remaining units are the least desirable in the building (less desirable views, smaller sizes, lower floors), that factors in.

2. LTV on Remaining Units

Standard condo inventory LTV is 50%–70% of the aggregate sellout value of the remaining units, not the individual appraised value of each. The lender is sizing the loan to recover fully even if the sellout takes longer than expected or requires price reductions to move units.

3. Existing Sales Contract Activity

Are there executed purchase contracts in process? Pending closings? A pipeline of interested buyers? Active sales momentum is the most reassuring signal for an inventory lender: it confirms the product is marketable and the sellout timeline is achievable.

4. HOA and Project Completion Status

Is the building fully complete? Is the certificate of occupancy (CO) issued? Is the HOA formed and funded? These are table-stakes for a condo inventory loan. A building that doesn’t have its CO yet is still in construction-loan territory, not inventory-loan territory.

5. Developer Track Record

Has this developer sold condo product before? Do they have a sales team in place, or are they relying entirely on brokers? A developer who has successfully sold out prior projects in the same market is a lower-risk borrower than a first-timer.

Atlas Invest Case Study: $6.5M Condo Inventory Loan, Manhattan, NY

In one of our recent transactions, Atlas funded a $6.5M condo inventory loan on a mixed-use building in Manhattan. The developer had completed the project, had strong early sales velocity, but faced a construction loan maturity before the remaining units could close. The existing lender needed to exit.

Atlas underwrote the remaining unit inventory, evaluated the active sales contracts and market pricing, and structured a loan with unit-level release clauses. From deal submission to funding, the transaction closed smoothly, giving the developer the breathing room to complete the sellout at market pricing without being forced into distressed sales to meet a construction loan deadline.

This is precisely what condo inventory financing is designed to do: protect the developer’s equity and the project’s value by removing the pressure of a hard payoff deadline.

See more deals like this in our Deal Highlights.

Condo Inventory Loan vs. Construction Loan: Key Differences

Rates and Terms for Condo Inventory Loans

Condo inventory financing is a specialized product and rates reflect that, typically at the higher end of the bridge loan range:

• Rates: 10%–14% annually, interest-only
• Origination fees: 1.5–3 points
• LTV: 50%–70% of aggregate sellout value
• Term: 12–24 months (with extension options)
• Release price: Typically 110%–115% of pro-rata loan balance per unit

For Brokers: How to Source Condo Inventory Deals

Condo inventory loans are often overlooked precisely because they’re not in every broker’s vocabulary. But the deal sourcing opportunity is real. Developers with maturing construction loans on partially-sold projects need help, and they need it quickly, because construction lenders will start charging default rates or demanding payoff.

Good sources for condo inventory deal flow:

• Construction lenders who are reaching maturity on partially-sold projects (they want to refer the developer to a takeout solution)
• Condo sales brokers (residential) who know which buildings have slow-moving units
• Attorneys who represent condo developers in their HOA formation and closing process
• Developers you’ve worked with on construction financing whose buildings are now completing

If you have a developer in this situation, submit the deal to Atlas and we’ll have a term sheet back in under 24 hours. Our team has funded condo inventory deals from the five boroughs to New Jersey to Connecticut. We know the product.

Frequently Asked Questions

How many units need to be sold for a condo inventory loan to make sense?

There’s no hard rule, but most lenders want to see meaningful sales velocity, at least 30–50% of units sold, with active contracts on additional units. A building with zero units sold is still a construction/pre-sales problem; a building with most units sold and a handful remaining is a classic condo inventory scenario.

Can a condo inventory loan be used if the building isn’t fully complete?

Generally, no. The building should have a certificate of occupancy (or be within weeks of receiving it) and the units must be ready for buyer closings. If construction is still in progress, the deal is more likely structured as a construction completion loan, not an inventory loan.

Does each unsold unit need its own appraisal?

Lenders typically commission a portfolio appraisal that values the remaining units as a group, with individual unit valuations as part of the report. This is more efficient than separate appraisals per unit and is standard practice in the condo inventory lending space. See our FAQ for more on our appraisal process.