The variability inherent in the requests is due to the uniqueness of each development project and the challenges each one will encounter along the way.
Our goal is to quickly understand what your current financing needs are and exactly where you’re at in terms of completed work, property owned, and debt outstanding so we can zero in on the most relevant options available to you.
One of the many challenges that clients face when looking to get a condominium development loan or mortgage for a residential project is that they don’t have enough completed pre-sales to qualify with most of the main line financing programs in the market.
Many times we will get a financing request from a condo project where the presales are in the 40% to 50% range and the lender requirements are more in the 70% to 75% range.
In these situations, a short term bridge loan against the equity in the project is likely going to be a better approach than continually trying to secure a larger build out construction loan where the presales criteria is lower.
If the developer owns the property and has completed a certain amount of work to date, then there is a good chance the property has gone up in value. Even if there is first mortgage in place, there can be enough built up equity to allow for a bridge lender to come in to the deal in a second position.
The deal is appealing to a bridge lender because the development already has a lot of pre sales in place and a marketing system generating pre sales. The short term lender will be paid out by the longer term development loan that can be secured once a high number of presales have been made creating an exit strategy for a bridge financing solution.
While the funds provide by a bridge loan will not be sufficient to meet the long term needs of the project, it will allow the project to continue and allow time for presales to be built up.
This can be a very effective strategy to keep the project on track while building a bridge to the larger scale construction development loan that the project will require.
This is one of many challenges that a condo development project can have where alternative financing strategies can help move the project along.
If you have a condo development project that is classified as residential that you’re planning or are in the middle of, I suggest that you give me a call so we can review your financing requirements as well as relevant funding options that could be available to you in the market place.
Click Here To Speak Directly To Construction Mortgage Broker Joe Walsh For A Free Assessment Of Your Residential Condo Development Financing Options.