| Posted by: James Laughton Nov 14 2004, 12:45 AM |
Dear Loanuniverse,
I have read your 4 part series on Constructions Loans in addition to the many forum posts. Thank you for all the great advice. I would also welcome your opinion on my particular circumstance. I own 3 contiguous properties in a downtown area (with a downtown view) in an area that is exploded with new construction. It is a nice area and getting nicer all the time.
All 3 properties have houses on them which I could sell for a modest return and be done with it. Or I can sell them to a Townhome developer like Perry Homes, et. al since they love contiguous lots. They would simply bulldose the 3 houses and build 9 townhomes in their place. But again this would leave a modest return since Townhome developers aren't too generous. Which leaves my final option and the most potentially rewarding. I could develop the 3 properties myself by building a 5 story building with 12 - 15 condo style units (each with a fabulous view) across the 3 lots. I'm guessing a brand new 5 story building with 40,000 sqft would cost $3 - $4 million. Since the whole project would hinge on financing the construction (I already own the property), do you think any bank would back me (and just me) with a net worth right around $1 M.
I read your response to MarkM about the 4 criteria but am I dreaming to think I can get financing for such a large project? Especially since it's my first time. But I do already know a great construction company that would oversee the whole project and they have a good reputation in my local market. I think that I meet the first 3 criteria you mentioned but no. 4 is so far away for me, that it doesn't seem worth exploring further. Although the dollar signs are flashing in my head.
Thanks |
| Posted by: loanuniverse Nov 14 2004, 02:59 PM |
James:
You will more than likely need a partner to get a bank to provide you the financing. This partner would be an experienced developer that has done similar buildings with you being the passive investor.
I do not know of any bank that would grant you a loan for a $4MM project without experience or without a stronger net worth position than $1MM. In addition, your personal net worth needs to be discounted by taking out the properties involved and other items. Your $1MM net worth is sure to shrink.
|
|
|
