real estate developing - how to finance commercial condo construction?

Question

My husband and I have not done this before, we have no clue where to start.

We have found an amazing location to purchase land and build a small condo development to make multi millions in profit. Where do we start for financing?! We would need to borrow $1.5million (this is including the land)... we are willing to pay a high interest rate... we just need to find some way to finance this! help!

We don't have alot of money (50k in bank), medium income (80k yr), don't own any property, don't even have a business set up yet. Is this even possible for us?!

I have tried to email commercial brokers but none of them will talk to me because I don't know all the technical details.

Anything you can suggest please, we need help!

ps.. how do i find investors to partner with for the downpayment that we can't afford? who is going to invest $300k in people who have never developed before! :(

for john doe below - you're being a dick, period. you actually have no idea about the details of our situation therefore have no right to speak to me as you've done. i was looking for advise on financing not to get told we are just dreaming. im not ACTUALLY a retard and have done the calculations considering we would have to pay a huge majority of our profits to investors (of course) and we would STILL come out with multi millions. so if you wouldnt want in on this investment after only reading two quick simple paragraphs lacking all and any detail, then thats your lose for not looking into the potential of things and being a big fat pussy really. have fun making all your money on your low risk investments, rich boy. im sure you're loaded.

Answer 1

You need about 20 to 30% of the 1.5 million to come from you own pocket. If you don't have the money they need to partner with an investor that is willing to put it in. If you owned a home you could take cash out of it and use that.

Answer 2

I invest in numerous deals all the time. The first thing I look at is experience. I would not invest in your deal but would offer some upfront advice and opinions to you.
First of all with no experience and no money you will not be making millions of dollars. You have to be honest with youself and realize that the person/partner that puts up the money will get the majority of rewards. Unless you are willing to realize that you really do not have anything to offer to an investor other than an idea to build condos, you will never get off the start line.

You must be willing to settle for a much smaller piece of the pie and structure your deal to where you may be a general partner with a very small interest.

This is your learning experience and unless you are willing to realize that you should not be participating in the profits as much as the person that puts up the money, YOU WILL FAIL IN ALL OF YOUR EFFORTS.

Take a hard look at this question and think!

WHY DOES SOMEONE WITH MILLIONS OF DOLLARS TO INVEST, NEED YOU FOR THIS DEAL? WHAT ARE YOU BRINGING TO THE TABLE?

I do not want you to think that I am a hard noze here, but I see it time and time again. These people call and have a wonderful idea to build this, or buy that, or open a fried chicken store etc.
The first thing I look at is where do they fit in this picture.

I bought a condo in a developement about 5 years ago. The developer was the builder and had several of the contractors as partners. They built 144 units in 4 phases and began by preselling all the units. The funds are placed in escrow and used to support the deal as it moves along.

I also participated in a subdivision once where we sold lots for homes to be built. We purchased the land, cleared and turtle backed road paths only. Next we staked out lots and boundaries and drove potential buyers through to have a look.

The streets and improvents were to cost $1.5 million on the first phase. This lots sold anywhere from $100,000 to $125,000 to start.

We presold the first 10 lots with all proceeds placed in escrow. Once the tenth lot sold we pushed the button on the improvements and never looked back. We never had a meeting with one banker and we were never a risk and with the funds in escrow the buyers were safe also. Just any idea of how preselling can assist a project.

Try to look at this as a way to get some experience under your belt before you start thinking of making millions.

Answer 3

Your first step is to go to the city and make sure the zoning will work for your proposed project. If it is find out what and how long the procedure will be to get approvals once you have your plans, drawings etc in hand. This could possibly take YEARS to get through if the neighbors appose your project.

If the city is OK then depending on how hot the property is you may want to do a lot loan just to secure the land. If the property is a little slow then maybe forget this part; this is up to you.

You are correct that most commercial lenders are going to be vary of you with no experience in this kind of thing. Is there any way your past work histories can be worked into this project? Maybe you or your husband is a contractor?

I work with several private fundng firms as well as multiple commercial lenders. In fact I am doing a private money funding of a mini mall 2.5MM where the borrowers are REAL tight on funds. Most private money lenders only care about their equity position in the property. If they are comfortible with the proposed value of the property versus the construction costs they may be willing to lend you the funds to get this off the ground knowing that when the project is complete it will be worth alot more than what they have inested in the project.

If you would like to discuss this in detail, drop me a line.

Kevin 866-562-6838 x 106
[e-mail]

Answer 4

In my opinion, without any experience, it will be a hard sell for you to ask for funding.

It is possible though. You can try attending your local real estate clubs to see if anyone will be interested.

If this was my deal, my exit strategy will consist of two options:

Option 1: Get the vacant land under a option contract for the land value only from the current owner. Try to get the option with option to extend. You should consult your attorney for the land option contract and discuss this with them.

Once the land is under the contract, find a developer/builder that is willing to build it. Once you find the builder, both parties can split the profit however you see fit.

Option 2: Once the land is under option contract, wholesale the contract to a builder or investor that will build the condominium projects.

I would prefer option 1 since you are partnering with a builder. Once you do this a few times, you can honestly say that you have experience.

Good Luck.

Answer 5

Some local community colleges have an organization called the "Small Business Development Counsel" (SBDC). They offer FREE counseling to small business owners and people who want to start a small business. They will help you develop a business plan, form projections, and even complete loan applications and find lenders to submit them to. The SBDC members are all retired business professionals who donate their time to help people to build their businesses. They are very honest and genuinely care about your success.

Another resource is called SCORE (it's the same as the SBDC, just a different name).

Good luck!!

Answer 6

specific, it is an element in coming up actual sources profession in case you have some history and adventure in a shape employer. once you enter actual sources employer like living house merchandising or living house finding out to purchase, attempt to be knowledgeable on the cost of the living house, value of the supplies used etc. this might help you to make certain the cost of the valuables you prefer to sell or purchase.

Answer 7

You can apply for a commercial loan with the bank making the property you want to and build as your collateral.

Answer 8

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