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Bridge Loans - Continued...
Continued
from previous page...
The
structured finance approach utilizes a combination of five (5)
funding resources to provide the capital financing necessary to
sustain the development, construction and initial lease-up cycle of
all types of senior housing. The elements in this 5-tier
structured financing are:
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Developer
seed capital. These are the funds the developer is
"fronting" for the transaction. How these funds
are employed makes all the difference in the world. Most
developers make the mistake of concentrating on trying to get a
construction loan when they should be focused solely on raising
additional equity contributions because, if syndication sales
are large enough, the developer will be able the developer's
seed capital before the project is even finished with
construction of the property.
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Statutory
Investment Entitlements. The next leg in the plan is the
leg supported by investment incentives such as tax credits and
other tax-advantaged incentives that may be converted into an
annuity and used to buy-down the construction mortgage financing
loan interest rate or purchase credit enhancement for the
construction loan.
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Condominium
Investment Plan. No, you aren't going to sell senior
housing condominiums for people to live in; this condominium
plan is organized solely for the purposes of creating a real
estate investment opportunity for the benefit of the
investing-public and the developer. There are significant
restrictions on the timing/access of condominium plan sales
proceeds in most states. Rainmaker utilizes these funds in
the final 45 to 60 days of the construction phase to reduce the
construction loan (or what amounts to the same thing), thus
lowering the exit loan-to-cost ratio, making negotiations for
non-recourse loans more palatable for commercial lenders.
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Fractional
Tenants-In-Common (TIC) Commercial Real Estate
Syndications. The mainstay for equity contributions is the
TIC plan. The TIC plan allows the developer the
opportunity to obtain at-risk equity contributions as early as
the project's pre-construction phase. The TIC plan is the
most important element because it has so much flexibility, it
may be the key to the non-recourse loan and the key for the
developer to get his/her funds up off the table.
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Construction
Mortgage Financing Loan. The final leg of the capital
stack is the construction loan. If the TIC plan is used to
raise enough equity, this can be a non-recourse loan. If
not, well you don't even want to think about it.
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Learn
more on how you can earn more. Talk to a Rainmaker today.
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Do
You Know The Secret?
When it comes to commercial real
estate development finance, it doesn't matter whether you need to raise
$5 million or $50 million, the out-of-pocket costs, advance fees and
project due diligence costs will always require the same relative
investment dollars the promoters have to fund. Do you know what
that amount is? Do you know the Secret? |
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