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Bridge, Mezzanine Loans & Commercial Real Estate Project Construction Financing...

Before you jump on the bridge loans bandwagon and start shelling out money for "application fees" and "commitment premiums" (and God knows what else) you have to understand when and where to use these capital financing tools because these are expensive tools to buy.

Bridge loans and mezzanine loans serve to very different functions at different times in the deal's genesis:

Bridge loans are used for pre-existing properties to form a funding "bridge" between project states of operation. If a project is expected to undergo a significant value increase once some milestone has been reached and a temporary financing net needs to be constructed to support the project in the interim, a bridge loan may make sense. The limiting conditions are the time it takes to get from the present operating state to the next - with the projected term of the bridge loan being equal to twice the time management currently projects it will take to reach the milestone. If the cost of capital is in flux and/or the ideal cost of capital cannot be reached until some other condition (or the passage of a minimum period of time) is satisfied, then a bridge loan makes sense.

Mezzanine loans are used as a capital financing tool to augment the capital financing pie when the developer has insufficient equity resources to qualify the project for additional mortgage financing to cover the gap. Mezzanine loans do not release the developer from completing the project due diligence documentation requirements regarding the prime mortgage financing and mezzanine loans come with their own caveats and risks. There are many mezzanine lenders out there who are really in the "fees business" (i.e.: these firms don't fund mezzanine loans, but they do take application fees and commitment fees from suckers). If you are considering a mezzanine loan, lender due diligence is of critical value. It is almost a daily routine for us to learn about yet another developer who has been victimized by a supposed mezzanine lender who charged them fees, got paid the fees and then disappeared.

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Call: 281.537.1200

What's New?

Tired of construction loan rejection letters? Rainmaker has come up with a whole new way of funding construction that eliminates the developer's reliance upon construction mortgage financing, while creating financial investment leverage greater than 10:1!

All of the information is in our latest white paper. Click here and download a copy and be prepared to be floored!

Email: consultants@rainmakermarketing.com. Address: 15519 Dawnbrook Drive, Houston, Texas 77068. 281.537.1200. Open M-F 9 to 5 (CST).

About Rainmaker Marketing Corporation...

Rainmaker Marketing Corporation, Inc. is a B2B consulting firm built from the ground up by Clint Lovell on the premise of providing market feasibility studies (hence the name Rainmaker Marketing) to the senior housing development industry for projects seeking FHA/HUD-insured financing. Rainmaker started business in 1993, though its roots extend back to 1988. In the intervening years, the depth of services has been enhanced to provide a complete continuum of due diligence documents and consulting services.

Today, Rainmaker has completed literally hundreds upon hundreds of consulting assignments on projects in the housing, health care, retail, commercial office and hospitality industries throughout North America - including projects in 45 of the 50 states, Canada, Mexico and the Caribbean Basin. The resulting reports and consulting services provided by Rainmaker have resulted in billions of dollars in new development. Our clients have included publicly-traded companies, privately-held companies, government bodies and not-for-profit organizations.

When Should You Be Talking To Rainmaker?

If you will be seeking construction financing from a third-party lender (or investor) with whom you do not already enjoy a previous underwriting relationship, then you need to be talking to Rainmaker. If you have insufficient equity or assets necessary to sustain a construction mortgage financing for a new construction project, then you need to be talking to Rainmaker about the alternatives. If you have doubts, Rainmaker is the firm to turn to when it's time to deal with them.