Independent Living Construction Loans - Continued...

The key elements to making a structured financing pay off and provide independent living facility non-recourse construction loans include:

• The principle of creating positive financial investment leverage for the project is of critical importance when sizing the condominium investment plan.  Any shortfalls can be made up out of the incremental equity gain the developer realizes much later down the road.

• The condominium plan funds are only going to be made available in the last month of the construction period, so the condominium plan should be sized to provide net proceeds that are large enough to cover the final month of construction only.

• The TIC plan can be undertaken in interlocked stages, to wit:

  • The first minimum sales target is to generate enough sales proceeds to allow the developer to close escrow on a construction loan without regard to the recourse and collateralization issues); then

  • The second minimum sales target is to generate enough sales proceeds to allow the developer to close escrow on a non-recourse loan that has no cross-collateralization requirements; then

  • The final sales target is to generate enough sales proceeds so as to allow the developer to obtain a non-recourse construction loan and withdraw the developer's capital.

Find out what we can do for your project.  Talk to a Rainmaker today.