Financing of Property/Assemblage

[Derek G.]

How is land typically financed for a land development project? Interest only, investors, combined with a construction loan so the interest can be added to the construction loan, etc. Since the time to purchase land and permit can be month to years I want to get a better understanding as to were payments come from during the pre-construction phase of real estate development. 

[Chris Seveney]

@Derek G.

Not sure what you are trying to accomplish but you posted a dozen + questions on here about real estate development. What is your end game / goal? Many of these questions are negotiated variables as part of any deal which is deal specific

[Derek G.]

Chris,

As it pertains question, “What is your end game / goal? Many of these questions are negotiated variables as part of any deal which is deal specific.” My goal was to get a big picture understanding of the questions posted and any specific samples will help of past experience. I’ve been in the Commercial General Contracting sector for 9+ years along with having a real estate brokers license and am trying to piece both together into Real Estate Development.

Derek 

[Enrique Huerta]

@Derek G., I agree with @Chris Seveney...these points are negotiated on a deal by deal basis.

Here are some general arrangements based on my experience:

-Equity Only (buy all cash)

-Land Contributed as Equity (partner with a landowner)

-Land Acquisition Loan (banks & other lenders)

-Land & Construction Loan (Banks & Other Lenders)

Terms: I/O, LTV, etc. are negotiable and depend on the developer's project cost and personal financial situation.

Pre-Dev Costs: Negotiable. Debt or Equity. Super specific and hard to comment on...Creativity is key.