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Updated almost 4 years ago,
How to maximize appraisal post-entitlement, pre-financing?
I have a 1-acre lot in Central Texas that I have rezoned for commercial and plan to build 13k SF of office-warehouse product, in 2k SF unit increments.
I paid cash for the lot, and am currently working through the entitlement process (which I am also paying cash out of pocket) -- I estimate that once I am fully entitled and fully permitted to build, I will be $400k cash into the deal.
I estimate site prep/grading/construction etc etc will be around $1.2m. The local bank likes the project/product and would like to finance it. They have suggested that I contribute my equity as the down payment for the construction loan.
So, if we were to take $400k cash in against $1.2m, my loan would be $800k and LTV would be 67%.
So let's fast forward a few months --- I am $400k in and have a fully permitted shovel-ready project --- presumably, the bank would have me pay for an appraisal to determine the value of my project at that point.
Stating the obvious, the higher it appraises, especially above and beyond my cash-outlay, the better for me.
For example, $500k against $1.2m, my loan would be $700k and LTV would be 58%. If that were the case, I could either take a bit of cash out or simply have a lower debt payment.
Any suggestions on what I can do in the project to make it appraise better/higher post-entitlement pre-financing?