Walk Me Through a New Development Deal Structure

[Andrew Taylor]

I'm considering a new student housing development at a nearby university with a chronic shortage of student housing. I'm curious about financing the project - specifically, how would I convert it from what I assume would be a hard-money / private-money / short-term loan from a friend / family member into a long-term permanent financing type deal? 

I'm thinking I need $1M to build out phase 1 of the project (purchase land, complete horizontal construction, and lease up the units). Once they're all leased up and the property is operating at a profit, I'd go to a bank and say, "Look, it's a viable concept, we completed phase 1 without screwing anything up, units are all leased and generating profits, and we have a waiting list for phase 2 and 3 units. Please loan me the money for phase 2 (or phase 2 and 3)."

Assuming I have to borrow the $1M from HM/PM/FF, what do the terms look like? Obviously I don't want to pay 12-14% for years, but I figure I'm going to have to pay an elevated interest rate for a while. How long until a conventional lender will loan against the project and allow me to continue with phases 2 and 3?