Strategies For Financing Multiple Specs And Land Development In Today's Economy

[Bryan Hancock]

So small banks pretty much all appear to be lending again in Austin. Their regulators all want them to limit spec loans to one though. Some of the more aggressive lenders will do 2 and send their overflow business to some of their small lender buddies that will use their same underwriting.

Is anyone doing something else creative to find cheap construction money currently? What have you found that is effective?

Are you using equity to finance your land development currently or are you finding other debt alternatives?

[Bryan Hancock]

My what a difference a year makes! We have banks calling US to loan us money constantly now.

If the project has large margins many of my local lenders will loan all the way up to 85% LTC. The LTC is generally our constraint since our gross margins are roughly 30-40%. There is a LTV number too, but this never matters for our projects.

80% LTC is pretty easy to find if you know which lenders to talk to. There are 4-5 main small lenders locally that are the best. I had to call over a hundred banks to find them though.