Construction Loan Structure for Multi-Family Development

[Chris Martin]

Hi BP members! 

I was hoping someone on the development side could answer a few quick questions for me. I am modeling out a multi-family development project to obtain financing, but this is my first dip into this sector of real estate (my experience is all existing properties to this point). To be honest, I likely won't facilitate this project, but am using it as a tool to learn for future opportunities.

• - Let's assume the lot is already vacant and has already been purchased utilizing a lot/land loan. 
• - The goal is an 18 month loan to complete phase 1 below. We'll worry about phase 2 & 3 (the remaining units) later on
• - Phase 1 is site development (horizontal construction) for the whole project, and a structure that will contain 10 of the units 
  • - Horizontal construction costs: approx $225k
  • - Vertical construction costs: approx: $210k/unit
• - Assuming loan will be structured between an advance against land for the horizontal and a construction holdback for the rest of phase 1

What would likely be the loan amount, term, and pricing (rate, points, fees)  for phase 1?

What risks would a lender find to be associated with this type of project?

Are there any other unique loan structure options that may be utilized?

Again, I'm mostly looking at this project as a learning tool, so your advice will be greatly appreciated!

Thanks everyone!