Building Real Estate - Finding Financing

[Jon Arambarri]

Hello BP Forums,

Currently looking into stepping into a new area of developing multifamily townhomes in a popular and growing location. I work in construction and I'm comfortable doing so, especially when inventory is at an all time low. I have everything in place excluding the Financing, I've been looking for new construction loans but no one can end me because of my experience as a developer is "minimal" on paper. 

This has pushed me towards hard money loans, which although is takes a slight hit to my numbers they are still well in the green. However, I am having a hard time finding a private money lender as well, if there is any direction any one here could push me towards, any and all insight would be greatly appreciated!

[Aaron Pfeffer]

Trying to follow this...

HML no problem, but additional PL problem? Because even with little to no experience you're going to have little issue finding an HML to fund your project if you have enough skin in the game. There's always a tipping point if the project pencils. But if you need both an HML to supply the construction financing and a private lender to also supply you with money (gap financing or JV agreement of some sort), yeah that's not going to be easy. The HML isn't going to love you also using private money unless that money is a partner and inside the entity you are using to borrow and the HML can have them guaranty the loan as well. And a private lender isn't going to love your lack of experience and the fact they will also be tied to an HML loan, unless of course your project and plan are fantastic and they are going to get a big piece of the upside.

Small one off flip loan...HML and PL easier to pair together though still not entirely easy. Multifamily townhomes (plural) where you need both HM and PM and you're not highly experienced? Tough sledding.