BTR LOAN LTC CALCULATION

[Kevin T.]

Hi, I have a question regarding financing on a BTR project I am working on. How does land value affect LTC calculations? Here is the scenario:

We own a piece of entitled land (free and clear no financing on the land) that is worth $4,000,000

It will cost (vertical, site work, fees) $15,000,000 to build our project.

Let's say a lender will lend 65% LTC. Will they consider the $4mm as cost? 

For example:

65% of $19mm ($15mm+$4mm) is $12,350,000

OR 

65% of $15mm is $9,750,000, and then can we give them the $4mm land as security/equity and not come up with out of pocket money?

Any help is appreciated.