Private Lending / Institutional to Fund a Project
--> Project due diligence and planning has been done. City has approved plans and green light given to apply for permits, subject to project starting in X months from their issuance. Builder has been chosen and signed off on. I need 1.5M to fund the whole project for which there is a 99.7% statistical confidence level of probability that the project will not exceed the requested amount. There is the least amount of risk attached to this project based on the internal banking risk assessment variables. There is absolutely no reason to believe that the project can not be pulled off, that the numbers are falsified and way off, and that not funding this would be a case of really poor judgement. This is the ideal project your bank wants to fund and be proud to be associated with. The team on the project are all all-stars and overqualified.
--> at 65% LTV, 550k can be refinanced off the remaining equity in the property
--> There is 550k that can be taken from remaining equity off the property, is this enough to go elsewhere or directly fund the totality of the project @ 1.5M?
How do you get the 1.5M needed under normal, traditional, highly kosher means. Walking into your local retail bank and sitting down with the in-house commercial mortgage broker, what is he requiring from you in terms of assurances and collateral, direct asset collateral, amounts and percentages, and their sources of originations. If there are constraints imposed, such as the amount used as collateral can not be based off the remaining equity on the property / funds obtained by refinancing the property with another / private lender.
I deleted the "too long" part, as I get better with understanding the importance and efficiency of brevity on discussion boards, but the main premise is let us reserve the discussion to the financial aspect being asked. Making statements and offering insights and guidance about things such as credentials, experience, are you a builder, etc. are useless to me and my questions. We assume, I took 50k out of pocket and spent 12 months putting this together, clearing all the concerns associated with the soft costs, and not once did I go check to see if I pre qualified or anything. I'm walking in fresh to the cheapest source of cost of capital which is a big bank, and asking them to fund the project based on remaining equity as collateral on the asset being discussed or based on funds obtained by re-collaterizing the asset elsewhere. What do they absolutely need and what are their minimum terms required beyond the experience and track record, the skilled professionals associated to the project, etc. If the bank requires 20% to finance you the 1.5M needed to build, can you fund the 300k with funds used to collaterize the asset and do they care to lend you $ for a project based on an asset that is already highly leveraged?
If the bank is not in a position to lend you 1.5M as a bridge loan using a drawback payment schedule subject to milestone completion, using the asset as collateral, what can a private lender do? Will he refinance your property for you to get the 550k, collect your new premiums, while taking that 550k he extended to you as new collateral towards the bridge loan for which you will have new premiums as you draw into the funds, subject to the negotiated rates.