Real Estate

Private Lending / Institutional to Fund a Project

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  • Jan 26th, 2021 1:30 pm
[OP]
Newbie
Sep 26, 2017
30 posts
5 upvotes

Private Lending / Institutional to Fund a Project

TL;DR:

--> 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.

Thank you.

--------

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.
11 replies
Deal Addict
Mar 2, 2017
1144 posts
2121 upvotes
Toronto
I've been down this road before, there are a lot of variables at play, there is no silver bullet unless you are wealthy.

That said, where is the property, what are you building, is it paid off, can you secure your construction loan against the land?

If not, what is your net worth, what are your assets, are you willing to provide a personal guarantee on the loan by giving your assets as collateral?

Lastly, thanks for the laugh (re: 99.7% statistical confidence level of probability), you had me there.

Good luck, also I am not sure what you mean by "Builder has been chosen and signed off on", no builder will be "signed off" let alone will they give you time slot allocation without a deposit which you don't seem to have yet. You maybe have chosen a builder, but unless you are fully funded they aren't accountable to you for any sort of timelines you've discussed until you have a deposit and he has actually allocated time slots to you. Even with a deposit, managing to those timelines is extremely difficult so I suggest reassessing your timelines or understanding that your project timeline is subject to you actually committing the builder and that happens when you have a contract with legal recourse for meeting timelines. Until then this is all pie in the sky stuff.
Realtor, Investor, CPA
[OP]
Newbie
Sep 26, 2017
30 posts
5 upvotes
RichmondCA wrote: I've been down this road before, there are a lot of variables at play, there is no silver bullet unless you are wealthy.

That said, where is the property, what are you building, is it paid off, can you secure your construction loan against the land?

If not, what is your net worth, what are your assets, are you willing to provide a personal guarantee on the loan by giving your assets as collateral?

Lastly, thanks for the laugh (re: 99.7% statistical confidence level of probability), you had me there.

Good luck, also I am not sure what you mean by "Builder has been chosen and signed off on", no builder will be "signed off" let alone will they give you time slot allocation without a deposit which you don't seem to have yet. You maybe have chosen a builder, but unless you are fully funded they aren't accountable to you for any sort of timelines you've discussed until you have a deposit and he has actually allocated time slots to you. Even with a deposit, managing to those timelines is extremely difficult so I suggest reassessing your timelines or understanding that your project timeline is subject to you actually committing the builder and that happens when you have a contract with legal recourse for meeting timelines. Until then this is all pie in the sky stuff.
Haha was hoping you would reply after reading the thread on the developer post. Basically, what are the requirements, the structures and the mechanics of bridge loans provided by big banks and retail so where CoC is lowest (RBC, BMO, Scotia, CIBC, etc.). They all openly advertise construction and builder loans, I just find it impossible to figure out what their requirements are. Which is why private lenders usually get involved here. Again, let's set aside all the details of the plans the builder, build costs, the city red tape, permits, etc. and let's assume, all that is done. The soft costs have been paid for out of pocket, plans have been made, the 12 back and forth and revisions made with the city borough planning department is done and finalized, etc.

I have a nice 50 page brief in my hand, now I need the funds for the project. The conversation can't always be "but have you accounted for ___ delays" or this challenge or that hurdle, like where does the real conversation begin for financing. In my case, it's as I mentioned:

--> property is semi-commercial duplex, in highly desired area (recession and pandemic proof, lowest residential vacancy rates ever recorded, while all the overpriced condos sold as short term rental investments market collapsed without travel) in Montreal.

--> biggest challenge of the area has notoriously been the city's pushback and red tape. For the most part, many projects have always sought to amend the bylaws and make exemption requests for things such as density and setback modifications from 3 stories to 4 stories, or for demolition permits which have notoriously been refused in this area. The focus has always been based around patrimony and heritage and theres 1000 keyboard warriors ready to go vote against your permit requests during the referendum process because they don't want to see another building get transformed. Now, as of the last year highly favourable changes to the bylaws have happened. In the last 6 months, the new borough council mayor and his team have approved about half a dozen demolition permits and after being taken to court and sued by landlords, investors and developers for years and interventions of the ombudsman of the city, etc. they finally agreed to speed up their permit process and urban planning consultations as to not delay projects and waste people's time and money. So not only are they now open to more demolitions, they're expediting permits quickly because there is a dire need for new housing units especially if they want to have numbers to back their efforts on the issue, + they made important changes to what they are allowing in terms of architectural heritage structural integrity and amended the rules to just a couple.

--> in my case, the building is grandfathered into the most ideal setbacks and zoning, it can be built up to 4-stories, 100% build to lot size, 16m height, + the current density sits at 55% built, so there's 45% of undeveloped portion

--> these projects, when demolitions aren't involved are considered transformation projects which include expansionary construction (floors, extended back, redone facades, etc.)

--> rent is going for 2.25-2.50$ on new built no elevator and about 3.00$ on new with elevator in the area. The units get taken off as quickly as they get listed, as mentioned low vacancy rates and recession proof since this has been a constant thing for multiple decades now, the "original" hip and trendy area to live in

--> extra appeal, it's the only property left out of a handful in a 3km radius that still has any sort of development capabilities, and all the remaining ones are actually built to their lot size, just have options for extra floors or mezannines

The project goal would be to develop the property to include a ground floor commercial unit as required by zoning and which is totally fair and needed, and 3 floors of residential units. Multiple layouts exist, just a question of which unit size will be used to target which group of renters. In similar projects currently being developed or previously completed, there's been either a division in a way where the 2nd floor has 4 units (studios) and then 3rd+4th floor have 2-floor units with mezzanine, I've seen some that do 3, 3 and 2 (which is what I would think would be the ideal division) and I'm currently working on drafts now with an architect.

--> lot size is 3,100 sqft

--> permit applications and plan approval process, which used to be the biggest challenge, aren't a walk in the park, but they're not impossible, it's not an area that people avoid for those reasons at least like is the case in other areas

As is, the property can sell for 1.3-1.5 given the market and based off future CFs. The property is recently vacant for the first time in a decade, thus the considerations for what can be done to take advantage of the opportunity is being discussed. I've considered designing and dividing the ground floor commercial space in a way as to attract small teams or individuals looking to embrace a co-working / shared environment which does really well in the area, and continuing to rent the residential to students by rooms, etc. but ultimately this project is one I'm considering it, and I'm doing a lot of discovery and due diligence tasks right now at my expense, to check for structural and foundational issues, drafting prelim pans, etc.

But the financing is where I have more serious questions on. Pitching the project to a private bank or group of investors is not difficult for me, as long as I have a solid pitchbook and good project brief and with transparent and very conservative projections and expectations, I'll be able to either find someone for a JV or find someone to fund the project and give me the bridge loan / use mezzanine financing.

I'd like to know how a layman, walks into a bank and sits with the commercial mortgage broker and says here, this is my project, this is how much I need to fund the project, I am totally fine with you doing it in a drawback structure where payments are issued upon milestone completion and I'm ok with you controlling supplier payments. I'm not selling you off any smoke and mirrors and not trying to conduct anything shady. How can you help me.

--> the current mortgage on the property is about 250k
--> most recent bank appraisal I paid for has the value at 1,25$
--> it is my understanding that commercial mortgages cap at 65% (although as mentioned I've been hearing talks of 80% and such from everyone pretending they can approve anyone)
--> which means there's about 550k of equity left on the building

The estimated build costs and hard costs sit at a healthy 1.7M. It is my understanding that both banks and private lenders require 20% for a construction bridge loan. Can the remaining equity on the property be used as the down payment to put up against the 20%? If not, how much is needed. What do I need to show in terms of other assets, cash or cash equivalents. If I had the 1.7M, I wouldn't need to go asking for it, so what's the typical requirement for them to lend off? 35%, 50%? No one can give me a straight answer lol.

Like I said, I know with a final draft and project brief in hand, I can make a few phone calls and have a meeting at Otera, Fiera or CDPQ and secure my lending, but someone who doesn't necessarily have contacts in PE or commercial lending and capital markets, and wants to leverage the normal commercial mortgage route, what is he to do?

If I can't go into RBC and say look there's 550k of equity left, that I can use to put against the 1.7M I need to build that you can pay me in 3 draws, then do I go to a private banker and get a secured mortgage that pays off the current balance + gives me the extra equity to then go use against the construction loan? What's the simplest and easiest way and what are the requirements for it without having to use any mezzanine financing or go raise funds directly from capital markets divisions like Fiera's construction branch, etc.

edit: --> I even saw you mentioned the affordable housing grants offered right now, I looked into those as well and they finance up to 100%, subject to rents being capped at 30% of the median household income and for a period of 10 years, for 3 years interest free. I asked a few builders I know and they told me right away to avoid those programs because of the level of scrutiny on the due diligence and the way payments are controlled and made, which if you're going by the book and not looking to shave and cut corners (which I know is synonymous with the industry and likely the only way to get things done and still make profit) shouldn't be a problem. But those programs remind me of procurement contracts, where they slam you with 1000 page documents of legal jargon making it impossible to even apply without paying $$$$$ to hire the consultant to help you write the proposal for you.
Deal Addict
Mar 2, 2017
1144 posts
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Toronto
You will need to distill that to 3 sentences if you want feedback.
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Jr. Member
Jul 19, 2018
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Mississauga
Canuck2017 wrote: Haha was hoping you would reply after reading the thread on the developer post. Basically, what are the requirements, the structures and the mechanics of bridge loans provided by big banks and retail so where CoC is lowest (RBC, BMO, Scotia, CIBC, etc.). They all openly advertise construction and builder loans, I just find it impossible to figure out what their requirements are. Which is why private lenders usually get involved here. Again, let's set aside all the details of the plans the builder, build costs, the city red tape, permits, etc. and let's assume, all that is done. The soft costs have been paid for out of pocket, plans have been made, the 12 back and forth and revisions made with the city borough planning department is done and finalized, etc.

I have a nice 50 page brief in my hand, now I need the funds for the project. The conversation can't always be "but have you accounted for ___ delays" or this challenge or that hurdle, like where does the real conversation begin for financing. In my case, it's as I mentioned:

--> property is semi-commercial duplex, in highly desired area (recession and pandemic proof, lowest residential vacancy rates ever recorded, while all the overpriced condos sold as short term rental investments market collapsed without travel) in Montreal.

--> biggest challenge of the area has notoriously been the city's pushback and red tape. For the most part, many projects have always sought to amend the bylaws and make exemption requests for things such as density and setback modifications from 3 stories to 4 stories, or for demolition permits which have notoriously been refused in this area. The focus has always been based around patrimony and heritage and theres 1000 keyboard warriors ready to go vote against your permit requests during the referendum process because they don't want to see another building get transformed. Now, as of the last year highly favourable changes to the bylaws have happened. In the last 6 months, the new borough council mayor and his team have approved about half a dozen demolition permits and after being taken to court and sued by landlords, investors and developers for years and interventions of the ombudsman of the city, etc. they finally agreed to speed up their permit process and urban planning consultations as to not delay projects and waste people's time and money. So not only are they now open to more demolitions, they're expediting permits quickly because there is a dire need for new housing units especially if they want to have numbers to back their efforts on the issue, + they made important changes to what they are allowing in terms of architectural heritage structural integrity and amended the rules to just a couple.

--> in my case, the building is grandfathered into the most ideal setbacks and zoning, it can be built up to 4-stories, 100% build to lot size, 16m height, + the current density sits at 55% built, so there's 45% of undeveloped portion

--> these projects, when demolitions aren't involved are considered transformation projects which include expansionary construction (floors, extended back, redone facades, etc.)

--> rent is going for 2.25-2.50$ on new built no elevator and about 3.00$ on new with elevator in the area. The units get taken off as quickly as they get listed, as mentioned low vacancy rates and recession proof since this has been a constant thing for multiple decades now, the "original" hip and trendy area to live in

--> extra appeal, it's the only property left out of a handful in a 3km radius that still has any sort of development capabilities, and all the remaining ones are actually built to their lot size, just have options for extra floors or mezannines

The project goal would be to develop the property to include a ground floor commercial unit as required by zoning and which is totally fair and needed, and 3 floors of residential units. Multiple layouts exist, just a question of which unit size will be used to target which group of renters. In similar projects currently being developed or previously completed, there's been either a division in a way where the 2nd floor has 4 units (studios) and then 3rd+4th floor have 2-floor units with mezzanine, I've seen some that do 3, 3 and 2 (which is what I would think would be the ideal division) and I'm currently working on drafts now with an architect.

--> lot size is 3,100 sqft

--> permit applications and plan approval process, which used to be the biggest challenge, aren't a walk in the park, but they're not impossible, it's not an area that people avoid for those reasons at least like is the case in other areas

As is, the property can sell for 1.3-1.5 given the market and based off future CFs. The property is recently vacant for the first time in a decade, thus the considerations for what can be done to take advantage of the opportunity is being discussed. I've considered designing and dividing the ground floor commercial space in a way as to attract small teams or individuals looking to embrace a co-working / shared environment which does really well in the area, and continuing to rent the residential to students by rooms, etc. but ultimately this project is one I'm considering it, and I'm doing a lot of discovery and due diligence tasks right now at my expense, to check for structural and foundational issues, drafting prelim pans, etc.

But the financing is where I have more serious questions on. Pitching the project to a private bank or group of investors is not difficult for me, as long as I have a solid pitchbook and good project brief and with transparent and very conservative projections and expectations, I'll be able to either find someone for a JV or find someone to fund the project and give me the bridge loan / use mezzanine financing.

I'd like to know how a layman, walks into a bank and sits with the commercial mortgage broker and says here, this is my project, this is how much I need to fund the project, I am totally fine with you doing it in a drawback structure where payments are issued upon milestone completion and I'm ok with you controlling supplier payments. I'm not selling you off any smoke and mirrors and not trying to conduct anything shady. How can you help me.

--> the current mortgage on the property is about 250k
--> most recent bank appraisal I paid for has the value at 1,25$
--> it is my understanding that commercial mortgages cap at 65% (although as mentioned I've been hearing talks of 80% and such from everyone pretending they can approve anyone)
--> which means there's about 550k of equity left on the building

The estimated build costs and hard costs sit at a healthy 1.7M. It is my understanding that both banks and private lenders require 20% for a construction bridge loan. Can the remaining equity on the property be used as the down payment to put up against the 20%? If not, how much is needed. What do I need to show in terms of other assets, cash or cash equivalents. If I had the 1.7M, I wouldn't need to go asking for it, so what's the typical requirement for them to lend off? 35%, 50%? No one can give me a straight answer lol.

Like I said, I know with a final draft and project brief in hand, I can make a few phone calls and have a meeting at Otera, Fiera or CDPQ and secure my lending, but someone who doesn't necessarily have contacts in PE or commercial lending and capital markets, and wants to leverage the normal commercial mortgage route, what is he to do?

If I can't go into RBC and say look there's 550k of equity left, that I can use to put against the 1.7M I need to build that you can pay me in 3 draws, then do I go to a private banker and get a secured mortgage that pays off the current balance + gives me the extra equity to then go use against the construction loan? What's the simplest and easiest way and what are the requirements for it without having to use any mezzanine financing or go raise funds directly from capital markets divisions like Fiera's construction branch, etc.

edit: --> I even saw you mentioned the affordable housing grants offered right now, I looked into those as well and they finance up to 100%, subject to rents being capped at 30% of the median household income and for a period of 10 years, for 3 years interest free. I asked a few builders I know and they told me right away to avoid those programs because of the level of scrutiny on the due diligence and the way payments are controlled and made, which if you're going by the book and not looking to shave and cut corners (which I know is synonymous with the industry and likely the only way to get things done and still make profit) shouldn't be a problem. But those programs remind me of procurement contracts, where they slam you with 1000 page documents of legal jargon making it impossible to even apply without paying $$$$$ to hire the consultant to help you write the proposal for you.
First of all you need building plans/permits before a bank would even talk to you or even a private lender. Banks are usually do not like funding smaller projects and end up costing almost the same as private lenders once you factor in all the costs. The draw downs are on a work completion basis. But they do disburse funds through their own lawyer and estimator every time they give out the money. This adds to your cost.

You did mention that you got the appraisal for $1.25 mil why cant you just refinance the property and get the permits and what not. You will still have enough cash left in your account to approach a private lender to finance the shortfall. Am i missing something here?

Walking into a bank for a construction load is very difficult and most builders/companies avoid banks for lending for construction costs. Also you will need a proper permits, business proposal even for private lending and a payment schedule by work completed to be able to get any kinds of lending even private lending.
Deal Addict
Mar 2, 2017
1144 posts
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Toronto
I think based on skimming what he wrote, in his mind the entire thing revolves around getting the lowest financing cost. A bit of a moot point when that is probably the least important piece of the equation.
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Dec 20, 2018
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RichmondCA wrote: I think based on skimming what he wrote, in his mind the entire thing revolves around getting the lowest financing cost. A bit of a moot point when that is probably the least important piece of the equation.
yup, first step will be to a report from a cost consultant, and then tender and see what prices he's actually getting and compare to his proforma. I've seen tender prices go 20% above cost consultant report easily in the crazy market we're in
Deal Addict
Mar 2, 2017
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20% is the old 10% these days.
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[OP]
Newbie
Sep 26, 2017
30 posts
5 upvotes
IrfanP53614 wrote: First of all you need building plans/permits before a bank would even talk to you or even a private lender. Banks are usually do not like funding smaller projects and end up costing almost the same as private lenders once you factor in all the costs. The draw downs are on a work completion basis. But they do disburse funds through their own lawyer and estimator every time they give out the money. This adds to your cost.

You did mention that you got the appraisal for $1.25 mil why cant you just refinance the property and get the permits and what not. You will still have enough cash left in your account to approach a private lender to finance the shortfall. Am i missing something here?

Walking into a bank for a construction load is very difficult and most builders/companies avoid banks for lending for construction costs. Also you will need a proper permits, business proposal even for private lending and a payment schedule by work completed to be able to get any kinds of lending even private lending.
Hey, yes exactly my thoughts. For the most part, from most deals I've been able to audit / builder contacts and CRE brokers I know, the general consensus is these deals get floated private. As for the question on the refinancing, that's exactly my question. As it stands, the easiest way for me to get hard cash would be to pull out any remaining equity off the building, which at a normal 65% LTV rate would be about 550k. I just want to know if a bank or private lender is willing to fund the project using cash that was pulled against the same said property for which the funds will be used to develop. Or if that's a condition that ultimately interferes with the lending criteria, and I'm obligated to show/put up 20% that is sourced differently.

Because it would also make sense to be denied funding based on that premise. If I refinance the property to pull out the 550k, I would then be carrying the 1.25M$ mortgage with required payments. I would understand that a private lender or bank would be hesitant to then put up the $ required for the project (let's keep it at 1.7M to keep things simple in draws) for which my down payment comes from the now heavily leveraged asset that I'm looking to transform. At the end of the day, I know it all comes down to an individual assessment on a case by case project basis adjusted for their risk criteria and analysis. I just want to feel out the mechanics before asking the wrong questions to the right people.

The way I've thought about it, I have a few options and incentives that I can offer:

(1) either refinancing, taking that equity and using it to secure the lending for the project - I now have the carrying premiums of the new mortgage that I need to factor into my cost analysis and capital budgeting tables, and then another premium to cover the minimum required on the private loan that will increase as I draw into subsequent waves

(2) I don't refinance, but I approach a private lender and form a temporary partnership where title is possibly shared to the new capital structure and my contribution will be the "gifted down payment" and equity portion left off the full asset market value. Shares to be repurchased upon project completion and subject to X fees/interest terms, when the property is then remortgaged to "close" the bridge.

Just getting feelers out because I've been getting many different answers in terms of just the basic and minimum requirements. Some people have told me generally 20% is needed to fund, others as comment under suggests 10% since private lender takes more $% and requires less, others have told me you need 50%, etc.

Thank you though appreciate the feedback, and yes I understand the requirements and costs associated to just being able to go out and pitch to get funding and the risk associated with the sunk soft costs on a project that ultimately just dies, much like 1000s of them do.
[OP]
Newbie
Sep 26, 2017
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RichmondCA wrote: I think based on skimming what he wrote, in his mind the entire thing revolves around getting the lowest financing cost. A bit of a moot point when that is probably the least important piece of the equation.
Hey, thank you for answering. In fact, it doesn't rely on that, I've been able to forecast and budget for very aggressive rates, I just wanted to understand if traditional retail institutional lending even bothers with this scale of a project that isn't too small and simple as a builder loan for a home, and not big enough where the commercial lending departments get involved. The more I look into it and the feedback I get is that walking into your traditional bank to fund a decently complex project of this nature isn't an every day occurrence.

In either case, with that out of the way, let's talk about private lending funding. So you say the down payment/collateral used to be 20%, but now you could luck out with 10% and a good plan, team and incentives for the lender. How would that work? Again, let's assume I have approved plans in hand, a complete detailed project outline with thorough investment analysis (capital budgeting analysis, cost analysis, etc.) and the city has approved the permits and given me 6 months to begin building, where do I go from there?

The only cash in this scenario would be the equity remaining on the property. The current mortgage is hovering around 250k, the most recent bank appraisal values the land+property at 1.25M$, and the market value and price at which the property would be absorbed at is 1.5M$. I walk into a meeting with a private lender, show him the plans and permits, the full project brief and ask for 1.7M$. Will he let me put up the down payment based off the equity balance? Is he going to take care of the refinancing as well and bundle it into the full structure of the full loan? Or is he going to tell me to go refinance, and come back with the 20% of 1.7M$ so 340k, and we move from there.
[OP]
Newbie
Sep 26, 2017
30 posts
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StatsGuy wrote: yup, first step will be to a report from a cost consultant, and then tender and see what prices he's actually getting and compare to his proforma. I've seen tender prices go 20% above cost consultant report easily in the crazy market we're in
Oh for sure! Building materials have easily doubled and in some cases tripled for certain things. Much like everything else at this point, and definitely a risk to be considered. I know of a few people who have put their projects on hold until material prices go down, I also know others who couldn't care less at this point the project needs to move forward, but then there's no available labour. It's definitely not the time to be taking huge financial and leveraged risks, I know. I'm just taking the time to fully grasp the process and familiarize myself with the general scope of things, the mechanics. I have someone who works for one of the big CRE firms and their internal cost budgeting and analysis tools get pushed updates regularly.

The way I see it, from a macro perspective, the average build cost for Montreal per sqft (I know I know, this method is highly flawed, but unfortunately this is how builders and developers still logic things out, they're not all necessarily numbers and data individuals right, they have their team for that) for multi residential is/was around 140-160$, even now with materials costs up and labour shortages, I inquired with a few guys I know with heavy door volume and they all told me that the main issue for them isn't that their cost/sqft increased because of things like materials, but that time and schedule delays because of the supply chain issues and labour shortages is what's costing them the most.

Even if I build at 200$ sqft for the residential (x3) and 80-120$ for the commercial (x1), which again seems very high to many people I've consulted with, and underestimating the FV CFs of rent (using pricing from 24-36mo ago), I could still easily refinance based on the new value and cap rate, pay off the project loan + interests and fees, and have the rents cover the new mortgage, while accounting for overhead and OE.

The numbers all work out in in terms of overall health and attractiveness of the project, the issue now becomes a question of timing the project to suffer the least amounts of inorganic setbacks such as supply and labour shortages, and not getting burned by several deep deadline pushbacks increasing my premium capital expenditures on the new loan(s) + OC of keeping the place vacant and not generating income right. And of course the mandatory things such as a great PM and project lead (in my case PM doubles as the building & structural engineer and licensed architect for projects of this scope, that don't require an MArch. stamp), good builder who has worked on similar projects in the area and knows the city employees, the plumbing and sewage main lines, etc. which is also the main builder I've been in talks with, who completed an identical project on the same street.
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Your numbers are not realistic.
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