Re: My condo construction project-need help

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Posted by Amy on January 07, 2005 at 14:25:24:

In Reply to: My condo construction project-need help posted by rdlazo on January 04, 2005 at 04:10:33:

Hi Rudy,

With development projects, lenders look for one major requirement: that you or a cosigner is strong enough financially to guarantee the loan.

With new developments, the risk is higher because the property is not producing any income, and has an unproven track record. Lenders always need to evaluate what will happen in the worst case scenario.

In your case, things that would help are the following:
1) Larger equity contribution
2) Preselling units
3) Finding a gurantor who is financially strong enough to back you

Regarding the land, is it undervalued? I do know of some lenders that will allow you to include equity in property (with no seasoning of ownership)when looking at your equity contribution, but it may be limited to owner-occupied construction loans.

Anyway, just my two cents.

Sincerely,
Amy Cheng
Real Estate Investment Analyst & Consultant

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