In order to receive financing a lender will need to see a reliable source for repayment of the loan. In the case of high rise condominium property, a lender would ask for unit pre-sales. Because the construction of this type of property could take place over an extended period of time a lender that provides financing for the first two steps of the loan process is pivotal.
If a borrower tries to purchase the ground before being approved by the county and then gathers unit pre-sales, tenants could drop out before construction is completed.
Acquisition and Development
Definition:
developing or renovating raw land or its existing infrastructure.
Examples:
Coming Soon.
Funding Usages: purchasing land and improvements to land, grading and street improvements, utilities, parking lost and landscaping, constructing new facilities, renovating existing facilities, purchasing machinery and equipment.
Acquisition and Development loans generally involve a long-term, fixed-rate financing for the development or renovation of raw land or its existing infrastructure. Because these types of loans will almost always contribute to the economic development of the particular community, a Certified Development Company or CDC will work with commercial financers to provide the best possible financing.
A maximum 90% loan-to-value of the total project cost is the best case scenario for borrowers seeking an Acquisition & Development loan. Generally, a commercial lender will cover up to 50% of the total project cost while the CDC will provide up to 40% of the total project cost. The contribution made by the Certified Development Company is a Small Business Administration or SBA loan which is backed 100% by the government.