Funding Land Development
We have a number of land development deals (buy the land, put in roads, subdivide, sell all lots to builders) that we have been using bank financing for.
Most banks require 30% down and want all their money back+interest before we take out profit.
Has anyone used private/other money to fund deals like this? The investments are pretty secure, the money is tied up for 2 years as the home builder takes down all the lots.
If you have used private money, what is the typical deal structure? (points, interest rate, equity split, etc)
Deal sizes are $2.5m - $5m.
[ Edited by jbrandt on Date 05/24/2006 ]
Are you still in the market of finding funding? if so contact me. I may be able to help you find funding.
Quote:
On 2006-05-24 15:10, jbrandt wrote:
We have a number of land development deals (buy the land, put in roads, subdivide, sell all lots to builders) that we have been using bank financing for.
Most banks require 30% down and want all their money back+interest before we take out profit.
Has anyone used private/other money to fund deals like this? The investments are pretty secure, the money is tied up for 2 years as the home builder takes down all the lots.
If you have used private money, what is the typical deal structure? (points, interest rate, equity split, etc)
Deal sizes are $2.5m - $5m.
<font size=-1>[ Edited by jbrandt on Date 05/24/2006 ]</font>
[addsig]
If subdividing will give you the maximum profit, then go for it..
I assume you are not planning to sell your house anytime in the near future.
You can subdivide your land and retain up to ten acres with the house and still call that your primary residence. The rest of the land, once subdivided becomes investment property. The sale of investment property gets the capital gains tax treatment.