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Syndications are the real opportunity in a recession that can beat the odds and senior housing is the industry to do it with...

 

 

HUD Feasibility Studies - Continued...

Continued from previous page...

Rainmaker's approach is two-fold in nature:

First, we undertake the due diligence analysis and documentation using the underlying assumption the construction financing will be pursuant to a HUD-insured mortgage; then

Second, we undertake the due diligence analysis on a structured finance basis so as to include the items left out of the HUD analysis and reduce the carrying costs by dramatically shortening the construction mortgage financing loan application period by going into the institutional market on a private placement basis; then

The developer makes the decision - but now the developer is making the decision not simply on the basis of whether or not HUD will process the mortgage in time to capture the current market opportunity, but also on the basis of creating the highest theoretical financial outcome for our client - you.  We serve you.

This is possible because there are a host of capital financing tools that may in fact be available to the developer who steps out from under the federal government umbrella and focuses on what the market may be providing if the right structured finance plan proposal was promoted on an equal basis to that of the HUD program.  These elements may include:

institutional condominium ownership plans.  There are condominiums and there are what look like condominiums but aren't condominiums in the traditional sense.  You can create a condominium ownership plan for a fractional proportion of the project space plan and use it as an alternative equity capital financing annuity.  You tell your investors the house will pay the taxes, insurance, maintenance and handle all operations  - giving the investor a portion of the income generated by the condominium plan elements.  These are commonly sold to institutional investors on a private syndicate basis.  Your investment banker may even want to help.  We need to see all of the pertinent issues and challenges - making a choice based upon a strong factual position (versus the HUD approach).

tenants-in-common real estate equity syndicate plans.  Unlike condominium plan financing, TIC plan real estate syndicates can invest as early as the project's pre-construction phase.  This means the funding may provide enough capital to qualify the project for a non-recourse loan without having the HUD-insurance.  These plans can be a very valuable addition to the developer's capitalization arsenal.  There is a three-level set of goals with every pre-construction phase syndicate:

First, provide the equity capital necessary to allow the developer to obtain and close on some kind of construction mortgage financing for the proposed project; then

Secondly, provide enough equity capital contributions to allow the developer to obtain and close on a non-recourse construction mortgage financing for the proposed project that is not HUD-insured; then

Finally, provide enough equity capital contributions to allow the developer to withdraw his seed capital before the end of the construction period activities, thus giving the developer the opportunity to re-leverage his seed capital and greatly increasing the component capital returns over the near-term and long-term windows.

tax-advantaged (statutory) annuity financing.  In almost every case, statutory tax-advantaged funding products can have an impact on the construction phase financing (e.g.: providing capital financing in the final 30 to 60 days of the construction phase) because the usual requirement for conveyance of the stated benefit is the completion of construction and commencement of operations.  These benefits may indeed be great and a careful review of all statutory programs should be a fundamental requirement of every project market feasibility study, but Rainmaker remains one of the very few firm's that routinely provide this very important process.

There is even more to realize.  Have you considered obtaining non-recourse financing without the headaches, interminable processing periods and earnings restrictions the HUD process entails?  You haven't?  Talk to a Rainmaker consultant before you leap into the fray and get ALL of the answers.

About Rainmaker...

Rainmaker Marketing Corporation is the brainchild of Clint Lovell, a seasoned business finance consultant with more than 20 years experience.  Rainmaker is a B2B consulting firm that was incorporated in 1994 for the purposes of providing market feasibility studies to businesses seeking capital financing in the commercial and institutional markets.  Today, Rainmaker Marketing Corporation provides a comprehensive array of due diligence documentation services for most major industry groups.  Rainmaker Marketing Corporation also provides syndication management services for fractional commercial real estate syndicates that can provide mezzanine gap funding for income-producing commercial property developments as early as the pre-construction phase.  Rainmaker Marketing Corporation serves clients throughout North America and the Caribbean Basin.

Rainmaker Marketing Corporation, Inc.

15519 Dawnbrook Drive, Houston, Texas 77068

281.537.1200  

consultants@rainmakermarketing.com

© Copyright, 2009 Rainmaker Marketing Corporation, Inc.  All rights reserved.

 

A Few Words on Change...

Clint Lovell, the Managing Principal of Rainmaker, has written a book on the subject of capitalism and the creation of a new economic society that ends our reliance on taxation and retires all of our national debt.  The book is called The Fix and you can order an advance copy now at www.the fixbookstore.com.  Order today and we'll pay your shipping, saving you some real change. 

What's New...

Read our latest whitepaper on capitalization strategies and commercial real estate syndications that provide developers with a new arsenal of capital finance weapons they can deploy in the middle of this recession.  Click here and download the whitepaper free! 

 

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