Construction Loans, Lending, Investing, Fundings & Financings...
the advent of Internet-based programs, non-recourse
construction loans were - by and large - the province of the federal
government that provided tax-exempt bond financing and mortgage loan
insurance for certain types of commercial income-producing properties
and lines of business. Today, non-recourse construction loans can
be obtained by increasing the amount of at-risk equity contributions to
the transaction - the sufficiency of which provides enough financial
incentive for a lender to provide non-recourse construction financing
and you make this work by having Rainmaker perform an underwriting
review of your proposal and help you with our participating network of
brokers to place your financing.
the equity capitalization is just one of the solutions for obtaining
non-recourse construction loans. In fact, there are a basket of
transaction terms that can be modified to induce a lender to make the
construction loan, including:
in the interest rate the notes bear; and
in the origination and placement fees/points on the note; and
additional collateral (not a smart option, but it is one that
a condominium ownership plan for a portion of the property and
immediately applying the sales proceeds against the outstanding
a tenants-in-common fractional real estate ownership interest
syndication to provide near-term equity contributions that reduce
the loan (per the heading of this page).
these items are used in combination to make the transaction attractive
to the lender. In many cases, the reduction in the origination
fees (created by the reduction in the origination amount of the loan)
can be waived and the points increased the same dollar amount as if the
higher loan-to-cost ratio had been used.
on the following page.
Goes Into An Underwriting?
The Rainmaker approach is truly
a comprehensive assessment with 66 exhibits collected on every project
that cover every aspect of the development, construction, operations and
regulatory matters. Collateral, credit and capacity underwriting reviews
are conducted using CREFC underwriting standards in addition to a
complete default risk analysis on term, maturity and technical default
risk profiles. Our typical underwriting report on a new
construction project will easily exceed 500 pages and catalogue all
transaction documents, plans and specifications.