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Pre-Construction Phase Project Financing...

Obtaining pre-construction phase project financing in the institutional market is no cake-walk and we recommend consideration be given to selling real property interests (via a qualified real estate syndication plan).  In most cases, qualified institutional buyers (the "life-blood" of institutional investment funding - "QIBs") are not going to provide pre-construction phase project financing because the pre-construction phase has too many intrinsic risk elements that haven't been properly "nailed down" by the developer/sponsor group, so the exposure is (therefore) too high.  Rainmaker Marketing Corporation receives a lot of phone inquiries relating to the golden question of, "where does the equity financing come from?"  Every project sponsor and/or developer seeks to make those pre-development phase dollars go further and create the kind of financial investment leverage that is essential to the complete capital funding plan of today's commercial real estate project.  The syndication approach provides the tools to allow the developer (in certain cases) to access non-recourse construction financing by increasing the equity capital to an amount sufficient to induce the lender to make the loan on a non-recourse basis.

The answer lies in a multiple prong type of approach that requires pain-staking due diligence be completed regarding all aspects of the capital funding cycle.  One of the most intriguing methods of attracting institutional investor support is to tie the institutional investor's investment to some type of entitlement that does not require the project to be materially successful over the long-term operating window in order for the institutional investor to cash in on their investment.  Examples of this include:

Grants - a pending grant can be assigned to the institutional investor as the investor's compensation guarantee.  This allows the investor to step outside the deal even when things don't look quite as rosy as you forecasted.

This discussion continues on the following page...

Call: 281.537.1200


What's New?

Tired of construction loan rejection letters?  Rainmaker has come up with a whole new way of funding construction that eliminates the developer's reliance upon construction mortgage financing, while creating financial investment leverage greater than 10:1!

All of the information is in our latest white paper.  Click here and download a copy and be prepared to be floored!

Email: consultants@rainmakermarketing.com.  Address: 15519 Dawnbrook Drive, Houston, Texas 77068.  281.537.1200. Open M-F 9 to 5 (CST).

 

About Rainmaker Marketing Corporation...

Rainmaker Marketing Corporation, Inc. is a B2B consulting firm built from the ground up by Clint Lovell on the premise of providing market feasibility studies (hence the name Rainmaker Marketing) to the senior housing development industry for projects seeking FHA/HUD-insured financing.  Rainmaker started business in 1993, though its roots extend back to 1988.  In the intervening years, the depth of services has been enhanced to provide a complete continuum of due diligence documents and consulting services.

Today, Rainmaker has completed literally hundreds upon hundreds of consulting assignments on projects in the housing, health care, retail, commercial office and hospitality industries throughout North America - including projects in 45 of the 50 states, Canada, Mexico and the Caribbean Basin.  The resulting reports and consulting services provided by Rainmaker have resulted in billions of dollars in new development.  Our clients have included publicly-traded companies, privately-held companies, government bodies and not-for-profit organizations.  

When Should You Be Talking To Rainmaker?

If you will be seeking construction financing from a third-party lender (or investor) with whom you do not already enjoy a previous underwriting relationship, then you need to be talking to Rainmaker.  If you have insufficient equity or assets necessary to sustain a construction mortgage financing for a new construction project, then you need to be talking to Rainmaker about the alternatives.  If you have doubts, Rainmaker is the firm to turn to when it's time to deal with them.

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