|Re: Your bank loan||<– Date –> <– Thread –>|
|From: Willie Schreurs (williefortnet.org)|
|Date: Fri, 30 Aug 1996 01:02:05 -0500|
John Major said (as quoted by Tom Lent): > . . . We at WaCoHo are building 25 units, which makes about a > $3 million project - we have been told that we may have to come up with > up to 25% of that, which is a huge sum for us to put at risk. . . . Just remember that you *don't* need to get a construction loan for the full cost of your project. Yes, you'll need to raise money of your own before the bank will talk to you, but the construction loan can be essentially a revolving fund. Use it to build the first few homes (and probably the common house). When the owners move in, their mortgages go to pay off a portion of the construction loan which is continuing to pay for the building of the next homes. For example, at Greyrock, which is probably about a $5 million project (God, those numbers are scary!), we have a construction loan of $500,000 and probably at least as much again in deposits (a deposit of only 5% of the projected home value was *required*, more was encouraged by paying interest on the excess), and loans and equity investment from within and outside our group. Each time someone moves in (14 families by this weekend!), the pot is refilled by their mortgage. /\ Willie Schreurs /\ //\\ <willie [at] FortNet.org> or <71500.2232 [at] compuserve.com> //\\ ///\\\ Future Home: Greyrock Commons, Fort Collins, CO ///\\\ /// \\\ . . . 4 weeks and counting down . . . /// \\\
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