Cohousing-L Mailing List: RE: **Getting The Construction Loan**

[Rob Sandelin (Exchange) (Robsan]

The number of units you have committed members for is not necessarily the
issue. The issue is capital.   What you will need to come up with is a
percentage of the Acquisition and development loan, typically 40%, although
it could be more.  Almost all condo projects in my area are built with NO
presolds, but the developer puts up to 60% of the A &D loan in those cases.

So if your A&D is for a million dollars, you will have to come up $400,000. 
A single person could contribute that amount.  In some cases people have
sold their homes and rolled all the captial into the project, and in most
cases, people  have put in varying amounts of capital. 

Raising venture capital is the subject of several books, although some
sources you might want to try and tap is out side partners with members
relatives.  Unless the banks in Utah are different, you can co-venture with
any number of partners so you can use capital from people parents, uncles,
whomever will put money into the pot. Obviously document this well and have
an attorney advise you on contracts and such.

At this stage, there is a huge pyschological thing going on in your group
where people have in some cases their whole lifes earnings on the line. 
Those same people may suddenly become enormously conservative about
EVERYTHING.  This can also be a place where you have to make some fast
decisions like - do we drop this lender and lose our application fee to go
with this other banks deal?  You might very well find your group paralyzed
at this point by the folks who have the most at risk.  Some general advise:

Make at least one extra copy of every single form, document etc. that the
bank asks you for, including your application form.  This way if you want to
approach another bank, you have most all the information you need right at
hand.

Keep your concept simple when you are applying to the banks.  Assuming you
are using the condo model of ownership, don't get all starry eyed about
cohousing to the bank.  You are building a condo project (and where you eat
dinner is your business, not the banks).

Empower somebody to represent you and make some decisions.  Its sometimes
not a good idea to have to run EVERY detail and negotiation item through a
large group consensus.  This seems obvious, but watch out how you deal with
it.  If there are difficult relationships, they will get more difficult
under  this stress.  Pay attention to this, even holding a special meeting
to let people blow off steam or whatever.  

Learn from rejection.  If one bank turns you down, politely ask why and then
use that information on your next application if you can.  

Rob Sandelin 
Sharingwood (Where a single 72 year old woman bought the land and did the
rezoning all by herself)