Cohousing-L Mailing List: Re: Your bank loan

[Willie Schreurs (willie]

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. 


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