Cohousing-L Mailing List: Re: Construction Loan Financing (fwd)

[Denise Meier (dmmj]

> Gilda Iriarte <iriarte [at] herald.infi.net>
> 
> Dear Friends:  I would like to hear from all those cohousing communities
> who obtained construction loans from banking institutions as to: 
> 
> 1. What kind of personal guarantees were required?  From whom? How were
> they structured?  Were the personal guarantees unlimited (covering all the
> assets of the individual) or limited and for how much ? 

All 22 adult members of the project signed personal loan guarantees. It
was a scary idea, but we all did it. I have a copy of ours and can fax it
to you if you want to see it. It was what the bank wanted. I don't really
know the legal structure of it; we all just signed it because it was
required. 

>
> 2. What was the pre-sale
requirement ? > 

the bank required that we be completely presold (14 units). This was not a
problem for us, but we are in a very desirable area near the San Francisco
bay area, which means a large pool of cohousing-friendly type people.

> 3. Did you
build the project in stages (to minimize the Bank's exposure)?
> If you staged it, how did it affect construction costs ?

we started the sitework with our own money to get a jump start on the
construction schedule. it didn't have anything to do with minimizing the
bank's exposure.


> 4. How much equity participation did the Bank require (of the total
> project cost) ? 

they required 20% of the APPRAISED value of the project, which was
considerably less than the COST of the project. We each (except for the
two subsidized low-income units) ended up putting in 35% of our projected 
purchase price, plus paying for upgrades and change orders in cash.

> > 5.
What other issues were important
in structuring the loan ? > > 

 don't know.

6. What Bank or Banks were involved ?

We got our loan from Luther Burbank Savings in Santa Rosa, California. It 
is a small local savings and loan and was attracted to the project
because of its community oriented nature.

When we were applying i compiled a list of banks that have funded
construction for other cohousing projects. I still have it somewhere if
anyone wants a copy; it has not been updated recently, though.


Denise Meier
Two Acre Wood
Sebastopol, Sonoma County
Northern California