Cohousing-L Mailing List: RE: Developer Hired vs Developer-Driven

[Rob Sandelin (floriferous]

One thing I would to Sharons excellent summary. One thing a developer-driven
model provides is project financing. Somebody has to pay for the architects,
planning fees, land options, lawyers, etc. If your group does not have the
capital to pay these things, then your project will stall. They can add up
to hundreds of thousands of dollars. It is common for banks to ask the
development group to come up with 10-20% of the project costs. So a 8
million dollar project may have to generate over a million dollars. Most
groups do this by paying their downpayments on a home long before the home
is built.  A developer has lines of credit or in some cases, assets to cover
these costs until the construction loan becomes available. In exchange for
this capital, they take the project profits. Developers that don't make a
profit, don't stay in business long.

Rob Sandelin


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