|
For developers and/or
owner/operators seeking commercial real estate construction loans there is
now a viable alternative to the commercial lender approach that destroys
financial investment leverage and grossly limits the developer's (or
owner/operator) ability to grow their company. Most commercial real
estate construction loans require the developer personally guarantee
repayment and pledge collateral to the lender equal to as much as 350% of
the loan. You have to ask yourself, "why should I accept this,
as the lender is only going to lend me my own money and charge me a
fee?"
The ugly truth is that
commercial real estate lenders are not in the business of accepting
subjective investment risks in exchange for making a mortgage loan.
It won't happen... It just won't happen.
There is now an alternative to
the commercial lender squeeze play - the fractional
real estate ownership syndication of real property interests via the
tenants-in-common (or "TIC") plan approach. The
syndication approach provides the following benefits that may
fundamentally change your prospects for financing the proposed project:
-
Increased financial
investment leverage. The structure of the transaction provides
opportunities for developers/sponsors of projects to increase their
financial investment leverage while offering commercial real estate
investors an opportunity to access extraordinary income-producing
assets that offer near-term and long-term real estate investment
opportunities.
-
Increased levels of
control. The TIC Plan leaves the developer (or sponsor, as the
case may be) in control of his/her future growth plans as long as the
developer hits the numbers set forth in the business deal that is
agreed upon prior to the syndication taking place. This means
the goal posts will not move for the lifetime of the transaction.
-
Additional profit-taking
may be possible depending upon the investment entitlements the
proposed project may in fact qualify for at the local, state and/or
federal levels. These incentives can be "commoditized"
and turned into an annuity all their own, thus allowing the
developer/sponsor to to offer additional opportunities to profit from
the transaction without increasing the risks to the syndication
participants.
There are some issues and
challenges you need to be aware of:
-
Due
diligence documentation is the same as it would be for a private
placement offering. Click
here and download our syndication program due diligence documents
checklist.
-
In most cases you must
have fee-simple ownership of the proposed project development site
before the syndication can start.
-
The market controls the
sales process. Rainmaker works with the RealEstatePlays.com
syndication program to provide a 90-day initial exposure to thousands
of prospective real estate investors. This means the market
controls the transaction success based upon the terms the sponsor
decides to offer. If you don't offer enough opportunity, then
you will not sell out your issue and it will be a failure. If
you offer too much, then you could be working for a lot less than you
have been counting upon. Syndications are strictly controlled by
the economic law of supply and demand.
It's high time you talked to a
Rainmaker consultant about the opportunities that may be created for your
benefit and/or the elimination of subjective investment risks from your
proposed transaction (thus making it easier to obtain capital financing).
|
