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Okay. You've
decided that a hard money loan is what is called for your
senior housing development project.
The use of hard money loans for senior housing
project development financing in the recent past has mainly focused on transactions with a real short fuse on them. The rates
are hard to otherwise justify in most instances. Hard money
lenders are going to put your through the wringer, so you had better be
prepared and do your own due diligence on each lender.
When you talk with a
senior housing real estate developer, you are talking to a promoter who
lives, breathes and eats new ways to capitalize pre-construction phase
and construction phase capital expenses; the earlier the funds can be
raised, the better. Hard money lenders carved out a near-term
bridge loan market in the late '80's that continues to this day.
Hard money loans are, for all intents and purposes, ubiquitous.
Some hard money lenders are not in the lending business, they are in the
application fee business. You should talk with a firm that has a
demonstrable track record in your industry. Don't worry, there are
more than enough to find someone who specializes in retirement living
development deals.
But, once you've looked
at the terms more closely, the reality is that hard money loans come
with a giant boost in your capital costs. Are the costs really
worth it? Is there an opportunity to look at alternatives?
If time is not the issue, then hard money is not the tool to apply to
the task; consider a commercial real estate fractional ownership
syndication (or, "real estate syndication"). The
Rainmaker method focuses on a $2.5 million floor and no upper
limit. Each contract is $25,000 - making each syndication no less
than 100 units. The sky's the limit and the good news is:
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There's a 90 day
marketing period. The syndication has to have at least $2.5
million in subscriptions in 90 days or you are not obligated to
close.
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The syndication
continues (assuming the floor sales requirement is met) and will
continue until the entire issue is sold or withdrawn after having no
further sales for any 90-day period. This means you have a way
to capitalize your senior housing project with all cash - no
loans. This would mean the investment would be bankruptcy
proof and foreclosure proof. With hard money deals, you have
extraordinary levels of bankruptcy risk and foreclosure risk.
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Each transaction is
configured with a buy-back option for the developer to use to
wind-up the deal whenever the developer chooses and assumes the
developer to not be in default.
Need to find out
more? Need help picking a lender? Call Rainmaker Marketing
Corporation and take advantage of a free initial consultation.
Rainmaker Marketing Corporation is the retirement living industry's
leading consulting group with hundreds upon hundreds of due diligence
documentation assignments, development management consulting assignments
and structured finance assignments under our belt, we have a solution
for your project. Call today and learn what a Rainmaker can do for
your program.
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