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Updated over 9 years ago on . Most recent reply

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Robert Vieira
  • Real Estate Broker
  • Philadelphia, PA
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Raising Capital for New Construction Project

Robert Vieira
  • Real Estate Broker
  • Philadelphia, PA
Posted

Hi All,

When raising funds for a new construction project, should one have the property under contract first?

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Bryan Hancock#4 Off Topic Contributor
  • Investor
  • Round Rock, TX
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Bryan Hancock#4 Off Topic Contributor
  • Investor
  • Round Rock, TX
Replied

If it is a syndicated offering I would say in general that you should have the property under contract.  If you don't this would need to be a disclosure item for your investors.  

If you intend to use a fund where money can be invested on a discretionary basis then it would be assumed that the properties don't need to be identified at the point of investment.  I'm assuming you're talking about raising money for a single project.  In this case what would you do if you couldn't contract for the property?  Your investors would probably be upset that you either wasted their time or were having their money sit idly for a project you didn't even control.  

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