DEVELOPERS!! What Was Your BEST Loan Experience?

Question

Developers!!

Who/What/When/Where/Why/How - what was your greatest, most favorable experience borrowing funds for a project, and why? What kind of project was it, and how did you find your lender? GO!!

Jonathan Klemm · Answer

@Marqus Freeman - I can't say I've had a super smooth experience yet haha but I know it's coming.

We are in the process of building a single-family house in Chicago's Bucktown neighborhood.  I had to go through about 5 lenders to find one that would give us a shot.  Then we thought we would be able to bill in our profit but because we are the developer and the builder they make us take it at the end - tons of priceless learning lessons!

How'd we find out the lender?  Tons and tons of networking and really telling everyone we ran into what we were trying to do.  Put it out the universe and good things will happen.

Merle Sauvola · Answer

@Marqus Freeman

My best.  I was 21 years old.  I was making 34k per year working for my dads home building company.  I found 16 acres that I contracted for around 260k.  I put $1000 down on the contract.

I had my surveyor draw up a conceptual plan for 18 lots.  I took that concept to 2 builders, and got commitments from them to take down 5 lots each.  I wanted to keep 8 lots for myself to build on.

I look the concept, the land purchase contract, the 2 builder contracts, and a pro forma letter to the bank.  I told them I want to borrow 80% of the after development value.  They signed off on it.

I went to closing.  I walked out of closing with $4500 (roll back tax credit where roll back tax never came)

Land development deal with no money down, and very low proven income.  That deal was the seed money to where I am today at 37 in business.

**Note** this was pre-recession.  Banks are a little tougher now :-)