Strategy for funding a Project
I have a large land development project. I think it is important to have back up plans for your back up plans when it comes to funding. So that brings me to an idea I had that I wanted to put out in the group to get some feedback on.
The plan would be to buy the land with "Lender A", land is $3,000,000. The plan is to subdivide the land for owners to have a lot within a gated community. That HOA community will have its own clubhouse and pool. The community will ultimately be part of a much larger resort that will have a boardwalk park, walking trails, larger community clubhouse/resort style pool and a restaurant.
The idea I had for a funding strategy for the development would be to presale 30% of the lots available. The funds from the 30% presale would be enough to cover development cost for the entire phase 1 of the project. The question is, assuming owners would pay in full for the lots for a discounted lot to possibly resale later, can I use those funds to develop the land?
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@Joey Locker
You could but there is a step missing which is the subdivision plan that you are proposing would take significant cost and creation of HOa docs.
That will take considerable time and $. You can't presell the lots until you have the subdivision plan approved. Even at that time if you have a HOA organized you as developer would need to put $ to start the HOA and pay for the lots you own until sold.
Lots to think about
Quote from @Chris Seveney:
@Joey Locker
You could but there is a step missing which is the subdivision plan that you are proposing would take significant cost and creation of HOa docs.
That will take considerable time and $. You can't presell the lots until you have the subdivision plan approved. Even at that time if you have a HOA organized you as developer would need to put $ to start the HOA and pay for the lots you own until sold.
Lots to think about
Chris, those things are all in the works as we speak. This is just looking at alternative funding strategies after those have been completed, which should be in the coming month.
