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Get Your Real Estate Projects Financed

At ClearBlu, we live, and breath assisting early to mid-stage developers scale and have regular scenarios from developers who know exactly what’s needed to best position their projects for capital, and others who don’t.

When seeking funding for a new real estate development, presenting a compelling case to investors or lenders is crucial. Here are key factors that a real estate developer should emphasize:

Project Feasibility and Viability:

  • Market Research: Demonstrate a thorough understanding of the local market. Highlight demand, supply gaps, and growth potential.

  • Site Selection: Explain why the chosen location is strategic. Consider factors like accessibility, demographics, and proximity to amenities.

  • Environmental and Engineering Assessment: Address any potential challenges related to the site.

Financial Projections:

  • Development Profit: Calculate the expected profit by subtracting total costs (including interest) from total revenue.

  • Development Margin: Express development profit as a percentage of total development costs (net of selling and leasing expenses).

  • Cash Flow: Show projected cash flow during and after construction.

Capital Stack and Financing:

  • Capital Stack: Describe the layers of financing, including senior debt, mezzanine debt, preferred equity, and common equity. Explain their relative priorities and risks.

  • Construction Loans: Discuss how construction financing will be drawn upon.

  • Security and Priority: Clarify the security and priority for various lenders in the capital stack.

  • Term: Align the financing term with the development timeline.

Risk Mitigation:

  • Risk Assessment: Identify and address project-specific risks (e.g., construction delays, market fluctuations).

  • Contingency Plans: Present backup plans for unforeseen challenges.

  • Exit Strategy: Explain how investors or lenders will exit the project (e.g., sale, lease, refinancing).

Experience and Track Record:

  • Developer’s Background: Highlight the developer’s expertise, successful projects, and industry reputation.

  • Team: Introduce the project team, including architects, contractors, and legal advisors.

Legal and Regulatory Compliance:

  • Entitlements: Detail progress on land entitlements and necessary permits.

  • Zoning and Land Use: Confirm compliance with local regulations.

  • Contracts: Provide information on contracts with contractors, suppliers, and other stakeholders.

Market Demand and Sales Strategy:

  • Target Market: Define the buyer or tenant profile.

  • Sales and Marketing Plan: Outline how the property will be marketed and sold.

  • Pricing Strategy: Explain pricing decisions based on market dynamics.

Remember that transparency, thorough documentation, and a compelling narrative are essential when presenting your real estate development project to potential investors or lenders.

I hope you find this helpful and please let us know if we can ever be of assistance at any phase in the process.  We also have calculators that can be helpful.

Best Regards,

Larry L. Gilmore, CMB, AMP

President & CEO

ClearBlu Capital Group Inc.

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