12 - Construction Loan + Funding Table

Summary

  • :dart: Comprehensive Loan Sizing with Funding Tables
    • The video introduces advanced tools like “Lead Developer” and “Lead Developer Plus” that utilize funding tables for precise loan sizing.
    • Funding tables allow allocation of percentages for various line items, critical for development project funding.
  • :building_construction: Understanding Construction Loans
    • Explains how construction loans typically replace land acquisition loans to consolidate debts under a single bank.
    • Details how banks assess the “Total Development Cost (TDC)” and their criteria for loan approvals.
  • :bar_chart: Key Differences in Loan Evaluation
    • Banks exclude several costs like stamp duty, interest, and legal expenses from TDC, which often surprises developers.
    • Offers a breakdown of how banks calculate funding limits based on “hard costs” like demolition or gas connections versus excluded “soft costs.”
  • :bulb: Operating Shortfall
    • Defines the “Operating Shortfall” as the gap in payments during the leasing period.
    • Highlights strategies to manage shortfall by balancing equity and debt percentages.
  • :briefcase: Dynamic Tools for Calculation
    • Describes features such as iterative calculation that automatically update funding data based on user input.
    • Discusses equity and debt scenarios to adapt funding options dynamically.

Insights Based on Numbers

  • :abacus: Banks may fund 70% of TDC but only consider a fraction of the stated costs (e.g., excluding stamp duty or soft costs).
  • :moneybag: Developers may need to cover up to 35% of total costs through equity.