Stuck with a real estate development deal you’re not sure how to finance? You could let it stop your project or you could try these strategies…
Many times a deal can be done without all the capital in place from the start. If you have a solid team, with experience you can put together a joint venture or other creative structure.
Your options include:
o Bring in equity partners – these can be Co-General Partners or Limited Partners. What you can negotiate.
o Preferred Equity or Mezz Debt can be used to give a higher return to the General Partners without giving away the exit upside.
o You can have someone else guarantee the construction loan, yes you will have to pay them.
o You can have a capital markets team help you find equity and/or debt.
o Partner with non-profit or quasi-public agencies to provide investment funding, this requires some amount of the project to include an affordable or a mission driven component.
o Tax credit equity, this topic could fill an entire book by itself.
o Opportunity Zones – again a massive topic I will not go into, but the tax advantages create value for investors and compensate for additional risk of building in a lower income census tract.
Did I leave anything out? Let me know in the comments!