Depending on the scope of the project, each of the five ingredients may need to be verified and documented before any loan approval.
Small Fix N Flip Project can be financed fast, sometimes without a full-scale appraisal and with limited documentation.
Major developments, ground-up constructions, and land developments may require hundreds of documents before any loan approval.
The most critical
aspect of any real estate development is having permits to build. Without permits,
obtaining financing is challenging and requires the lender to assess the likelihood
of getting the permits and what it will entail.
One way a developer can bypass the permit obstacle is to pledge another property as additional collateral, which will satisfy the equity requirements and open the door for fast funding. Blanket loans are welcome by most hard money lenders and pave the road for fast financing. Alternatively, developers can obtain bank cash-out financing on existing property they already own and use the cash to get the permits before applying for the development loan.
For permits or No Permits, the lender may require some of the documents listed below before approving a real estate development loan.
Executive Summary (Document)
Client Testimonials (Document)
Site Overview (Document)
Ownership History (Document)
Location Analysis (Document)
Appraisal (Documents)
A compressive appraisal report could cover the location analysis and the project value as is and as completed.
Environmental Report ( Documents)
Development Plan Feasibility Analysis (Document)
Development Timeline
Consultants
Financial Analysis (Document)
Risk Analysis (Document)
Sponsor Information The following documents may be required for the main sponsor and each partner with 25% or more stack in the project. The information below may be needed on the general contractor.
The list of documents above is incomplete; Lenders could ask for additional documents depending on the project and the sponsors.
For more information, Check the links below
https://www.bullpenre.com/insights/definitive-guide-to-real-estate-investor-presentations
https://www.dealpath.com/blog/real-estate-development-process-scaling/
https://info.simoncre.com/the-commercial-real-estate-development-process
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