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Case Study

Constructing a Solution

Mark T. had been in the real estate development business for over 30 years. He had always been able to get the financing he needed through his long-term relationship with a major bank. However, when Mark approached the bank about his latest project for upper end units in a community he saw as having enormous potential, the bank did not agree with his valuation, and despite the relationship was willing to only offer him a loan amount far too small for the project he envisioned. 

To make the deal work, Mark would have had to liquate a large portion of his real estate developments as well as other assets he had that were profitable. He wanted to find a way to keep his capital working while being able to pursue the development he believed would become the cornerstone of his business.

Discouraged, he was about to list the lot as vacant land when he heard about Lendacy through another developer with whom we had worked.

Lendacy structured a deal that allowed Mark to bypass the need for any bank loan. By establishing a line of credit with Lendacy, Mark was able to realize a total cost savings of 16% from interest savings, closing fees, loan fees, construction draw fees, as well as substantial discounts on materials he could now pay for up front – all without liquidating any of his properties or other investments and suffering the inherent loss of income from them and possible tax implications.

All this made his investment a sound, viable one even if the market didn’t support his projections and he was forced to rent the units at market rates.

When the project was finished, Tom did find a market for his higher end units, at the projected rents his bank had deemed to optimistic. With the additional net operating income and his Lendacy credit line, he was able to consider his next venture without the participation of the bank.