Land and Development Financing
- Land acquisition and servicing mortgages
- Development and construction draw mortgages (both firsts and seconds)
- Discounted or pre-paid mortgages
- Mezzanine or profit participating second mortgages
- Equity invested
An Example
A development company with just a few previous projects to their credit makes a deal to purchase a site in a good location in Vancouver. In order to get construction financing, they require a development permit and building permit from the city. This takes 4-6 months. In the meantime they have to close on the land purchase. Land financing without a development permit is generally limited to 50% of appraised value or purchase price, whichever is lower. In this case, purchase price was $3,050,000 and the appraisal came in at $2,850,000. 1 City arranged $1,775,000 first mortgage bridge financing through one of our private investor clients with the option to draw up to $2,000,000 to pay marketing and soft costs as the development permit application progressed. Interest is accrued and is paid out, together with the principal when the first advance is made under the construction loan.
