How Much Equity Needed To Fund New 10 Unit Condo Construction

I'm in contract on a duplex that is zoned to allow about a 10 unit condo complex to be built on it. It is a good area for such development (in WA state) and I'm interested in tearing down the house to pursue this. I'm wondering how much down payment is typically needed for a construction loan for 10 unit condo complex about 5 stories high with underground parking.

There should be about 200k equity within say 6m in the land alone based on the down payment, appreciation, good price, etc. This is with the current home torn down.

The est total cost to construct is say 1,400,000. So, if a construction loan also covered the current loan it would be a total of about 1.8m loan.

I've heard 10% equity is sometimes suffcient to get such a loan, with equity in the land allowed to be used, so in this case I would hope to leverage the 200k equity in the land with no further cash out of pocket to do the loan.

The finished value should make it at least 65% LTV (value of 3m).

Thanks for any insights!

I put up 20% of A and D and bank puts up 90 to 100% of vertical with 50% resales. This is fairly typical.

Thanks Gregg, could you please clarify a little -- do you mean somethin like this:

-if land costs 400k you would put up 80k and get a loan for the rest.
-if the vertical building costs 1.6m to construct, you would put up 160k or nothing for this.

A few questions related to this:

1. If you put up the 80k, then due to appreciation the land value goes up 20% (80k), would your 160k equity in the land then typically be sufficient to get the constructoin loan with no further cash out of pocket.

2. What is meant by 50% resales?

3. Does anyone have the name of a good broker/lender for this type of commercial construction loan?

Thanks, sorry for the lack of knowledge, I'm still trying to come up to speed on this!

scott,

50% presales means the loan terms are based on your getting 50% of the units under agreement to buyers pre-construction--prior to your closing on the property.

Nancy