Seeking Condo Development Funds

D.M. from outside of Connecticut writes:

Dear Mister Condo,

What are the best options to build more capital on 22 units, townhouses?

Mister Condo replies:

D.M., I am not completely sure what you mean by “building capital” but I assume you mean how can an association fund a new phase of development. Banks and investors are the only ways I am aware of at this time. Banks will evaluate the plans for development and either approve or deny the loan request. If they approve, they will offer loan terms and along with interest to be paid back over time. Investors don’t have to behave as conservatively as most banks so if the project isn’t right for a traditional bank loan, you might look to investors with track record in condo development. Investors usually seek a higher return based on the amount of risk they feel the project offers. So, if your development is in a particularly hot condo market right now (Boston, for instance), you might find it easier to attract an investor who might see the risk as lower because of the current demand. All the best!