Advice on Hard Money Lender 90% LTC (or Investor)

Based on the most helpful WSO content, here are some insights and advice for your situation:

1. Hard Money Lenders and 90% LTC:

   • Hard money lenders typically focus on the deal's strength and your experience rather than strict conventional lending requirements. However, achieving 90% LTC in today's market might be challenging, especially with the liquidity and reserve requirements you're encountering.
   • Mezzanine debt or bridge financing could be an alternative to fill the gap if you can't meet the liquidity requirements. Keep in mind that mezzanine loans often come with higher interest rates (12-15% is common) but can help you leverage up to 80-85% LTC.

2. Building Relationships with Lenders:

   • Since you're looking to establish a long-term relationship, focus on smaller, local hard money lenders or private investors who are more flexible and willing to work with developers like you. Highlight your multifamily experience and emphasize your track record of delivering projects successfully.
   • Consider hiring a broker to source the debt. Brokers often have access to niche lenders who might be more accommodating to your specific situation.

3. Liquidity and Reserve Challenges:

   • If liquidity is a sticking point, you might explore syndicating the equity portion of the deal. Bringing in a partner or investor to cover part of the equity could help you meet lender requirements while preserving your cash for reserves.
   • Another option is to negotiate with the lender to reduce reserve requirements by demonstrating your strong credit score and experience.

4. Market Realities:

   • In the current lending environment, many construction loans are capped at 60-65% LTC, as seen in recent WSO discussions. While 90% LTC is ambitious, it’s not impossible with the right lender or structure. Be prepared to pay a premium for this level of leverage.

5. Next Steps:

   • Reach out to local real estate investment groups or forums in Atlanta to identify lenders or investors who specialize in new construction projects.
   • Consider structuring the deal with a combination of senior debt and mezzanine financing to achieve your desired leverage.
   • If you’re open to it, explore joint ventures with experienced developers or investors who can bring additional liquidity and credibility to the table.

By leveraging your multifamily experience and focusing on creative financing solutions, you can position yourself as a strong candidate for lenders or investors. Good luck with your project!

Sources: Mezz Debt vs. Traditional Debt Financing, The market is turning rapidly..., From Real Estate Finance to Founder of Development Company - Q&A, Ground up negotiations - LP side, Ground Up - Refi'ing Out Most Of Equity