Construction loan - how to get interest back into total dev costs- help me?!
I’ve searched high and low and cannot figure out how to fix this. This is basically the first pro forma I’ve had to make from scratch so I’m struggling.
I’ve built out my cash flow with all my development costs, created lines for loan funding, calculated the interest on loan along with upfront fee & unused commitment fees. I am now wanting to plug all these loan fees back into the development costs section, then have it flow thru the loan and equity portion. I get hit with #Ref immediately when I try to add in the finance fees to the total project costs line.
Example: my project costs are 72M, I calculated 4M of interest/fees, and need to include the 4M in my project costs so that it’s 76M.
I have looked at a few partner’s pro formas and they all seem to be doing this somehow? I reduced iterations to 100 but that didn’t do anything. How are people calculating the interest/fees and flowing it back into the total dev costs?
Also - I need 65% LTC. Is the “loan” of the LTC considered loan+interest or literally just the loan? I currently am using goal seek to get to a loan amount so that loan+interest=65%.
Does anyone have any solutions ? Or a model or video that will give me any form of help here?
On the circular reference issue, our models usually cheat with a hard code the equity required and loan fees/interest reserve and self iterate until it's close (probably not the best solution, but it works though the model has to be set up to allow that to happen too).
As far as the 65% LTC, it should be on the total costs of the project including loan interest and fees. So if I have a deal that cost 100 to build with 3 in interest costs and fees, my loan at 65% LTC would be 67.
If you want to PM me I can help take a look if you'd like.
Update: I think I finally got it! I created a separate line “dev costs including interest and fees”, which for some reason worked fine. Then I got rid of the circular reference by creating a “total dev cost” plug which is just manually typing the subtotal of my “dev cost w interest”line. That plug is then used in the loan calculations. Literally wasted so many hours to get to this solution
Interest costs way high
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