Using equity in property to fund development?
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[{"id": "fhqlzfv", "text": "Possible but most likely not. You could try to get a loan against the land value but that won't get you far.\n\nBest bet is to contribute the value to a JV with a developer that can finance and execute the actual development.\n\nNot trying to be snarky but the nature of the question implies not a ton of development experience. You're going to want to work with somebody that can get the project complete - ground up development is a pretty complex process.", "replies": [{"id": "fhqt6ip", "text": "This is the answer. Reach out to sponsors (ie deveopers) and tell them your willing to contribute the land at fair market value to a joint venture. You will be a silent partner in the decision making process but, the land will be collateral for the construction loan so, you should pic someone who you believe can maximize the value of whatever the improvements will be, is financially capable of completing the project, has done a shit ton of them.\n\nAlternatively, you could ground lease the land to a developer.\n\nBut, I\u2019m going to be brutally honest with you, if no one has approached you this far, it\u2019s not that good a site or the improvements make it substantially uneconomical for redevelopment.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fhqmbby", "text": "Yeah but I\u2019d say private debt would be your best option. Ultimately though you would have a construction budget with the land at market value and the delta between your basis and the market value would count toward your equity, though most lenders would want to see some sort of additional skin in the game, likely permit fees or other soft costs, A&amp;E, etc. I\u2019d also be prepared to \u201ccontribute\u201d your development fee as well.\n\nI say private lender because they lend more based on the asset and less on the balance sheet of the guarantor/borrower, and if you\u2019re wanting to count imputed and sweat equity toward your development, I\u2019m assuming you don\u2019t have the balance sheet that a traditional lender would be looking for.", "replies": [], "depth": 1}, {"id": "fhqqyy0", "text": "First, if the current structure is collateral for the existing debt, you cannot demolish the structure without the unlikely approval of the lender.\n\nNext, your new construction lender will want to be in first lien position, so the existing debt will need to be paid off as a part of the deal.\n\nAssuming those hurdles are crossed, your construction financing package will account for the value of the land.  That said, many lenders will want capital from you in the deal, though this can be offset with higher rates reflecting the perceived risk.", "replies": [], "depth": 1}, {"id": "fhqt8n9", "text": "See my response to iamhoop", "replies": [], "depth": 1}, {"id": "fhrbxrw", "text": "Give numbers to get better responses", "replies": [], "depth": 1}, {"id": "fhu1neh", "text": "Real estate development lawyer here. Reach out to an established developer and form a JV. Your contribution is the property .", "replies": [], "depth": 1}]