Commercial Development Advice
Hi all. Just wanted to throw out my situation out there and see if there was any guidance you can provide.

Me and my family currently own four properties in Brooklyn with a total square footage of 10,000 with R6 zoning. As I understand it, from reading the zoning regulations and having initial discussions with architects we can build 48,000 square feet with up to 10,000 of it being a community facility (daycare, doctors office). 

If we go forward with the commercial development route,I know we must have a business plan, and be able to fulfill the ratios they are looking for LTC, LTV, debt service coverage ratio, etc. That is where there might be some issues. We have all put down payments on the land, but we might have to have a hard investor to be able to secure a loan. Have any of you gotten creative on the financing for your first project?

Any other items you think I should look out for?


[{"id": "dckxnam", "text": "Hi there! I'm not familiar with Brooklyn's requirements and capital market or R6, and have a lot less experience than some of the people on this sub, but I thought of a few things you may want to consider. \n\nYou touched on loan to value and loan to cost, but what sort of LTV and LTC are typical for your type of project? If this is your first project, you may have a different experience securing lending compared to someone with a history of successful deals. Your LTV may be lower than market. \n\nYou should look out for the guarantee clauses on your loan.  If possible you should set it up in hurdles - as different milestones are met, your liability should be reduced, up until the point where you have little to no liability since the loan is secured with a fully operating asset. \n\nSome lenders may require a debt service ratio or debt yield test once you begin operations. \n\nWhat does your ultimate occupancy look like at stabilization? How long have you planned for lease up?\n\nAre you covering interest out of the loan itself or will you be paying that from some other source? \n\nWhat is your time / dollar contingency?\n\nLike I said, grain of salt, but these are things that I would be thinking about. Best of luck!", "replies": [], "depth": 1}, {"id": "dco7msp", "text": "are you talking about 10,000 SF of continuous land (ie the 4 properties are all connected)? Or are you saying each property is currently a 10,000 SF building? It's tough to figure more out.  \n\n&gt; We have all put down payments on the land, but we might have to have a hard investor to be able to secure a loan. Have any of you gotten creative on the financing for your first project  \n\nIt sounds like it's just land based on this. Cash is super important for development, you might consider flipping the land. ", "replies": [], "depth": 1}]