I have the opportunity to get into a building project in the construction and part ownership of an Assisted Living Facility. It is in an area that desperately needs one, and to make a long story short, the ROI after year 6 is nearly 400%. This will be state of the art, including a dementia / alzheimers floor (two story).
Some projected comps…
ROI year 1 for 500,000 30,000 (construction, opening and filling the 50 beds)
year 2, 63k
year 3, 166k
year 4, 182k
year 5, 199k
year 6, 213k
The equity in it alone will be roughly 2 million alone for this initial investment over the 6 years.
I have 150k and am looking for advice on how to raise the additional 350k, or that would give me the full 500k. Are there commercial loans out there that would work for me for the full amount needed? Hard money would even be a possibility I would guess. An ideal situation would have me holding onto the 150k to assure pay back ability the first year during construction and filling. I will be forming an LLC for this deal.
Can someone suggest lenders or give me some guidance? My wife and I have excellent credit (high 700’s, low 800’s)
What kind of rates could I expect, and how long could I go interest only? This is a 7 year commitment.
If I understand you correctly, you are seeking 100% commercial construction loan based upon a final loan amount of 500K; is this correct?
Pending your clarification, there are commercial loan programs that allow for a high 90ish LTV for assisted living facilities which would allow you to keep 2/3 of your seed capital for first year assurance.
There are construction loans that are a perfect fit for ALF. You can get over 90% LTC.
However, the loan will be for the LLC that is building the project, not your equity portion. Most lenders will want the LLC that is building the ALF to sign for the loan. What you are looking for is more of a personal line of credit.
Any equity in your house that you can use? Do you need $500k to buy into the project or can you buy in with only the $150k you have? Maybe if the owner is having hard time raising funds he’ll let you invest only $150k and get the $350k from other PMLs.
And last but not least maybe a note against your first born? :biggrin
I can put as little as 50k into this deal. I have 180k equity in my home, with an interest only HELOC, but would like to hold onto this to ensure loan payment on a 500k - 1mil loan for the first couple years. With the location, the design and the ROI potential, I’m looking at this in a much bigger way. I would like to borrow up to 1mil for 10% ownership. As other investors sell of their share, I would be saving the monthly cashflow to buy their shares.