Intuitive Land Advisors LLC

Traditional lending parameters don't usually have direct impact on development processes in terms of obtaining approvals. However, they can significantly influence a developer's strategy & overall liquidity during disposition. Let me explain. Banks, once upon a time, required 90% LTV on land & 100% LTC for construction, which enabled mom & pop/mid-sized builders to compete. For example : Land Acquisition = $1m ; Construction Costs = $3m Total Cash Needed = $100k (10% of Land, exclud. closing costs, fees, etc.) In contrast, today's lending parameters for builders are typically 70% LTC for both land & construction. The same project, mentioned above, would require $1.2m to obtain financing (12x the amount of capital). The increase in required capital not only limits who's able to participate in projects but also impacts internal KPIs, resulting in a significantly higher basis, greater exposure, & inevitably a shrunken ROI. For a developer, it's important to stay cognizant of these conditions, as they can affect the marketability of your project. Tighter requirements mean larger development projects have less liquidity, with fewer builders able to take on such projects due to capital constraints in obtaining financing. *Of course, lending requirements have many implications beyond an individual project's performance. The over-leveraging seen prior to the 2008 financial crisis, for example, contributed significantly to the crash, highlighting the risks of excessive debt & insufficient equity. The tightening of lending standards post-crisis has resulted in a more stable real estate market, reducing the likelihood of over-leveraged projects & improving long-term sustainability in the industry. That being said, it's important to stay attuned to the lending environment, as it holds significant influence over all asset classes & their cyclical performance. Pay close attention to corporate entities & the consolidation or disaggregation of deal flow as market conditions evolve. #CRM #ILA #Land #Development #Construction #RealEstate

Don’t bottleneck your sales process with lackluster agents, who cost money. Allow your money to be better spent with land professionals who 1) ensure development potential is calculated accurately, & 2) establish practical expectations in reaching optimal values with guided involvement. Call Us Today. Intuitive Land Advisors LLC 68 White St. Suite 7-158 Red Bank, NJ 07701

Every property is unique and has its own restrictions and opportunities. Intuitive Land Advisors (ILA) is comprised of New Jersey-based land developers. We actively ensure our due diligence practices are holistic, address client concerns, and uncover all risk attributes associated with each venture. Intuitive Land Advisors LLC 68 White St. Suite 7-158 Red Bank, NJ 07701

ILA provides clarity & quality insights where it matters. Let’s talk land. Schedule a consultation today! Intuitive Land Advisors LLC 68 White St. Suite 7-158 Red Bank, NJ 07701