Sarasota construction completion.

01 / The challenge

The initial challenge.

A fictional investment development is partially built. The review needs to reconcile existing debt, work already performed, the remaining construction budget and the route to a completed, saleable property. A finished-value estimate alone would leave too many unanswered questions.

02 / The structure

The financing structure.

The sample uses a $1,000,000 total commitment: $600,000 initial funding to retire existing debt and a $400,000 holdback for completion. Total project cost is $1,500,000, comprising $1,100,000 already incurred and $400,000 remaining. At full funding, commitment divided by project cost is 66.67% LTC; commitment divided by the hypothetical $2,000,000 as-completed value is 50.00% LTV. The initial advance is 60.00% of commitment; an initial as-is LTV is not calculated because no current value is supplied.

LTV uses the explicitly stated property-value basis. LTC uses the stated total project cost. These sample ratios do not establish lending limits.

03 / Key considerations

Key considerations.

• Reconcile incurred costs, debt, borrower capital and the remaining budget.
• Review existing work and the status of permits and contractor arrangements.
• Keep future advances tied to the applicable written conditions and documented progress.