Developer Financing for New Development

What development are you buying in?

Although these lender restrictins sound suspicious, they aren't usually bad. I certainly have not heard complaints about having gone w/ developers' preferred lenders.

It is usually for your own good. Specifically, the lender knows the bldg. well, so there won't be extra time wasted investigating or assessing it (i.e., it'll facilitate the process), and they may also relax the %-sold requirements, etc. Also, their rates tend to be very good.

If you want to ensure that you're getting a good rate, you can aways speak to a morgage broaker or two, maybe through lendingtree.com, to compare rates (althouh you know you won't be using them...which always sounds unethical to me, but it certainly is acceptable to shop around...). My guess is that the preferred lender will give you one of the best deals--if not the best. Good luck!

you will not have problems as long as you get a 30 yr fixed rate. the problem will be if there will not be enough people who want to use the preferred lender to achieve the needed 50-70% for other lenders to start financing of the development. you can then end up in a bad situation.

Thanks for the comments guys! The building is about 60% sold now, and we're waiting for a COO.

I'm glad to hear it's not going to be a huge potential problem!

What are some thoughts on buying into a new development in which the the developer offers the purchaser a financing contingency - but only to the extent that the preferred lender choses not to close on the loan. Essentially, the developer can force the purchaser to close if the preferred lender is willing to step up and make a loan. Is this typical? Is this something that I should be warry of?

Would seem to me that this would give the preferred lender a lot of leverage to make last minute changes to the contract at the closing table (opps...did I say the rate was 5.5%? I meant 6.0%..etc).