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Re: [carfree_cities] Financing

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  • Martha Torell
    ... I have wondered if some of the dot com billions would find their way to development. If a developer did not have to borrow to build or support himself
    Message 1 of 4 , Jul 3 11:38 AM
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      "J.H. Crawford" wrote:
      >
      > Regarding the financing discussion:

      I have wondered if some of the dot com billions would find their way to
      development. If a developer did not have to borrow to build or support
      himself until the units sold, he would be able to call all the design
      shots himself. Banks are not going to want to lend money for radical
      design like car free. Further, the developer could go into the finance
      business himself, lend money only for the purpose of paying for units in
      his development. He could write it into the contract that if you need
      a mortgage to buy a place in the project, you borrow only from his
      finance company. Of course there would be proper safeguards against
      discrimination and price gouging. The developer's rates would track
      along with other mortgage rates, neither higher which might repel
      buyers, nor lower which would set up friction from general mortgage
      companies.

      If the buyers defaulted, the property would go back to the developer.
      And he would get all that interest. For years. It would exceed the
      profits in the typical borrow-build-sell-pay off cycle. And the buyers
      would be able to take the mortgage interest tax deduction.

      After some success and defining a building ethic and style, he could
      probably go public with it, sell stock to repeat the project. It could
      be one of the greenest stocks ever -- car free mixed complexes, with
      electrical trolley transportation. Could be it would spread and
      consume some sprawl.

      Martha
    • James Rombough
      ... (snip) The dot-com money is looking for a quick profit; real estate of any type is not quick at all. ... What you are describing about the developer being
      Message 2 of 4 , Jul 3 12:16 PM
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        --- Martha Torell <eyrehead@...> wrote:
        > I have wondered if some of the dot com billions
        > would find their way to
        > development.
        (snip)

        The dot-com money is looking for a quick profit; real
        estate of any type is not quick at all.

        ...

        What you are describing about the developer being the
        lender makes no sense. The developer borrows money,
        builds the property, and then sells it. If the buyer
        defaults later, the lender forecloses on it and may
        have to take a loss (depends on the foreclosure sale
        price and the leftover mortgage balance). Why should
        the developer care if the buyer defaults?

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