Re: [carfree_cities] Financing
- "J.H. Crawford" wrote:
>I have wondered if some of the dot com billions would find their way to
> Regarding the financing discussion:
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
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 Torell <eyrehead@...> wrote:
> I have wondered if some of the dot com billions(snip)
> would find their way to
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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