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Real Estate Funding

Finnova Advisory specializes in comprehensive financial solutions, including Real Estate Funding. Real estate funding is crucial for the successful execution of development projects, covering various stages from land acquisition to final sales. Different types of funding are tailored to meet specific needs within the development cycle. Land acquisition funding is used to secure the land, which is the foundation for any project. Inventory funding helps developers mortgage unsold units to unlock liquidity for ongoing operations. Last mile funding ensures that a project nearing completion has sufficient capital to cover final expenses and delivery. Construction finance provides developers with the necessary capital to fund the construction phase of the project. Funding for acquiring Transfer of Development Rights helps developers increase the floor space or buildable area. Funding for redevelopment projects focuses on financing renovations or rebuilding of existing structures. Additionally, funding for project approvals supports developers in covering the costs associated with obtaining regulatory clearances, while cash receivables funding helps monetize future payments from sales, ensuring smoother cash flow throughout the project lifecycle.

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  • Land Acquisition Funding

  • Inventory Funding

  • Last Mile Funding

  • Construction Finance

  • Funding for Redevelopment Projects

  • TDR Funding & Funding for Project Approvals

Detailed Services:

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  • Land Acquisition Funding - Land acquisition funding is a critical component for builders and developers, as land is the fundamental raw material in the real estate business. Securing land at a prime location can significantly impact the success of a development project, as location often dictates demand, property value, and overall profitability. However, obtaining financing for land acquisition can be challenging, as not all lenders are willing to provide funding for this purpose due to the higher risk involved compared to financing constructed properties. Only select lenders, often with specialized real estate experience, offer land acquisition loans. In this type of funding, real estate developers are typically required to contribute a portion of the cost, while the lender finances the remaining balance. This margin-sharing approach ensures that both the developer and lender have a stake in the success of the project. The developer’s contribution demonstrates commitment, while the lender’s involvement makes it possible to secure prime land without fully depleting the developer's financial resources. Without land acquisition funding, many builders would struggle to secure the vital resource needed to start new developments, making this financing option crucial for growth in the real estate sector.

  • Inventory Funding- Inventory funding is a crucial financial tool for builders and developers who have completed a project but are left with unsold units, commonly referred to as "inventory." These unsold properties represent significant capital that remains tied up, restricting the developer's ability to reinvest in new projects or cover operational expenses. When sales slow down due to market conditions, developers can face a cash flow crunch. To address this, developers mortgage their unsold inventory to lenders, securing funding based on the market value of these properties. The unsold units act as collateral, allowing developers to unlock liquidity without having to wait for the remaining units to sell. This funding can be used to pay off construction loans, fund new developments, or manage ongoing business needs. Lenders are generally open to inventory funding because it is secured by completed, marketable assets, reducing their risk. For developers, it offers a way to maintain financial stability and continue operations without being dependent on the sale of the remaining units. By accessing inventory funding, developers can free up capital, manage their cash flow effectively, and keep their business moving forward even when some units remain unsold. This ensures they can reinvest and grow their portfolio while managing short-term financial challenges.

  • Last Mile Funding- Last mile funding plays a critical role in real estate development when a project is nearing completion, but the existing sources of funding become insufficient to cover the remaining costs. Typically, a developer funds a project through three main channels: 1) their own contribution, 2) loans or financing from lenders, and 3) proceeds from the sale of the project or inventory. However, as the project progresses and approaches its final stages, unexpected costs, increased construction expenses, or delays can deplete the available capital from these sources. At this point, last mile funding becomes essential, providing the developer with the necessary financial support to ensure the project is completed on time and up to standard. This type of funding ensures that crucial elements, such as final construction, interior finishing, infrastructure, and amenities, are not compromised, enabling the developer to deliver a quality product. It often helps avoid costly project delays and ensures that the property is brought to market without sacrificing quality or incurring additional time-related costs. Last mile funding acts as a bridge to cover any remaining financial gaps, allowing the project to reach completion and be monetized as planned. In a competitive real estate market, this type of funding is crucial for maintaining cash flow, avoiding project delays, and ultimately ensuring the developer can meet deadlines and customer expectations.

  • Construction Finance- Construction finance is a vital part of real estate development that comes into play after a developer has acquired the land and secured necessary government approvals. It provides the capital needed to bring a project from blueprint to reality. Typically, construction finance is structured with contributions from multiple sources: 50% of the funding comes from lenders, 25% from the builder's own contribution, and the remaining 25% is expected to come from the sale of the project's inventory. This mix of funding ensures that all parties involved have a vested interest in the success of the project. The lender, often a bank or financial institution, provides a substantial portion of the funds, secured by the project's progress and value. The builder's own contribution, representing 25%, demonstrates their commitment and financial stake in the development. As construction progresses and units are sold, the proceeds from these sales are used to fund the remaining costs, effectively supporting the project's cash flow. Construction finance is typically disbursed in stages, based on the project’s milestones, such as foundation completion, structural work, or final finishing. This staged release of funds ensures that the project remains on track and that lenders have the assurance that funds are being used efficiently. It also mitigates risk for both the lender and the developer. Construction finance is essential for managing the substantial upfront and ongoing costs of labor, materials, and subcontractors, ensuring that the project can be completed without financial interruptions.

  • Funding for Redevelopment Project- Funding for redevelopment projects is essential for revitalizing aging residential societies that can no longer be maintained or repaired by the residents themselves. As these buildings age, they often become unsafe or outdated, but the society members typically lack the financial resources or expertise to undertake a complete redevelopment. To address this, societies often enter into joint ventures (JV) with developers or builders, where the society provides the land, and the developer takes on the responsibility of constructing a new project. In these JVs, the developer benefits by gaining access to valuable land without having to purchase it, while the society members receive new, modern homes at no cost. Additionally, developers often receive permission to build more units or floors than the original structure, allowing them to sell the additional space for profit. To fund the redevelopment projects, developers secure loans or financing from lenders, which cover demolition, construction, and the addition of amenities. This funding allows developers to manage the project's financial requirements, while the sale of extra units helps repay the loans. Redevelopment funding is crucial in transforming aging properties into modern, high-quality spaces, benefiting both society members and developers without burdening the residents financially. 

  • TDR Funding & Funding for Project Approvals- Funding for Transfer of Development Rights (TDR) and government project approvals plays a vital role in real estate development by providing the financial support needed to navigate legal and regulatory challenges while maximizing project potential. TDR funding allows developers to purchase additional building rights, enabling them to exceed zoning limitations and construct larger structures or develop more units than originally permitted. This is particularly beneficial in high-demand urban areas where land is scarce, and maximizing buildable space can significantly increase the profitability of a project. However, acquiring TDRs can be costly, so developers often seek specialized loans or financing options to manage these expenses. By securing TDR funding, they can optimize land use and enhance the project's overall value and return on investment. Both TDR funding and approval financing are essential for the smooth progress of a real estate project. They enable developers to expand their projects, remain compliant with regulations, and manage cash flow efficiently. With these funds in place, developers can confidently move forward, ensuring that their projects meet market demands while adhering to legal standards, ultimately increasing the likelihood of a successful and profitable development. Similarly, funding for government project approvals is crucial to cover the costs associated with securing permits, zoning changes, environmental clearances, and other regulatory requirements. These approvals are mandatory for any development to proceed, and the process can be both time-consuming and expensive. Developers often need external funding to manage these upfront costs to keep their projects on track.

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