Construction Loans For Condo Projects Can Be Cash Flow Challenging
Unlike most construction projects where the amount of financing produced by construction loans is partially based on the fair market value of the completed project, condo projects have a bit of a difference twist.
A condo project cannot acheive its fair value until the project is completed and condo registration is granted. And because condo registration is not guaranteed at the start of the project, lenders will not factor in the final condo market value.
Instead, lenders will provide financing based on the completed value for townhouses which is what the units will end up being if condo status is not acheived.