Quote:
Originally Posted by 78701
Could this be related to the construction loans? That they don't have to start paying them off until the building is finished?
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Possibly, but if its anything like my home construction loan, I paid interest only on my "draws", but I still had to complete the home in a specific amount of time (12 months or get extension). Can't drag it out too long, but maybe for awhile. But then that would throw your contractors, suppliers, subs, into a shit storm, and could bite you in the ass going to the back of the line (most subs have many projects and have them lined up in order....if you ask one of them to reschedule, it may be WAY later than you hoped, which then pushes back all the other contractors who are scheduled after them). Worlds worst domino effect.
And you still have overhead expenses, taxes, and the fact that your product is producing zero revenue, when it could be producing something at least. Most of the developers I know, want to push it through no matter what and turn it over the marketing/lease up crew as fast as possible.
When a slow down happens, I find its typically:
-inspections turned up a big problem/problems
-supply chain issues
-sub goes out of business unexpectedly
-construction worker shortage
-a big $ issue (but I believe the banks make sure the private equity is in place prior to start) Banks have done a great job of this since '08 from what I've seen.
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