What is pre-development and acquisition financing?
Pre-development expenses include a variety of costs related to determining the feasibility of a particular project, such as the costs of preliminary financial applications, legal fees, architectural fees, and engineering fees. Acquisition expenses refer to any costs associated with obtaining control of the site.
Since these costs are incurred before construction begins, traditional lenders often consider pre-development and acquisition loans to be high-risk and set the interest rates at levels that make it infeasible for smaller organizations to get projects off the ground. Many states, non-profit housing organizations, and local lending programs provide low-cost financing for pre-development and acquisition expenses to help increase the availability of affordable homes.
How does pre-development and acquisition financing increase the availability of affordable homes?
Related Case Studies
Greater Metropolitan Housing Corporation (GMHC) provides high-risk pre-development loans to organizations which assist in the development of quality affordable housing...