It goes without saying that time equals money, and the commercial real estate industry is acutely aware of this truism. Land or property sitting idle doesn’t generate revenue for its owners, so real estate developers work tirelessly to prepare buildings for occupancy and/or sale as quickly as possible. Unfortunately, local government agencies and regulations can sometimes bring development to a standstill. These bureaucratic delays can stretch the expected timeline for a real estate project anywhere from weeks to several years. The additional cost of all this red tape can leave a developer on the hook for enormous sums of money, severely curtailing profits by the time the property finally gets that coveted stamp of approval. More importantly, the conventional lenders being counted on for funding are hurting developers by grinding the process to a halt, stopping the project from moving forward. Fortunately, private lenders can provide the funding to keep these projects going.
It stands to reason that by the time development has begun, the property owner may have already secured a commercial real estate loan to finance the work. If the project hits a significant speed bump, the interest meter continues running. If the delay continues for too long, owners and developers could be financially ruined. What if the bank leaves a borrower on the lurch by not showing up at the closing table? If a borrower is ready to close, but the traditional bank lender needs two more weeks to push around paperwork, it could cost him or her millions.
So what can be done to mitigate the possibility and impact of a significant bureaucratic delay? Naturally, the first step, as with anything in life, is taking preventative measures before work even begins. Ensure there are no environmental issues with the land. Make sure the title is clean and clear and that there are no partnership issues that could result in the added time, expense and hassle of a protracted legal battle that could shut development down indefinitely. Overall, assume that unforeseen issues and delays will occur and factor that into your timeline and budget.
However, even if you run a tight ship and have every i dotted and t crossed, the timely completion of your real estate project ultimately lies in the slow-moving hands of the bureaucrats. That’s why the best defense is to secure funding from a private lender. Direct lenders, such as Kennedy Funding Financial, are the solution to bureaucratic delay. Kennedy Funding can close the loan in days when others fail to deliver.