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Construction Financing:Easiest Method

The easiest way to specify financing is to enter the interest rate as MV[11]. The model will assume line of credit financing is available for all needs and will repay the line of credit as rapidly as net proceeds allow.

If only a portion of sales proceeds is to be used to repay the loan , then MV[10] can be used in any of the following four ways.

a) As a decimal (e.g. .85) - the percentage of sales proceeds to go to repay the loan.

b) As a positive number greater than 1 (e.g. 1000) - the dollar amount that can be retained by the developer.

c) As a positive number greater than 1 and less than or equal to 2 (e.g. 1.25) - a factor to multiply times the maximum loan amount divided by the number of units to determine the amount per unit which must go towards repayment of the loan.

d) As a negative number greater than 1 (e.g. 1000) - the dollar amount that must be given to the lender from each unit sale.

If there is a limit on the amount to be borrowed, then MV[17] can be used in either of the following two ways.

a) As a decimal (e.g. .75) - the percentage (decimal) of total projected revenues that can be borrowed.

b) As a positive number greater than 1 (e.g. 1619000) - the maximum loan amount.

If the amount to be borrowed should be rounded, then MV[16] can be used (e.g. 1000 would round borrowing and repayment amounts to the nearest $1000.)

Inputs described thus far for entering financing terms work best where there is only one loan. Where more than one loan is expected to be used, other input variables are used.

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