Green Home Builders often ask me who is lending green money these days. Most already know the answer. Very few lenders are interested in construction projects unless you are a proven and substantial performer in the industry. What matters most to a bank is performance. For better or worse, they are less concerned about fundamental principles of green building relating to energy efficiency, building durability, indoor air quality, resource efficiency and water efficiency than they are about how the loan performs. So how do you, the highly qualified green builder, with years of expertise and a wall covered with awards for sustainable projects, get funding for your green home or community? By marketing your homes as custom built and yourself as the best builder for a highly qualified client. Here’s a tip: Your client is much more appealing as a long-term prospect to an investor than you ever were. Once you have the right client wanting you as their builder, bank doors will fling open.
So who is the right client? Certainly one with great credit, assets and the financial health to entertain the complexity of a custom home. I’m sure you have your own criteria. Basically, a bank wants a custom home client to be building something well within his or her budget, a person (or couple) with a proven history of success in ownership. Only the bank loan officer can level with you about whether your client is that person. The potential buyer will need at least 6 months of reserves and 20% down or at least 20% equity in the land, if the lot has already been purchased.
Don’t Over-Educate
Lately, the biggest change in the lending world has been an increased rigidity around guidelines. Anything that does not fit a lender’s specific investor guideline ‘overlays’ is suspect. In other words, photovoltaic systems and all that other amazing eco-technology must pencil out (meaning it makes financial sense). Even with a custom home for a well qualified client, the bank may be nervous about non-standard features. It’s a pretty simple concept: Banks do not like the idea of getting stuck with a home they cannot sell.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76