financial times
Strong design and felicitous floor plans are essential to a successful development project, but adequate financing is the fuel that makes the engine go. For newbie architect/developers, the first venture is the big leap of faith. “Once you learn the process, it’s easy,” Sebastian Mariscal insists, “but the first one is always the most difficult, because you don’t have any history.”
For his fledgling project, a two-unit development, Mariscal started small and partnered with an investor, David Baun. The project “was going to be my house and [Baun’s] house, so there wasn’t much risk to the bank,” Mariscal says. Still, he adds, “it was important to get it correct, on time, and on budget.” Now, Mariscal has developed an efficient system that works well for him: he works with the same banks, and partners with Baun on almost every project (although he brings in other investors when needed).
“As soon as we open escrow on a property, we need to work on the financing,” Mariscal explains. “I always prefer to buy the land with a construction loan—we save money by having just one loan.” That way, he and his team can simultaneously work on drawings, the pro forma, and a cost breakdown all at once, making the process more efficient.
“We like to start the entitlement process while we’re in escrow,” he continues. That time, he adds, “can be very beneficial for completing all the preliminary studies, entitlements, and financing.”