Fluctuating Interest rates are definitely something we’re keeping in mind and rate caps are a potential solution to the problem. We also make sure to have enough in interest reserves to handle increasing rates and plan on converting our floating rate construction loan to fixed rate agency debt upon stabilization. But the best solution for this is our relationship with our lenders and our ability to work with them to come to a solution that works for everyone. We don’t want to foreclose on the property and the bank does not want the headache of managing an unfinished development so I know that we will work together on a solution that benefits all. For labor and material pricing, we have a 15% $3M vertical construction contingency and we buy our materials and labor in bulk for better pricing.

We do plan on refinancing out of the bridge debt for the horizontal infrastructure and may refinance additional investor capital out of the opportunity once we have stabilized the development. This way we return investor capital tax free before we hold until the 10 year period. We did not include refinances in our underwriting projections and do not recommend you take refinances into account when making your decision. Any decisions we make we will keep our passive investors’ best interests at heart.

Our exit strategy is to hold the investment for 5 years. At this point we will either sell or in order to establish a Legacy as is our mission, buy out existing investors who no longer wish to hold to see the profitable cash flow and instead want a capital event, and hold for a longer period of time.