Lot Option Financing provides Homebuilders an attractive off balance sheet structure creating a liquidity option while simultaneously providing investors with minimal real estate, construction, development, or entitlement risk with a short term Project horizon.
The dislocation in the capital markets has generated high levels of demand for financing solutions / products successfully placed by APEX principals over the past two decades.
We are also in an attractive point in the real estate cycle: (i) New single family homes sales over the next 10 years will trend toward their pre-recession peaks; (ii) Resale inventories are approaching equilibrium; and (iii) Mortgage rates are historically low and housing affordability is high.
Homebuilders face the challenges of minimizing lot inventories, while the forward supply of finished lots is dwindling to levels that threaten production volume targets of the public builders.
Builders find lot financing as an accretive option to them for various reasons: (i) incremental capital, (ii) control of land, (iii) balance sheet flexibility , and (iv) financially attractive.