As tourists flock to the Caribbean for fun in the sun, developers see opportunity and dollars signs. All over the Caribbean, developers are snapping up oceanfront real estate in attempts to become the next Sandals. Of course, developing a Caribbean resort does not come cheap, but we can help with that with our commercial financing options.
Construction Resort Financing
If you are in the early stages of your project, before getting started with the construction process, we have funding sources willing and able to assist. If you have started construction already, the process can be more difficult so best to plan ahead. There is not an infinite number of lenders willing to work in the Caribbean, so knowing where to find this capital is key to the success of getting your project off the ground in a timely manner.
Generally you can count on needing 30-35% equity in the property, either via your own equity or through a joint venture. Some of our lenders who offer construction financing are also able to bring equity to the project.
The requirements for qualification are not all that different from what would be required in the US or Canada. They would expect you to be experienced with this type of development, and you must have some equity in the project.
Buying an Existing Resort in the Caribbean
If you don’t have the stomach to tackle building a new resort, buying an existing hotel may be the way to go. Financing an existing resort with the financial history to validate the numbers, is actually much easier from a financing perspective; a lot of risk is taken off the table.
Again, you will still need a significant amount of equity in the property, either through your own means, through an investor group and/or through a joint venture.
Although the process to finance a hotel or resort in the Caribbean is similar to what you would experience at home, rates and terms will likely not be the same, as these loans are generally priced higher than North America. Less options equals less competition, meaning a higher cost of funds.
Avoiding Pirates in the Caribbean
More often than not, clients who come to Carib Capital have already spoken with one or more lenders. Either the terms were unsatisfactory or the lender was unable to help. In many cases however, the client paid out upfront fees only to have the deal not go anywhere. Sadly, this happens all too often in the Caribbean.
So how do you avoid being a victim of these lenders? Do your homework! Try to find out as much as you can in terms of what they have financed in the region, and what the costs were for those deals. Just because a lender has done a deal in Florida, does not mean they have the ability to finance a deal in The Bahamas.
What is Required to Qualify for a Development Loan?
To start the process, we need to see an executive summary of your project. This gives us an idea of the project and your financing needs. If you have an appraisal, pictures, company financials, projections available, this will also help us in determining the feasibility of your project.
Carib Capital does not charge any upfront fees, however the funding sources we work with will likely require due diligence fees to underwrite your financing application. This is common in the industry, and cannot be waived; underwriting a loan large commercial loan can take months, and this is a cost which simply cannot be carried by the lender due to the large number of applications they receive.
Talk to us today about all of our resort and hotel financing options in the Caribbean!
