Development/Subdivisions

“Got a client with subdivision dreams? Unfortunately we’ll probably say no…”

Look, we know you’ve got that client. The one with 5 acres in Kamloops who’s convinced they’re sitting on a goldmine once it’s subdivided. They’ve got the sketches. They’ve done the math. They just need a lender who “gets it.”

We get it. We just don’t do it anymore.

After 20 years of funding subdivisions across rural BC, we’ve learned that development potential and development reality are distant cousins at best. Your client’s property might pencil out beautifully as 12 lots. The market might be hot. The municipality might seem supportive. But here’s what two decades taught us: everything takes twice as long and costs three times as much as anyone plans for.

Why we’re out of the subdivision game

We’ve held too many half-finished projects. Watched too many developers run out of money at 70% completion. Spent too many months trying to sell partially serviced lots in markets where finished houses already take a year to move.

Our investors are friends and family. When a subdivision goes sideways in Revelstoke, we’re not explaining it to a pension fund. We’re explaining it to people we’ll see at Christmas dinner.

The (very) rare exception

Alright, your client’s special. We hear you. Here’s what might – might – work:

Three lots maximum. Not four. Not “three plus future potential.” Three. In a market we already know and lend in.

Their house comes along for the ride. This is non-negotiable. We want your client’s principal residence secured inter alia with the development property. Not for the equity – we don’t care if it’s maxed out. We want it for the motivation. Developers who can lose the project but keep their home tend to walk away. Developers with their family home on the line find ways to finish.

Clear exit, minimal risk. Your client already has two of three lots pre-sold? The credit union already approved but needs three months? The subdivision’s already approved and they just need servicing costs? Maybe we talk.

What your client needs to know

We value land at today’s price, not tomorrow’s possibility. That $600K property they think is worth $1.2 million subdivided? We see $600K. The development upside is theirs to capture, not ours to lend against.

If they’re paying 19% at another private lender, our rates might look attractive. But if they’re comparing us to bank rates, they’re looking at the wrong lender. We’re priced for the risk of holding half-finished dreams in places where the nearest buyer might be two provinces away.

Better alternatives for your subdivision clients

Send them to a credit union. Seriously. Credit unions understand local development. They know the planning department. They have patience for the process. They’re built for this.

Or help your client explore selling the land as-is. Sometimes the bird in hand beats three lots in the bush.

If they absolutely must subdivide and can’t get traditional financing, they better have a story that includes: - Their personal residence as additional security - A realistic timeline (then double it) - Proof the market wants what they’re creating - An exit strategy that doesn’t require perfect conditions

The broker reality

We know you want to help your client. We know other MICs might say yes to this deal. But we’ve been doing this for 20 years, and we’ve learned when to say no.

Your subdivision client isn’t a bad client. They’re just not our client. We stick to what we know: equity lending on existing properties in small-town BC. Boring? Maybe. But our investors sleep at night, and so do we.

Quick summary for your files

What we don’t do: Speculative subdivisions, raw land development, anything over 3 lots, developments without the borrower’s principal residence attached

What we might consider: 3-lot subdivisions max, with principal residence inter alia, in markets we know, with clear exit strategy, where credit union is already interested but delayed

What we prefer: That you send these deals to a credit union or help your client sell as-is

Bottom line: We’re not in the hope business. We’re in the equity lending business. There’s a difference.

Got a subdivision deal that actually fits our tiny box? Call us. But honestly? Save yourself the time and start with the credit union. They’re better at this than we’ll ever want to be.