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Investor and Lender

The developer’s primary role is to make improvements to the land, which may include subdividing and then developing it. Developers often work with either investors or lenders to fund their projects. How do lenders’ and investors’ roles differ? Review each statement and determine if the statement applies to an investor or a lender.

Annalise works for a bank that specializes in home mortgage loans. However, on occasion—if the deal isn’t too risky—she and her bank will agree to finance development/construction projects.
Investor
Lender
Rolf is an entrepreneur who’s funded a land development project that he believes is going to result in some excellent returns.
Investor
Lender
Stefan is patting himself on the back because a development project that he funded is bringing him some fantastic returns. The homes in the new subdivision are selling like hotcakes.
Investor
Lender
Rolf recently applied for a loan to fund a new land development project. Mark did his research and ran the numbers, and he knows that Rolf isn’t the best money-maker on the planet. Mark and the firm he works for have agreed to finance the deal, but underwriting says they’re going to have to come with a larger down payment and a shorter payback schedule. In this situation, Mark is a ___________.
Investor
Lender

1 answer

Let's categorize the statements based on whether they apply to an investor or a lender:

  1. Annalise works for a bank that specializes in home mortgage loans. However, on occasion—if the deal isn’t too risky—she and her bank will agree to finance development/construction projects.

    • Lender

  2. Rolf is an entrepreneur who’s funded a land development project that he believes is going to result in some excellent returns.

    • Investor

  3. Stefan is patting himself on the back because a development project that he funded is bringing him some fantastic returns. The homes in the new subdivision are selling like hotcakes.

    • Investor

  4. Rolf recently applied for a loan to fund a new land development project. Mark did his research and ran the numbers, and he knows that Rolf isn’t the best money-maker on the planet. Mark and the firm he works for have agreed to finance the deal, but underwriting says they’re going to have to come with a larger down payment and a shorter payback schedule. In this situation, Mark is a ___________.

    • Lender

Summary:

  • Annalise: Lender
  • Rolf (entrepreneur): Investor
  • Stefan: Investor
  • Mark: Lender