Sosan has also received funding to begin development of a $2.4-million 16- to 19-unit complex, the Detroit Avenue Lofts, which he expects to be completed by the end of summer 2005. He's working with the same group of lenders he used for the Metro Lofts development project.
"Why go somewhere else? I'm a very devoted customer. As long as I'm happy, I'll stick with whoever I'm working with," he says.
Sosan also works full time as a senior technical manager with SBC Corp. After developing smaller, four-family units, Sosan was intrigued by the loft concept and wanted to develop one, but wasn't sure how to go about securing financing.
"I looked at the other projects around, and I did my own investigation to see what kind of financing they did. ... I went through the same route of the kind of financing I did for those smaller units," Sosan says. "Then I found out that I could not use that for the big project. Then the question was how do I get financing for a big project?"
Adapting his strategy to the bigger picture, Sosan discussed his plans with Key Bank and the city of Cleveland.
"By doing this, I was able to find other avenues for financing, which included Neighborhood Progress Inc. (NPI)," he says. " ... The bank will only do so much of the project, percentagewise. ... You almost have to have the city involved to make it work because the city loan is cheaper than any other loan, and they give you a longer time to finance, so that reduces the monthly payment on that loan."
Sosan developed Metro Lofts with $1 million from Key Bank, $450,000 from the Cleveland Housing Trust Fund, $300,000 from NPI subsidiary Village Capital Corp and the balance from his own equity.
Village Capital doesn't lend directly to individual developers. Instead, it assists with real estate development projects sponsored by community development corporations (CDCs), and Metro Lofts straddles the border between the Clark-Metro Development Corp. and Tremont West Development Corp. zones.
Sosan developed Metro Lofts two months ahead of schedule and under budget, which "blows everybody's mind," he says. He recalls the first time he went to the city of Cleveland, and officials told him to come back because they weren't sure he could do it.
The following year he returned, armed with the necessary documents, and finally got the green light. The Metro Lofts complex opened in July 2003, and people in that community have told Sosan that his development is a positive neighborhood influence that has attracted an international professional clientele of renters, many of whom work at nearby Metro Health Medical Center.
Working with several lenders on a development project can be challenging, but Sosan offers some words of wisdom.
"Start small and work your way up. Get a good team on your side -- a bank that understands, a good contractor and a good architect," he says. "Get involved; don't just say, 'These guys are good,' and ... leave everything up to them. You have to participate 100 percent. ... The way to a successful project is to know exactly what is going on at all times."
HOW TO REACH:
Metro Lofts LLC, (216) 622-2998 or www.metroloft.com
Building on experience
Entrepreneur James Sosan says a developer needs to do several things to have a good relationship with lenders.
* Have a persistent vision. Sosan went to two other banks before a third him the chance to present his project. "I don't sit down and feel sorry for myself if I don't get what I want. I just see it as a setback, and that's not going to stop me from thinking of other areas," he says. " ... (It's important to find a lender that understands) what I want and what I have to offer, and they are willing to sit and talk about it."
* Be straightforward. When Sosan approached lenders to help finance the Metro Lofts renovation, he knew he had to earn their trust. "You achieve that by laying everything on the table for them. You're not hiding anything from them. They know your weakness, and they know your strong points," Sosan says.
* Show enthusiasm about the project. Financial institutions will be more willing to lend money if they see an interested customer backing the project. "They know you're putting 100 percent into this project, not that you (are putting) 20 percent (into) it and sitting back and letting somebody else run it," he says.
* Know when to ask for help. Most lenders are willing to give advice, but only if they realize their assistance is needed. "(When) I was going through this project, I'd never done it before. It was a learning process for me," Sosan says. "The bank was patient with me. Now I think I'm a pro; I know what I'm doing."