This Paper summarizes eight fundamentals to guide a successful financing effort.

Readers of this space may recall that the author is a former Wall Street lawyer, who has written frequently on financing for fractional developments. He is working in conjunction with a major financial institution to create a template defining the requirements for a financeable deal.

1. Don’t Be Your Own Lawyer

This is a saying in the legal profession. The comparable rule in development financing is, “Don’t be your own feasibility analyst.” We developers are all strong-minded and believe in our deals. That’s as it should be.

But third party validation from an experienced analyst is prudent and will undoubtedly be required by your capital source

2. Be absolutely clear as to your capital source’s deal parameters.

Make certain that you understand, and comply with, your capital source’s deal parameters in two ways. One is substance (such as IRR, timing, returns, and risk tolerance). The second is in their preferred manner of presenting projections, sensitivity analyses, and other information.

3. Remember Murphy’s Law

This says if something may go wrong, it will. It is essential to anticipate all problems that may arise. Show your capital source that you have anticipated varied contingencies and that you have planned how to deal with them.

4. Create an Experienced, Creative, Detail-Minded and Cohesive Team

You may have a superb feasibility analysis. Yet, you still must execute the program in the real, practical and intense world of development. The need for experience and creativity is obvious. The need for detail-mindedness is also essential, because development is a complex endeavor. Cohesiveness is essential in the trenches.

5. It’s the Marketing and Sales, (word bleeped)

The mantra in President Clinton’s 1992 campaign was, “It’s the economy, stupid.” The corresponding mantra for development is “it’s the marketing and sales.”

You may seem to have the best project on paper. But if you can’t market and sell it, you will go nowhere. This point encompasses factors, including marketing and sales tactics that have generated many millions in revenues, that I have recently written about in my book (referenced below).

6. Meet your Competition For Investment Dollars

Many Wall Street sources are focused on “buying distressed”—i.e., secondary properties in secondary areas that are deeply discounted. This is obviously not the profile of luxury resort properties.

Yet, the demonstrable fact is that buying luxury properties favorably (though not distressed) plus the fractional multiplier (of how much fractional sales can exceed whole unit revenues) can produce comparable or greater profits with more speed and security than “buying distress.” You can show this with mathematical models (for which my company has designed templates).

7. Differentiate Issues of “Principle” from Issues of “Principal”

Inevitably, the capital source’s due diligence team will have different views on various business and deal points. If the due diligence team view will not cost you any money—“principal”—don’t fight over (minor) issues of “principle.” That will only delay the financing and irritate the reviewer. This is a variant of “don’t fight city hall.”

8. Work Harder and Smarter.

The author has spent considerable time in familiarizing colleagues in the financial community with the profit opportunities and due diligence criteria in fractional real estate. The potential financing sources are there; interest has been stimulated.

Select your financing targets with care, follow these guiding points, and keep at it—“hang in there” - and you can raise your needed funds.

David M. Disick is the developer of the award-winning Franz Klammer Lodge in Telluride Mountain Village Colorado, the first property to be branded as a Private Residence Club. Fractional Life named him to its list of “The Top 21 Fractional Real Estate Professionals of 2010.”

An active consultant to the Fractional Industry, Mr. Disick is also the author of the recent book. Fractional Vacation Homes: Marketing and Sales in Challenging Times, referred to in Section 5 above. The book has received favorable review from many industry professionals.