How to Fund a Development Project.

I’ve watched it happen to smart people, more than once — a good deal, a solid plan, sunk by a capital stack that was too much debt, too high interest, or just the wrong shape for the project. It’s part of why I moved this lesson earlier in my own course curriculum. It will absolutely destroy any good you’ve done on the rest of the deal.

Here’s the shape of what actually funds a development project.

Capital Stacking, in Plain Terms

A capital stack is just layering different sources of funding, each with its own return expectations, risk, and repayment terms. Most developers blend a few of these: equity, debt, and sometimes mezzanine financing, each covering a different part of the project and carrying a different cost.

Equity usually comes first — the developer’s own capital, or investors contributing in exchange for a share. Debt is typically the largest layer, sourced from banks or alternative lenders. Mezzanine financing sits between the two: more expensive than a conventional loan, but it buys you capital without giving up as much equity. None of these are “the right one.” The right mix depends entirely on the deal in front of you.

Beyond the Bank

Conventional financing is one layer. It’s not the whole stack, and new developers who only know that one layer end up stuck when the bank’s terms don’t fit the project. A few of the creative structures worth actually understanding:

Vendor take-back mortgages, where the seller finances part of the purchase themselves — useful for freeing up cash flow in the early stages. Equity partnerships, where investors take on part of the risk in exchange for ownership. Mezzanine lenders and private capital, more flexible than a bank but priced accordingly. And government programs — CMHC, in particular, offers long-term, low-interest financing for projects aimed at rental or affordable housing, which not enough developers even check for before assuming a conventional loan is the only path.

Assessing What You Actually Need

Your capital requirement isn’t a national number — land prices and development costs shift by province, sometimes by municipality. Review your numbers thoroughly, build in real contingency, and make sure every part of the project is actually accounted for in the pro forma before you go looking for money.

Structure Protects You

The terms you negotiate at the start of a capital stack either give you room to move later, or they don’t. A deal with one layer of debt, at a rate you can’t flex, and no partial-discharge clause, is a deal with nowhere to go if the timeline slips. The ones I’ve seen hold up under pressure were structured with that flexibility built in from day one — not bolted on after something went wrong.

And when you’re raising from people, not just institutions: don’t frame it as asking for money. You’re looking for the right partners. People don’t feel “you own 7% of this.” They feel “I know I’m getting 16% on my money” — and you underwrite the worst case first, so that number still holds even if the project doesn’t go exactly to plan.

This Only Covers the Shape of It

Every layer above — equity structuring, debt terms, mezzanine pricing, which government program actually fits your project — goes a lot deeper than what’s here. Capital stacking is one of the places I watch new developers lose the most money, not because the deal was bad, but because nobody taught them there was more than one way to fund it.

That’s the real work inside the Land Development Fast Track course and the LDA Community: building a capital stack against an actual project, with people who’ve built one before, instead of guessing your way through the first one alone.