Some of the most important work in real estate development happens before anybody outside the project notices.
There are no cranes.
No construction workers.
No finished suites.
Sometimes there is not even a sign on the property.
Yet behind the scenes, land is being assembled, plans are taking shape, approvals are progressing and value is being created.
Michael Ruge believes this early stage is also where funding can make an enormous difference.
The stage traditional banks often avoid
Banks generally want predictability.
Early real estate development offers very little of it.
There may be municipal approvals outstanding. Construction costs may change. Timelines can shift. Interest rates can move.
That uncertainty helps explain why a bank may decline a project that an experienced developer believes has strong potential.
Michael does not see that as a reason to complain about banks.
He sees it as a reason to find another source of capital.
Private lenders can step into the gap.
What private funding actually does
Early-stage private capital can help finance the work that moves a property from potential towards development.
That can include land assembly, entitlements, planning and advancing the project.
These steps matter because later-stage lenders generally want to see progress.
Once approvals are in place and the development looks more predictable, conventional lenders, institutional partners or government-backed programmes may become much more interested.
Someone still has to pay for the journey to get there.
That is the role Michael sees private capital playing.
A secured loan rather than an abstract investment
Michael’s structure is designed around a real-asset-backed loan.
Private lenders participate in increments of $250,000, secured against the asset.
The loans earn a 10 per cent annual return, compounded annually while the capital remains in place.
At the appropriate exit or refinance point, the intention is to repay the full principal and interest.
Depending on the individual project, there may also be a performance dividend or a continuing small ownership interest.
For Michael, the security and structure are just as important as the stated return.
Moving from private capital to long-term funding
The interesting part of real estate development is that the risk profile changes as a project progresses.
At the beginning, there may be many unknowns.
As land is secured and approvals are achieved, uncertainty starts disappearing.
Eventually, the project may become suitable for longer-term financing.
In Canada, qualifying rental developments may have access to CMHC-backed programmes offering high levels of financing and longer amortisation periods.
Projects can be rewarded for features such as better energy performance, affordability commitments and long-term rental tenure.
Michael likes that alignment.
Better financing can encourage better buildings.
Private capital is not being replaced
Some investors might wonder what happens when that later financing arrives.
Michael’s view is that the private lender has already performed an essential job.
Their funding helped move the project through the stage that made long-term financing possible.
Without the early capital, there may have been nothing for the institutional lender to finance later.
It is better to think of the two sources as part of a sequence.
Private funding helps unlock the opportunity.
Later funding helps stabilise and complete it.
Where the real value gets created
Michael believes one of the most interesting places to participate in real estate development is while the project is being shaped.
This is when land may be assembled.
This is when planning improves the opportunity.
This is when approvals can dramatically change what the property is capable of becoming.
That does not mean early-stage development is easy.
Quite the opposite.
It requires patience, experience and the willingness to deal with uncertainty.
But that is also why capital can be valuable there.
The simple version
Strip away all the financial language and the idea becomes fairly straightforward.
There is a property.
There is an opportunity.
There is work required to unlock it.
That work requires funding.
Private lenders provide capital during the stage when traditional institutions may be reluctant to do so.
The project advances.
Later financing becomes possible.
The early lender gets repaid according to the structure.
And the development continues towards becoming something useful.
Michael Ruge has spent decades in real estate development, and one of the lessons he keeps coming back to is that projects do not move because people talk about their potential.
They move when somebody is prepared to put the right funding behind them.
Michael Ruge’s new book “Building Hope in the Housing – How to Solve the Rental Affordability Crisis” will be realeased this fall (2026).
Links to Michael Ruge, Affordable Apartments and his Initiatives:
How Michael Ruge is Reimagining Rent-to-Own to Tackle Canada’s Housing Crisis
Michael Ruge: Why Sustainable Affordable Housing Matters
Michael Ruge: Why You Don’t Need Skyscrapers to Solve the Housing Crisis
High Streets, Not Highways – Michael Ruge’s Retail Rescue Plan
