Ruby Purchase Groups

Closed construction financing for individual group members, tailored to complex ownership structures and the financing needs of each member.

A purchase group is an association of private buyers who undertake a construction project together rather than purchase homes from a developer. The group members own the land and the project and contract directly with the general contractor and other professionals.

The Purchase Group Model

This structure creates financing challenges that do not exist in a conventional developer-led project. Instead of a single owner, ownership is shared among dozens or even hundreds of individuals. Each group member has a different financial profile, payment capacity and timeline. There is no single developer centralizing the obligations, so the financing structure must be adapted to the group’s unique structure.

At project completion, each group member must repay their credit facility, either by contributing additional equity or by refinancing with another lender – a process that needs to be planned well in advance.

About Ruby Purchase Groups

Ruby Finance operates a dedicated division, Ruby Purchase Groups, specializing in financing projects of this type.

Ruby Purchase Groups works with three types of groups:

• Groups participating in Israel Land Authority tenders, where proven experience with tender submissions and the required financing structure is particularly important.

• Purchase group organizers who identify land and recruit buyers and require a financing partner that understands both the development and group-related complexities involved.

• Private landowner groups joining together to build in multi-owner developments, where the ownership structure requires flexibility and active involvement that may not always be fully addressed through conventional bank financing. A financing structure is tailored to the specific needs of each group.

Financing Elements

The financing is structured as a closed financing framework secured by a first-ranking mortgage over the property. It includes financing for planning and permitting processes before the building permit is obtained, construction-phase credit with individual credit facilities tailored to each group member’s financial profile, and flexibility in payment schedules according to the group’s needs and the project’s progress.

An important component of the financing structure is advance planning for the repayment of the credit facilities and/or transition to permanent mortgages upon project completion. Ruby Purchase Groups enables group members to transition to a mortgage as early as 75% construction completion, reducing their monthly debt service during the period when their credit facility is close to being fully utilized.

How Purchase Groups Manage Risk

One of the unique characteristics of a purchase group is the number of individual members, each of whom has obligations to the group and the project. Over the life of the project, the composition of the group may change, or individual members may experience difficulty meeting their financial obligations or obtaining the financing required to complete their share of the project.

Because the circumstances of each member may affect the group as a whole, the group’s participation agreement establishes in advance the relationship between the members and the mechanisms for addressing such situations, with the aim of supporting the project’s continued progress.

The closed financing framework helps address these risks through centralized management of project receipts in a dedicated project account, ongoing monitoring of members’ payment compliance, individual credit facilities tailored to each member’s financial profile, and early preparation for mortgage financing, helping to reduce the risk of financing gaps at advanced stages of the project.

The group organizer also plays a central role in the group’s ongoing management, coordination among its members and advancement of the project. An organizer with experience in managing purchase groups and leading projects of this type can contribute to the group’s orderly operation and its ability to address challenges that may arise throughout the project lifecycle.