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The world of real estate investing can sometimes feel like a“choose your own adventure” with the numerous financing opportunities available, and while we’ve delved into hard money loans, traditional loans, and seller financing, it’s time that Ground Up Construction loans entered the chat.
These loans are designed to provide a streamlined financing solution for investors building single family, multi-family, and mixed-use projects. Short term in nature, these loans can be used to cover the costs of construction only, or of the purchase and construction of the property.
If the next project you’re looking to tackle is one that needs a lot of TLC, then a Ground Up Construction loan might be the best option for you. Other ideal situations to consider this type of financing include:
· Experienced builders or developers who don’t have the time to wait for bank financing and are ready to capitalize on a new project.
· A contractor with shovel-ready land who needs financing to get the project off the ground.
· An already existing property that needs significant additions or rehab work done before it can put on the market.
Unlike traditional loans, Ground Up Construction loan applications require minimal income documentation and investors often qualify based on the property loan-to-value (LTV) ratio, liquidity, and experience. As with any other financing application, you should be prudent with who you approach for the loan and make sure the working relationship that’s developed is a symbiotic one. Finding a lender that is invested in your vision, project, and success is sure to result in a smooth process once the building or renovation begins.
Another important question to ask? What if the project takes longer to complete than was first quoted and agreed upon? After all, unreliable contractors, weather emergencies, and other unforeseen obstacles are common in construction work that can easily send a timeline off kilter. Make sure you understand the lender’s terms under worst-case scenario circumstances – going in blindly could mean a costly outcome for you.
At Temple View Capital, we now provide ground up financing for new residential construction projects with a quick closing process that means faster funding for you. We’re ready to discuss your next construction project - contact us today.