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A construction development loan or acquisition development loan is a short-term loan used to finance the building of a home or any other kind of real estate development project. The investor or developer takes out a construction loan to cover the cost of the project before obtaining long-term funding or have the option of using a one-time close construction to permanent loan which rolls the construction loan into permanent financing without any additional cost.
Construction Development Loans are used by investors and real estate developers who use leverage to increase their rates of return and profit. They are short-term loans, usually for a period of only a year unless it is a large development project that will take longer to build. After construction of the property is complete, the borrower is required to payoff the construction loan or roll the loan into permanent financing through our one-time close construction development program.
The borrower may only be required to make interest payments on a construction loan while the project is still underway. Some construction loans allow you to roll the carrying cost into the loan which helps to limit the out-of-pocket expenses for the investor/developer while the project is being built.
With a construction loan funds are distributed as the project is being built by what is known as construction draws. Draws are associated with the completion of work through what is known as the critical path of construction which ensures proper building methods and materials are used. As the project is being constructed an inspector is sent to the site to confirm progress at which time, they approve the disbursement of funds for work that has been completed. These funds are usually paid by the lender right to the developer or general contractor performing the work.
Yes, Commercial Real Estate Wholesale offers fix and flip loans with great terms and fast approvals. We offer hard money construction loans as well as more traditional construction development loans.
Rates for Construction Development Loans are “risk adjusted” for many factors. There are several things that will be considered like loan to value, borrower’s experience and loan duration. Other factors include current and projected market conditions, projected rent rolls and absorption rates.
The documentation required will depend on the size and scope of the project. For instance a single family renovation using our fix and flip loan program will require much less construction documentation then a larger construction development loan for a shopping center. After reviewing your loan scenario we will provide you a short list of any documents needed.
Our team of experienced loan officers can help you create a program that meets your commercial financing goals! We handle bridge loans, interim financing, and programs for small and medium sized businesses. We finance a variety of commercial properties, including:
Purchase, refinance and construction/remodeling programs are available.