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Few firms can afford to start a building project on their own cash, whether they’re trying to grow or start from scratch. Commercial construction loans come into play in this situation. Commercial construction loans are used to fund the construction, renovation, or expansion of a structure. When opposed to personal loans or mortgages, these loans typically have shorter terms (i.e. the time allocated to repay the amount borrowed). They usually have a higher interest rate as well. The financing is based on the estimated value of the completed project.
Let’s say you’re looking for financing for your development or construction project. It’s a hassle. I know. You talk to dozens of lenders or brokers or even brokers who pretend to be lenders, and it’s exhausting. Each one of them tells you something different, has a different offer, and takes time to underwrite your request enough to come to some sort of terms on your deal. So in the spirit of making your life a whole lot easier, I thought I’d put together a Top 10 List for reasons why you’d want to consider us for your next development or construction loan.
First, I’ll present the list. And then I’ll go into a little detail about each item in the list below.
10 Reasons to Get Your Development or Construction Loan Here
1. We Give You Higher Leverage
Banks, and even other private money lenders in the construction and development industry often cap their loan to cost leverage at 65%. Maybe 75% on a good day. Often less than 65% on most days, especially if it’s a bank. We don’t. We actually don’t even have a loan to cost limit or requirement. Sure, we want you to have some “skin in the game” so you won’t just give up and walk away if things get tough. But we frequently lend in the 80 to 90% loan to cost range, and upon occasion have gone into the 90%’s if the deal is strong. That means less cash out of your pocket, or less expensive equity you have to raise from partners.
2. We Underwrite Much Faster
The current average time it takes for a bank to underwrite a construction loan is between 60 and 90 days. Sure, there are exceptions to that, but as a whole, that’s pretty consistent. So let’s say you have a property under contract and your contract is about to expire. Or, your deadline to pull permits is coming up. Or you have partners who are itching to get out. I can think of dozens of reasons why closing in short order is necessary, or at least useful. The fastest loan we’ve ever closed was in 24 hours. That’s not typical, but with private money – closing a loan in under 30 days is very doable. So in the time it takes the bank to start underwriting your file, you’ve already closed your loan and started working on your project. Time is money, so they say.
3. We’re Super Creative
You come to us with a loan request or scenario. Great! We’re so glad you did. But we know how to use our capital best, and for that reason, may see opportunities to restructure or phase a deal that you weren’t considering. For example, maybe you asked for funding on the entirety of the project, when in actuality it makes more sense to do the A&D (acquisition and development) first, and then modify the loan into construction financing. Or, maybe you’re building 3 apartment buildings, or a commercial pad site, and it makes more sense to finish the site, and only go vertical on one building. There are dozens of scenarios I could use as examples here, but the point is – I review about 1000 projects a year. You probably review a fraction of that. So use our experience to help you dial in the easiest way to get your deal funded.
4. We Close Quickly
The fastest we’ve ever closed was 24 hours. But that was a loan that had already been underwritten elsewhere, and all the docs were in order and the supporting file was full. They handed it over. We reviewed. It closed. Sounds easy, but it wasn’t. In reality, it takes us about 5-7 days to fully underwrite a file. Any other time in underwriting prior to that is ordering appraisals, waiting on title commitments, gathering a full document file. But as far as closing a construction loan in this business goes, I believe we are as fast as they come.
5. We Have a Long Track Record
Over a billion dollars in loans closed. Thousands of transactions. We know what we’re doing, and we do it well. We pride ourselves on getting it done.
6. Our Rates and Fees Are the Best in the Business
We’re more than competitive. We’re aggressive. Combined with the high leverage we provide, among the other benefits listed in this article, it’s hard to compete with the cost of capital we provide. Rates and origination fees vary by project. For instance, a land deal in a remote location won’t cost the same as an apartment construction loan in downtown Dallas. But apples to apples, we’re better than most. Especially when you factor in the leverage, speed, creativity, and absence of BS.
7. We’re Reachable By Phone, Text, and Email
Not exactly sure why I put this one so far down the list, when in actuality, it probably should go at, or near the top. If it’s business hours, which in my case are Monday through Friday 8am to 6pm, and you call, text, or email – the odds are incredibly good you’re either going to get an immediate answer, or at a minimum will get a response the same day. If you contact me after hours (or before, depending on how you look at it), then you’ll more than likely hear from me early the following business day. I’m on the phone a lot, so you can’t always get through instantly, but I can respond to texts and emails while I’m on the other line – and do just about daily. Test it out if you like. I’m waiting…
8. We Understand Construction Better Than Anyone
What I meant to say here is better than anyone, meaning lenders. Of course, I don’t know it better than you! But due to the sheer volume of projects we review, discuss, analyze, and close – we really “get it”. I don’t know a better way to say it than that. We get it. When you explain your goals, we understand. When you want to banter ideas on structures or phases, we can. If you’re looking for guidance because we’ve underwritten and closed dozens of projects like yours before – we can offer it. Do we know everything? Of course not. We’re learning something new every day. But our experience is deep.
9. We’re a Great Resource
Kind of tying into what I said above – all that experience is available for you to tap into anytime you want. Stuck on a financing problem? Ask me. I’ve probably seen the same problem before. Have some issue with construction or planning or whatever? Ask me. If I haven’t heard it before, I likely know someone who has, or can help. Let’s put it this way. We’re just so entrenched in this business, that we have a lot of contacts, and a lot of resources, and hear a lot of problems. If we can’t help you, we’ll tell you. But if we can, we’ll certainly try.
10. Absolutely No BS
My favorite words to describe the way I operate are transparency and authenticity. When something stinks, I’ll tell you. If it’s not a fit, I’ll tell you. If it’s close, but not quite, I’ll tell you. If it could work if we made a few changes, I’ll tell you. Point is, I strive to keep my communication crystal clear. I want you to know exactly where I stand, what I need from you, and what I can offer at any given time. If anything is unclear, ask for clarification and you’ll get it. Feel a little confused? Tell me and I’ll try to sort things out for you. Ultimately, I choose to treat people the way I want to be treated. I know, that’s a cliché. But whether we do a deal together or not, I want you to feel respected, listened to, and that you were treated honestly and fairly.
If you’re a business owner looking to develop a home or a commercial structure, you should be aware of the many new construction financing possibilities. Consider The Construction Lender as a potential source of funding. We have more than 20 years of real estate investing, finance, development, and construction experience. With over a billion dollars in capital, we are direct lenders, not brokers. We’ve examined thousands of projects and, most importantly, we’ve closed deals on hundreds of loans. If you have any questions or would like to discuss your construction loan request – reach out anytime by clicking HERE.