Private Lending for Residential Ground-Up Construction
Real estate investors who develop residential investment properties now have a lot of options with private lending, AKA hard money lending. Construction lending used to be limited to the metro area where the lender has a local office, but now you can find lenders that offer ground-up construction loans nationwide.
Private construction financing is only for investment properties.
No private lender will provide a construction loan for someone who is planning to occupy the home as their primary residence or a 2nd home.
Although the pricing is higher than banks and conventional lenders, there are several reasons why a builder or mortgage broker would seek private financing for residential developments:
Red Tape
Dealing with banks can be painful and requires so much documentation. Even for real estate developers with strong financials,
Speed
Private lending is typically much faster than dealing with banks. Timing is so crucial in construction, and builders don’t want to risk project delays due to a bank’s processes. This is not only critical for the initial funding, it also applies to the draws for each phase of the project. Most private lenders can fund a draw request in 2 to 5 business days.
Typical Guidelines & Pricing for Residential Construction Loans
Below are some of the general guidelines for most of the lenders listed on our platform.
- Loan Amounts: $200,000 to $50,000,000
- Loan-to-Cost: Up to 85% of construction costs
- Most lenders max out at 75% LTC
- Loan-to-Purchase: Up to 50% for land acquisition
- Must be entitled
- Some lenders go up to 65% LTP if project has building permits
- Lien Position: 1st only
- Loan Term: Up to 24 months
- Payment Structure: Interest Only
- Interest Rate: 8% to 13%
- Most lenders charge around 10%
- Origination Fee: 2 to 5 points
Typical Requirements for Residential Construction Financing
Below are some of the general requirements for most construction lenders on our platform.
- Experience: 1 ground-up project in past 2 years
- Some lenders require more experience
- Must have plans and budget
- Minimum Credit Score: 650
- Sufficient Cash Reserves
- In case project goes over budget or takes long to sell
No Experience for Ground-Up Construction Financing
Center Street Lending provides private hard money financing solutions designed specifically for residential real estate investors across multiple investment strategies. As a direct lender, they focus on building long-term relationships with borrowers while delivering competitively priced, streamlined, and fast-moving transactions. With loan programs spanning bridge, fix & flip, new construction, short-term rental, and DSCR long-term rental financing, Center Street Lending is positioned to support investors as they grow and scale into more advanced projects — including ground-up construction. Below is an excerpt from our interview discussing how they approach construction financing for investors who may not yet have ground-up experience.
No experience is a major barrier for investors moving from rehabs into ground-up construction. Many lenders require borrowers to have prior projects before considering them for construction financing. Center Street takes a more flexible approach. While experience is considered, they are one of the few lenders willing to work with first-time construction borrowers when the deal structure and project team make sense.
Contractor experience is a key factor in Center Street’s evaluation. Rather than requiring the borrower to manage construction personally, they focus on ensuring an experienced general contractor is overseeing the project. This reduces risk while allowing newer investors to pursue higher-value opportunities. Borrowers should still expect stricter requirements around credit profiles, liquidity, and leverage, which may be slightly reduced for first-time construction projects.
Repeat borrowers and long-term relationships are central to Center Street’s lending model. A significant portion of their business comes from clients returning for multiple loans. When investors succeed with Center Street, the goal is to grow alongside them as they take on more complex projects. This approach makes the team more willing to back borrowers expanding into ground-up construction when they demonstrate strong fundamentals and a qualified team.
Project type also affects complexity. Tear-down construction projects are generally easier because onsite utilities and infrastructure are already in place, reducing timelines and costs. Building on raw vacant land can be more challenging, requiring new utility connections and additional planning, which increases risk and adds layers of complexity.
Ground-up construction financing traditionally requires prior experience, but Center Street recognizes that strong borrowers with the right team and financial profile can successfully take on their first ground-up project.
Funding Land Acquisition for Construction Projects
Land acquisition is a common first step in ground-up construction, and Center Street supports investors at multiple stages. In many cases, borrowers already own the land and have completed soft costs, including approved plans and permits. Center Street then provides financing for the full construction budget, often with the possibility of returning some cash to the borrower depending on ratios.
Purchasing land that is already prepped for construction is another scenario. If the ratios align, Center Street can lend up to 60% of the land value on day one, with the borrower contributing the remaining 40% in cash. From there, Center Street typically finances 100% of the vertical construction, supporting the project from the ground up through completion.
Fund control is an important part of the lending process. Construction or rehab budgets sit in a separate escrow account, and borrowers only pay interest as they draw. Reimbursements are based on completed work, creating a controlled and transparent process. This approach, combined with Center Street servicing all loans in-house, sets them apart from most private lenders who outsource draws and payments to third-party companies.
Inspections are coordinated through a third-party company. When a borrower reaches a project milestone or requests the next phase of funding, the inspector visits the site, takes photographs, and verifies completion. The draw department then reviews the report against the budget before releasing the wire to the borrower. This system ensures accuracy, transparency, and accountability for every loan, contributing to Center Street’s high rate of repeat clients.
Draw Schedule for Ground-Up Construction Projects
Construction reserves are an important part of funding ground-up projects. Because construction is more capital-intensive upfront, Center Street typically requires borrowers to maintain reserves, often around 10% of the construction budget plus several months of loan payments. This ensures borrowers have enough liquidity to begin the project and maintain momentum through early construction phases.
Project phases are typically planned between the borrower and their general contractor. Borrowers usually have enough capital to begin the first phase of construction before requesting reimbursement. As phases are completed, borrowers can request draws based on completed work, allowing projects to progress in a structured and predictable way.
Flexible draw timing is one of the key differences in Center Street’s approach. Borrowers are not locked into strict draw schedules or forced phase timelines. Instead, they can request draws as needed based on actual project progress. Whether a borrower prefers larger upfront equity contributions or smaller, more frequent draws, the structure allows them to manage cash flow in a way that fits their business model.
Soft cost reimbursement is also available in many cases. Center Street may reimburse certain pre-construction expenses such as plans or permitting costs. While they occasionally fund projects involving horizontal development like roads or major site work, most projects focus on vertical construction where structures are being built rather than land being fully developed.
Borrower control remains a central philosophy in construction lending. Some investors choose to front a large portion of project costs themselves and draw less frequently, while others prefer regular reimbursements throughout construction. Center Street supports both approaches, allowing investors to run their projects based on their experience level, capital structure, and contractor relationships.
Land Draw Cash Out at Construction Loan Closing
Land equity cash out can be available when borrowers already own their land free and clear. Many investors purchase land using cash and build equity over time while completing plans, permits, and other pre-construction work. When they move into a construction loan, the land can be used as collateral, sometimes allowing borrowers to receive cash back at closing based on total project cost and future value projections.
Cost-based lending plays a major role in determining whether cash can be returned at closing. Lenders review the original land purchase price, additional money invested into permits or site preparation, and the total construction budget. If sufficient equity exists within the overall project structure, borrowers may receive some funds back to help support construction startup costs or material purchases.
Permitting timelines are one of the biggest challenges investors face when preparing land for construction. Depending on the city or county, investors may hold land for months or even years while waiting for approvals. Changes in local regulations, environmental requirements, or safety updates can delay projects. In some cases, lenders may work with borrowers to refinance or restructure loans if delays push projects beyond original loan terms.
Leverage balance is critical when structuring construction financing. While some investors prefer to fund as much as possible with their own capital, using too much liquidity upfront can leave them short on funds later in the project. Strategic leverage allows borrowers to maintain reserves for draw requests, unexpected costs, or timeline changes while still maintaining strong project control.
Project flexibility is essential because construction projects often evolve over time. Material costs can fluctuate, project scopes can shift, and approvals can change during development. Because of this, each loan scenario is evaluated individually to ensure borrowers maintain enough liquidity to complete construction successfully while maximizing available financing options.
Borrower Requirements for Private Construction Loans
Asset-first lending is the foundation of private construction financing. The first thing lenders evaluate is the project itself — what is being built, where it is located, and whether the deal structure makes sense. Because private lending is primarily asset-based, a strong project can often help offset weaknesses in other areas of a borrower’s profile.
Borrower profile is evaluated after the asset review. Lenders typically look at credit history, available liquidity, and prior real estate or construction experience. While these factors are important, there is often flexibility depending on the overall strength of the deal. Strong liquidity, experienced contractors, or a high-quality location can help support borrowers who may be newer to construction projects.
Experience flexibility is common in private lending compared to traditional banks. Some borrowers may have strong fix-and-flip experience and are transitioning into ground-up construction, while others may be first-time builders with strong financial backing and experienced general contractors. Each scenario is evaluated individually based on total risk, leverage, and project viability.
Responsible leverage plays a major role in successful construction projects. While many investors aim to maximize leverage, maintaining sufficient reserves is critical for managing draws, handling cost overruns, and navigating timeline delays. The goal is to find the right balance between using financing efficiently while still maintaining financial stability throughout the project.
Relationship-based underwriting is key because construction loans often require deeper conversations about goals, timelines, and project strategy. Rather than applying rigid approval standards, many private lenders evaluate deals collaboratively with borrowers to determine whether the project can be structured for success.
Broker partnerships are handled with the same level of care as direct borrower relationships. When deals are submitted through brokers, lenders typically respect the broker-client relationship by allowing brokers to control communication preferences. Some brokers prefer to stay fully involved in borrower communication, while others prefer lenders to assist directly, and systems are often set up to support either structure.
Center Street Lending is a direct private lender personally invested in every loan and committed to helping residential real estate investors succeed. They offer a variety of loan programs to meet the needs of investors at every stage: bridge loans for purchase or refinance, fix & flip (or rent), new construction financing, short-term rental loans, and DSCR long-term rental financing. Watch or listen to our complete interview with the Center Street team, and click the button below to visit their profile.
High Leverage Construction Lending With Rehab Financial Group
Rehab Financial Group has been providing real estate financing solutions since 2009, focusing on helping investors access high-leverage funding for fix-and-flip, rental, and construction projects. Their 100% financing program is designed for both new and experienced investors who want to scale without tying up large amounts of upfront capital. With flexible qualification guidelines, streamlined documentation, and a focus on practical, repeatable projects, Rehab Financial Group supports investors looking to move quickly and efficiently in competitive markets.
While Rehab Financial Group (RFG) is primarily known for its rehab-to-flip and buy-and-hold financing, the company also offers a specialized program for ground-up construction projects. Although this segment represents only a small portion of RFG’s portfolio, the program provides high-leverage loans for investors with strong profiles who want to enter vertical construction without prior experience. With clear requirements around credit, contractor vetting, and borrower equity, RFG ensures these projects are positioned for success from day one.
Portfolio allocation for ground-up construction remains limited, generally accounting for no more than 5–10% of RFG’s overall lending. Despite the small share, the program is designed to attract qualified investors who may lack prior experience but demonstrate strong liquidity and a high FICO score. RFG’s approach ensures that even novice builders can access financing under structured, risk-managed terms.
Credit requirements are stringent to safeguard the investment. Borrowers must maintain a minimum 700 FICO score to qualify for the program, ensuring that the investor has a strong financial foundation before taking on a full-scale construction project. This threshold allows RFG to extend financing confidently while maintaining its low-risk profile.
Contractor vetting is mandatory. All contractors involved in the project must be fully qualified and approved by RFG. This ensures that the quality of work meets the lender’s standards and mitigates risks associated with inexperienced borrowers managing large-scale construction projects. By requiring a vetted general contractor, RFG provides a layer of oversight critical for project success.
Leverage is structured with high loan-to-cost ratios. RFG offers up to 90% LTC financing, requiring the borrower to contribute approximately 10% of the total project cost, including both land and construction expenses. This skin-in-the-game requirement ensures that borrowers have meaningful equity in the project and are incentivized to manage costs and timelines effectively.
Land requirements are flexible but precise. Borrowers do not need to already own the property, but the site must be vertical-ready with all necessary entitlements in place. RFG does not finance horizontal development or subdivisions, focusing exclusively on shovel-ready construction where the project can begin immediately.
Reserves and cash flow planning mirror RFG’s rehab program. Interest is typically drawn for the first six months, providing borrowers with runway to initiate construction. Adequate liquidity ensures the project can progress without interruption, aligning both the investor’s and the lender’s interests toward timely and successful completion.
Rehab Financial Group has been providing financing solutions to real estate investors since 2009 and is a direct private lender focused on high-leverage funding for residential investment projects. They offer 100% financing programs designed to support fix-and-flip, rehab-to-rent, and select new construction opportunities for non-owner occupied 1–4 unit properties. Visit their profile to watch more short video clips, or watch the complete interview to learn more about their 100% financing rehab program and borrower requirements.
VIEW PROFILE
Private Lending New Construction vs. Fix & Flip
i Fund Cities was built by real estate investors who wanted a faster, more transparent, and more execution-focused lending experience. Since launching in 2018, the platform has funded thousands of alternative real estate loans across fix & flip, new construction, bridge, DSCR rental, and small multifamily projects. With deep hands-on experience in both lending and building, the company has developed a reputation for balancing speed, leverage, and reliability of capital — particularly in more complex asset classes like ground-up construction. Below is an excerpt from our interview discussing how capital markets view new construction versus fix & flip lending and why execution experience matters.
Capital balance plays a major role in how large private lending platforms manage relationships with institutional capital partners. Rather than concentrating solely on fix & flip or construction originations, many lenders aim to maintain diversified exposure across bridge, rehab, and vertical construction loans to support long-term portfolio performance and risk management.
Construction expertise is critical when scaling new construction lending programs. According to Bryan Ziegenfuse, offering construction financing is only one part of the equation — lenders must also demonstrate real operational knowledge around draw management, construction timelines, and execution risk to maintain confidence from capital partners.
Securitization limits can impact how much new construction exposure lenders can include in capital markets executions. Some securitization structures place caps on construction allocations, which can restrict overall capital flow into development projects unless lenders work directly with rating agencies to refine construction milestone classifications and definitions.
Execution risk becomes significantly more complex in ground-up construction compared to light rehab projects. As Chris Tereo explains, construction lending involves longer timelines, inspection coordination, contractor performance monitoring, and more complex draw schedules — all of which directly impact borrower project success and loan performance.
Investor alignment often differentiates investor-built lending platforms from traditional financial institutions. Lenders with direct real estate investment experience tend to prioritize faster draw speeds, flexible structuring, and practical construction knowledge, which can improve borrower execution outcomes in real-world project environments.
Ground-Up Construction Loan Guidelines & Leverage
Experience matters is the foundation for determining loan eligibility and leverage in ground-up construction projects. Lenders evaluate both the sponsor’s prior experience and execution ability alongside the scale and type of the project, whether it’s workforce housing, a townhouse development, or a luxury spec single-family home.
Leverage ranges typically fall between 80% and 90% LTC (loan-to-cost), with most projects averaging around 85% LTC for new construction. This calculation includes hard and soft construction costs in addition to the purchase price, ensuring that the total project cost is properly financed.
Land valuation can be incorporated into the LTC calculation through imputed equity, provided the land is seasoned and properly entitled. Investors who have acquired land, subdivided it, or made improvements can include that built-in value, potentially increasing overall leverage for the construction loan.
Entitlement risk is not assumed by most lenders. A project must be shovel-ready with approved plans and permits in place. Without these prerequisites, loans generally cannot close, as raw land without approvals does not provide sufficient security for financing.
Project sizing is flexible, ranging from smaller single-family or townhome developments to $20–30 million multi-unit projects. Lenders assess each project against local market data and comparable home prices to ensure alignment with community standards and mitigate risk.
Loan determination for leverage considers multiple factors: sponsor experience, project complexity, geographic location, and market comparables. Larger or more complex projects may fall into lower leverage buckets, while experienced investors executing smaller or infill projects may access higher leverage, reflecting reduced execution risk.
Stabilized value is often used as a benchmark, with loan-to-arb calculations typically governing final loan amounts. LTC remains the primary metric, guiding lenders in balancing project financing with risk management.
Borrower Requirements for Ground-Up Construction Loans & Leverage
Experience matters when qualifying for a ground-up construction loan. Borrowers with six or more completed projects and a credit score above 700 typically receive the highest leverage. Those with two to three prior deals or slightly lower credit scores can still qualify, though leverage may be reduced.
Credit evaluation considers more than just the number. Factors like utilization, timing, and history of late payments all influence lender decisions. A 670–770 FICO may be acceptable depending on overall financial behavior, while a 620 with multiple late payments can make approval difficult.
Minimum projects ideally start at two completed deals, though exceptions are possible for borrowers with verified general contractors. A trusted GC significantly reduces execution risk, allowing lenders to consider borrowers with less direct experience.
Transitioning investors moving from fix-and-flip projects to ground-up construction must go through GC verification. This ensures both the lender and borrower have confidence in the construction management, especially for first-time ground-up projects.
Rehab experience also plays a role. Borrowers with extensive full gut rehab experience are viewed more favorably than those with only cosmetic renovations, as it demonstrates the ability to manage complex, high-stakes projects successfully.
Rental Exit Strategy for Residential Rehab and Construction Loans & Leverage
DSCR utilization has become a predominant exit strategy for both rehab and ground-up construction projects. Borrowers frequently transition newly completed properties into debt-service coverage ratio (DSCR) financing, sometimes within 120 days post-construction, optimizing cash flow and mitigating market risk.
Portfolio structuring is common, as built-to-rent strategies generally involve multiple residential units rather than single assets. Aggregating properties into a single DSCR portfolio loan enhances leverage efficiency, risk diversification, and operational scalability.
Market analytics guide asset type selection. Townhomes, detached single-family homes, and other residential typologies are underwritten using local supply-demand data, absorption rates, and cap rate trends to ensure alignment with community-level liquidity and investor risk appetite.
Refinance conversion is frequently employed, moving borrowers from short-term bridge, construction, or rehab financing into stabilized DSCR rental loans. This strategy reduces rollover risk, extends loan maturities, and provides predictable debt-service coverage over the investment horizon.
Underwriting parameters are property and portfolio-specific. Maximum loan exposure per single asset typically caps at $2.5 million, while portfolio-level DSCR financing can accommodate $20 million across multiple units. Minimum thresholds generally start at $100K, providing flexible entry points for investors across varying deal sizes.
i Fund Cities has funded more than 4,900 loans totaling over $2 billion for real estate investors since 2018. The platform provides financing solutions across fix & flip, new construction, bridge, DSCR rental, and small multifamily assets, with features including high leverage options, fast draw timelines, and flexible deal structuring. Visit their profile to watch more short video clips, or watch the complete interview with Bryan Ziegenfuse and Chris Tereo.
Funded Residential Construction Loans
Construction Loan for Luxury Home in Jupiter, Florida
$6,000,000
Capital Funding Financial, a direct family-office private lender, funded a $6,000,000 ground-up construction loan for a luxury single-family home in Jupiter, FL. The construction budget was $5,500,000. We paid off the previous loan loan and set aside a construction reserve to complete the work required for the Certificate of Occupancy. The builder is anticipating a sale price of $12,000,000 which puts our loan at a conservative 50% LTV. The loan term was set at 12 months. Capital Funding has extensive experience handling luxury single-family bridge and construction loans ranging from $500,000 to $25 million on its family office–backed balance sheet. This ground-up construction loan was funded in July 2025.
Private Construction Loan for Spec Home in Charlotte, North Carolina
$820,250
I Fund Cities, an alternative lending platform, funded a $820,250 senior-lien position ground-up construction loan for a single-family home in Charlotte, NC. The purchase price of the land was $410,000 and $540,000 was the construction budget. We funded 86% of the total project costs. The completed value was estimated at $1,360,000, so our loan-to-completed-value was 60%. Erik Eichinger, iFC’s North Carolina Manager and Loan Officer, worked with this repeat Borrower who relies on iFC for all of their funding needs. The property was purchased out of an estate, and the investor needed to move quickly. Navigating through the heirs posed a significant challenge for the Borrowers, but once resolved, it was critical to honor their commitment to a fast close. iFC closed the deal just one week after the Seller’s issues were resolved. Erik noted, “There was not a bank in North Carolina that could have closed that fast.” In addition to the quick closing, the Borrower received favorable terms, enabling them to pursue additional deals. The Borrower plans to sell the property as an exit strategy. The loan term was set at 18 months. This private ground-up construction loan was funded in January 2025.
I Fund Cities, an alternative lending platform, funded a $410,912 senior-lien position ground-up construction loan for a single-family home build in Charleston, SC. The purchase price was $77,500, and the construction budget was $388,740. We funded 88% of the total project costs. The completed value was $555,000 which will put our loan-to-value at around 74% upon completion. This investor manages both fix-and-flip and new construction projects in Charleston. Local Loan Officer Vincent DeMarco discovered the Borrower’s work on social media and reached out via Facebook. The Borrower had been using cash for flips and a local bank for construction, but was limited by exposure caps. Seeking to scale, he needed a lender with more flexibility. i Fund Cities offered the support and efficiency to help grow his business without those restrictions. The Borrower now has a strong relationship with a lender that enables expansion without the limitations of traditional financing. They plan to sell the property upon completion. The loan term was set at 12 months. This private construction loan was funded in October 2024.
Private Construction Loan for Spec Home in Forked River, New Jersey
$706,000
Malve Capital, a real estate private lending fund, funded a $706,000 ground-up construction loan for a single-family home in Forked River, Ocean County, NJ. We funded 100% of the $517,500 construction budget and 48% of the $389,000 purchase price, while the Borrower contributed 52% cash to the purchase at closing. The completed value was estimated at $1,205,000 so our loan-to-completed value was 59%. The Borrower had good credit. They plan to sell the property upon completion of the construction project. The interest rate was 12% and we charged 2% origination points. The loan term was set at 12 months. This ground-up construction loan was funded in February 2025.
RCN Capital, a national direct private lender, funded a $1,128,800 ground-up construction loan for a single-family home in Charlotte, NC. We funded 100% of the $828,000 construction budget. The completed value was estimated at $1,900,000. The Borrower is a repeat and experienced investor with good credit and 5 verified ground-up projects. This sale will bring their total to 6 completed projects. Over the past 36 months, the Borrower has successfully completed 15 rehab projects. The Borrower acquired the subject property for $500,000 on 6/27/24. Since acquisition, they have secured all necessary plans and permits and have already demolished the existing structure, allowing the land to be appraised accurately “as is.” The Borrower plans to exit the loan by selling the completed property. The subject property is approximately 4,540 square feet. The interest rate was 11.74% and we charged 1% origination points. The loan term was set at 18 months. This ground-up construction loan was funded in October 2024.
Ground-Up Construction Loan for SFR in North Charleston, South Carolina
$257,706
I Fund Cities, an alternative lending platform, funded a $257,706 senior-lien position ground-up construction loan for a single-family home in North Charleston, SC. The land purchase price was $75,000 and the construction budget was $268,609. The completed value was estimated at $445,000 so the loan-to-value was 58%. This build-to-rent Borrower learned about IFC through a local wholesaler who works with loan officer Vincent DeMarco. The investor was funding his first new construction project entirely in cash but decided to preserve more cash on hand to purchase additional lots as opportunities arose. While many lenders hesitate to fund a first-time new construction project due to concerns about local knowledge, network, and expertise, IFC approved the loan for several reasons. We had extensive knowledge of the area and had previously worked with the investor’s general contractor. This allowed us to provide funds for the remaining construction costs and reimburse some of the investor’s capital already spent on soft and hard costs. With this partnership, the investor could pursue new opportunities and lay the foundation for many future projects with IFC as his trusted capital partner. The loan term was set at 12 months. The Borrower plans to lease the home and refinance into a long-term rental loan. This ground-up construction loan was funded in October 2024.
Construction Loan for Custom Home in Saint Augustine, Florida
$1,003,750
Center Street Lending, a direct lender for residential real estate investors, funded a $1,003,750 first-lien position ground-up construction loan for a single-family home in Saint Augustine, just south of Jacksonville, FL. The Borrower is an experienced builder who has closed 3 loans with us. He requested the loan shortly after the project had started. The property value was estimated to be $2,900,000 upon completion so our loan is around 35% loan-to-value. We funded 100% of the $978,750 construction budget. This new modern luxury coastal design was presented by McFarland Family Homes in the gated golf community of Palencia. The size will be 5,045 square feet of interior space. With 5 bedrooms and 5.5 baths, the home will be perfect for entertaining. The Borrower plans to sell the property as an exit strategy. The loan term was set at 12 months. This ground-up construction project was completed in September 2024.
Ground-Up Construction Loan for Spec Home in Gastonia, North Carolina
$203,808
I Fund Cities, an alternative lending platform, funded a $203,808 senior lien position ground-up construction loan for a single-family home in Gastonia, NC. We funded 100% of the $201,775 renovation budget. The purchase price of the land was $35,000. The completed value was estimated at $305,000 so our loan-to-completed value was 66%. This builder, a repeat client and a major spec home builder in the area, struggled to scale using the bank’s funding due to caps on exposure (the amount of debt a Borrower can carry) and spec ratio (the number of builds a Borrower can undertake). The banks also offered lower leverage, requiring the Borrower to bring more cash to deals. We supported this builder’s volume of over 100 new builds per year and funded 85% of the project cost, closing in two to three weeks – much faster than the bank’s 60-day timeline. The loan term was set at 12 months. This ground-up construction loan was funded in June 2024.
Ground-Up Construction Loan for SFR in Delray Beach, Florida
$1,081,110
Center Street Lending, a direct lender for residential real estate investors, funded a $1,08,110 1st lien position ground-up construction loan for a single-family spec home in Delray Beach, FL. The land value was estimated at $850,000 and was owned free and clear. We funded 100% of the $931,110 construction budget. The completed value was estimated at $2,800,000 so our loan-to-value was 38%. The Borrowers had trouble finding financing previously since they are not US citizens. Given the strong equity position they had in the land, we were able to fund the entire project costs and closed within 4 weeks of receiving the loan application. The home will be a luxury residence on a 7,105 square-foot lot, located in the heart of the prestigious La Hacienda neighborhood, just minutes from Downtown Delray Beach. The Borrower plans to sell the property upon completion of the project. The loan term was set at 18 months. This SFR ground-up construction loan was funded in April 2024.
Hard Money Construction Completion Loan for SFR in Los Angeles, California
$655,000
Secured Capital Lending, a direct hard money lender, funded a $655,000 1st lien position construction completion loan for a single-family home in the Glassell Park neighborhood of Los Angeles, CA. The property value was estimated at $950,000 so our loan-to-value was 68%. We paid off a previous loan balance of $501,000. We funded 45% of the total $292,900 construction budget. The completed value was estimated at $1,125,000 so our loan-to-completed value was 58%. The Borrower started the project with her own funds but due to inflation and construction costs going up, their budget was increased, and they were not able to finish on their own. They came to us mid-construction during the framing stage, and we were able to quickly underwrite and approve the loan. We ended up paying off her previous lender and gave her the entire completion funds to complete the project. It required us to get out of our comfort zone and do a little more work to make sure there was no hair left on the deal. We eventually got comfortable with the project and got the job done. The subject property was approximately 850 square feet set in a 4,640-square-foot lot. The Borrower had excellent credit. They plan to sell the property as an exit strategy. The interest rate was 11%, and we charged 2% origination points. The loan term was set at 12 months. This SFR construction loan was funded in February 2024.