When it comes to real estate investing, getting financing for any property can seem like a daunting task.
Attempting to gain money for new construction hard money loans may even seem impossible for some, especially when you’re unsure if you need traditional construction loans, investor construction loans, conventional bank loans, new construction loans for investors, residential construction loans, or commercial construction loans.
One of the reasons real estate investment financing is so difficult to obtain is because a traditional lender sees these properties as significant risks. A hard money lender that provides hard money for new construction projects, and new construction investors is just what you’re looking for.
Traditional Bank Financing Is Stressful to Pursue
The process of dealing with a traditional bank loan or conventional loan application from a private money lender is highly stressful. Often, real estate investors jump through hoop after hoop, only to be turned down for a loan.
Traditional bank loans, business loans, and hard money private loans also take too long to close and have rigid loan terms. Imagine having to wait 45 days or more to close on a conventional loan to get started on construction. Most real estate investors trying to purchase a real estate investment property from hard money construction lenders find this unacceptable.
What is a Hard Money Construction Loan?
No matter what happens in the world of real estate investments and the real estate market, investors are always going to need financing. Perhaps you are experienced in the real estate market and ready to increase the challenge by building a property from the ground up.
A hard money construction loan may be just what you are looking for. Like other types of financing, construction loan terms typically require a portion of the money to be given to you to purchase the lot, and the rest of the loan money remains in escrow. When a particular phase is completed, portions of the funds are released.
Unlike hard money fix and flip loans or other types of real estate investment loans, experience is a must with this type of construction loan. The right company can help you get up to 70% of the lot cost (and more in some cases) and 100% of the repair or construction costs with a reasonable monthly payment and flexible minimum credit score requirements.
Best of all, the new construction loan amount is based on the construction property value and not your creditworthiness.
Advantages of Hard Money Construction Loans
Such financing may be your answer if you want to avoid the issues mentioned above. Construction-only loans offer a range of benefits that you should know about before making your final decision.
- The fast closing and loan processing period draw experienced real estate investors to this type of loan. You can close on the loan in as few as ten days, making this loan choice much faster than bank financing, financing from other private lending companies, private investment firms, and a traditional lender.
- While interest rates are slightly higher, the rates are extremely competitive and explained more in all the loan details.
- With flexible underwriting requirements, those who cannot get approved through big banks will find hard money construction loans from a private money lender like us as the answer.
EXAMPLE LOAN SCENARIOS
Hard Money New Construction Loan Summary
While your summary may differ from the one below, this will give you an idea of what you can expect if you apply for conventional construction loans or a conventional mortgage from private lenders like Creative Hard Money Lending Group.
- You can often receive up to 85% (and in some cases more) of your total new construction project cost with a construction hard money loan, making it appealing from a budget and schedule standpoint.
- You can receive an investment construction loan that ranges from $75,000 to $20,000,000.
- The financing terms generally range from 12 to 24 months.
- You may be eligible to seek this type of financing or renovation construction loans on condos, apartments, town homes, and multi-family homes, regardless of whether or not you have a strong financial background.
Where Does the Lending Come From?
While you begin considering your options, it is important to learn as much as possible about hard money financing and the hard money loan process. As you likely know, traditional loans are funded by banks and other lending institutions.
Special lending groups, investors, and investment groups provide the funds for most hard money loans. Because these lenders do not work for big banks, they can be more flexible in their requirements.
With new construction loans, the private money lender will expect you to put up some of your own capital in the project once a particular phase has started. You will also generally be charged a higher interest rate and have a lower term. In most cases, you should plan on investing 10-20% of your own cash in the project.
With a traditional bank loan, you are looking at months of waiting before you will be able to close. This could lead to new construction projects being snatched up by others with capital on hand.
MORE EXAMPLE LOAN SCENARIOS
Questions You Should Ask Hard Money Lenders
Seeking this type of loan from new construction hard money lenders like us could be perfect for your new construction investment needs, but it could also be the wrong choice. Before applying, you should ask yourself a few questions.
How Fast Do You Need the Money?
In real estate investing, time is of the essence. Swooping in fast and snapping up a residential or commercial property is what makes a successful investment. Traditional lenders will take at least thirty days before they get back to you. If you need a short-term loan or your money sooner, consider applying for hard money constructions loans or new construction to permanent loans.
What Type of Loan Structure Are You Seeking?
You certainly have many options for seeking financing for your project. Unfortunately, traditional approaches to financing often lead to strict requirements from loan officers that not all investors can meet.
If you cannot meet your loan officer’s fixed requirements, there are lenders available with flexible terms to help you get the money you need without the stress. They will structure your loan to be attractive for both you and them. They would be happy to help you understand the level of flexibility they can bring to the table.
Do You Have What It Takes to Qualify?
Getting approved for a loan will be the most important part of your investment strategy and getting your construction project started. Traditional banks and a loan officer will take a serious look at your creditworthiness.
With this loan or other hard money loans, the focus is more on the property than the borrower. This means you can get approved even if your credit is less than perfect. You can fund projects other lenders will not touch.
You Want a Local Lender
Local lenders have what it takes to help you every step of the way. Your loan expert will develop a close working relationship with you to understand your needs and aspirations.
It takes a local lender to help you get the money you need with the terms you want. Without a local lender, you will have no one to reach out to should you need assistance in any way.
Get Pre-Approved Today
It is our privilege to help you with your new construction financing needs. You are not just a number to us. We invite you to get pre-approved today. With approval, you could have your money in ten days.
With this new construction loan, you won’t go through the hassles of traditional lenders. You will get upfront information and will be here to help you every step of the way.
Get started today. Fill out the easy online application and close on your property in days, not weeks.