Construction loans
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Golfgar4
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Do you already have the plans for the project? In my mind, especially in relation to a multiple family dwelling unit , that would be first, to have a set of plans developed by an architect. This insures that everything is up to code, which I'm sure would be somewhat different from a single family dwelling unit.
Once the plans have been finalized, you should have a pretty good idea of what the general costs are going to be based on square footage. What's the going rate in your neck of the woods? In our area right now, and for residential building, it's about $80 - $100 a square foot. Don't know what it might be for commercial building projects.
Do you have the land that you're going to build on? I don't imagine any lender would hardly even talk to you unless you already have the land.
Maybe you should just go to a commercial lender and ask them what they need from you to get the project started? Sometimes we get so involved in details, we forget to take the easy road! /forums/images/graemlins/smirk.gif
Once the plans have been finalized, you should have a pretty good idea of what the general costs are going to be based on square footage. What's the going rate in your neck of the woods? In our area right now, and for residential building, it's about $80 - $100 a square foot. Don't know what it might be for commercial building projects.
Do you have the land that you're going to build on? I don't imagine any lender would hardly even talk to you unless you already have the land.
Maybe you should just go to a commercial lender and ask them what they need from you to get the project started? Sometimes we get so involved in details, we forget to take the easy road! /forums/images/graemlins/smirk.gif
EddieWalker
Epic Contributor
I've done a few construction loans to build spec homes.
First step is to find the land, get a price and some local information about the market in the area.
Then you need the plan for what you will build along with bids from your subs.
You bring all the numbers and comps for the area to your lender and talk it out. Most lenders know what the average price to build is in their area. If you are too low or high, then they wont take you seriously.
I can build a house for under $60 a foot real easy, but the bank expected $70 a foot as the going cost, so I pad my estimates to get that amount, then when I come in way under, they are happy. Works every time.
If they like your proposal, they will order an apraisal of the project. If it's worth more then they are lending, you're in business.
Funds will be made available for each expense when they come due. I bring my bills to the bank, hand them the bill and they put the funds in my account, then I write the check to my sub or supplier.
You pay interest every month on the amount outstanding. Depending on your lender, the financing will last from 6 months to a year. Then you get perminent financing for the amount you borrowed to build your project. Again, terms depend allot on your relationship with your lender.
First step is to find the land, get a price and some local information about the market in the area.
Then you need the plan for what you will build along with bids from your subs.
You bring all the numbers and comps for the area to your lender and talk it out. Most lenders know what the average price to build is in their area. If you are too low or high, then they wont take you seriously.
I can build a house for under $60 a foot real easy, but the bank expected $70 a foot as the going cost, so I pad my estimates to get that amount, then when I come in way under, they are happy. Works every time.
If they like your proposal, they will order an apraisal of the project. If it's worth more then they are lending, you're in business.
Funds will be made available for each expense when they come due. I bring my bills to the bank, hand them the bill and they put the funds in my account, then I write the check to my sub or supplier.
You pay interest every month on the amount outstanding. Depending on your lender, the financing will last from 6 months to a year. Then you get perminent financing for the amount you borrowed to build your project. Again, terms depend allot on your relationship with your lender.
I appreciate your help and advice very much, VERY helpful. I think i changed my mind. I talked to a lender from Franklin Bank and he said getting commercial(anything over a fourplex) will be hard so i am shooting for fourplex's. He said getting a second home loan then building it would be a better idea. I guess from there we get find homeplans and get blue prints, and let subs bid on the project, then take that with the total cost and a time schedule and take it all to the bank and ask for a loan. Now its just finding plans.
Eddie.. very informative. Do you have a specific name for the loans you get?
Eddie.. very informative. Do you have a specific name for the loans you get?
MossRoad
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<font color="blue"> Maybe you should just go to a commercial lender and ask them what they need from you to get the project started? Sometimes we get so involved in details, we forget to take the easy road!</font>
That works for inspections, too. Generally, I've found that if you talk to an inspector BEFORE you start a project, you will have the idea of what they will be looking for when they get there. If you start out on their terms, the whole project goes so much easier. They do that stuff for a living and most really are quite helpful. It also saves you money, because you usually only have to change minor things, rather than re-doing a major goof. /forums/images/graemlins/wink.gif
That works for inspections, too. Generally, I've found that if you talk to an inspector BEFORE you start a project, you will have the idea of what they will be looking for when they get there. If you start out on their terms, the whole project goes so much easier. They do that stuff for a living and most really are quite helpful. It also saves you money, because you usually only have to change minor things, rather than re-doing a major goof. /forums/images/graemlins/wink.gif
EddieWalker
Epic Contributor
</font><font color="blue" class="small">( Eddie.. very informative. Do you have a specific name for the loans you get? )</font>
They are either called Construction Loans or Interim Financing.
The first thing you should do it make an appointment with your lender at the bank you use. Ask what they require to make the project happen.
When you're ready to request the funds, remember every bank has a different aproach to these things, so it's not that big a deal if you get turned down a couple times. Make some adjustments and go to the next bank on your list.
In the meantime, you need to develop a plan, create your pro-formas and start interviewing subs.
They are either called Construction Loans or Interim Financing.
The first thing you should do it make an appointment with your lender at the bank you use. Ask what they require to make the project happen.
When you're ready to request the funds, remember every bank has a different aproach to these things, so it's not that big a deal if you get turned down a couple times. Make some adjustments and go to the next bank on your list.
In the meantime, you need to develop a plan, create your pro-formas and start interviewing subs.
