With both the economy and national real estate market trending steadily upwards as we continue to navigate a post-COVID world, more and more real estate professionals are choosing to pursue ground up construction as their preferred business strategy to drive higher revenue streams on their fix ad flip undertakings and single-family rental portfolios. New construction loans are a common funding model that investors need to be aware of and how to incorporate it into their investment approach. Here are a few common FAQ’s to help clarify the utility of ground-up private money loans and how they can be implemented to help you achieve your investment goals.
What’s the difference between ground-up and traditional loans?
Ground-up construction loans are short-term funding packages that investors can use to cover the expenses of just construction, or the purchase and development of the entire property. Note that if you opt to retain the property as a single-family rental, you may have to refinance the initial loan into a longer-term mortgage.
What are construction draws and why do they matter?
Private money lenders typically disburse the funds provided via a ground-up loan incrementally—which are referred to as “draws.” They usually take place when a pre-designated stage of the project is completed—for example, when the foundation is poured, when the roof is completed, or, alternatively, on a timeline basis such as monthly or bi-weekly. After a particular stage of work or passage of time, the borrower will submit a draw request to the lender who will review and approve it before disbursing the funds. Make sure that you keep detailed records of the status of any projects to help expedite the draw process and ensure that your project stays on-schedule. The experienced construction lending professionals at JCAP Private lending are well-versed in how to appropriately manage ground-up development projects and will be able to assist you in scheduling and documenting all required tasks.
What if I want to use the property as a rental?
Earning a passive stream of income via a rental property is a great strategy to accumulate wealth and fund the expansion of your real estate investment portfolio. You may begin a construction project with the original intention of selling it right away, but due to market fluctuations or other factors you may ultimately decide that your interests will be better served to transition the property into a rental. JCAP Private Lending is able to facilitate a smooth and efficient transition from one plan to the other by converting the construction ground-up loan into a cost-effective, individually-tailored 30-year loan. Having this extra degree of flexibility built into your arsenal going into transactions gives you a leg up on the competition and allows you to adapt to changing circumstances in order to optimize your income.
Contact Us Today!
Jcap Private lending provides flexible ground-up construction loan financing that offers developers and real estate investors straightforward, practical terms. Construction funding is a short-term loan model utilized to acquire and finance the build-out of a wide variety of projects including single-family residences, multi-family housing and mixed-use developments. Traditional funding options for ground-up portfolios typically require both a construction loan and a long-term mortgage. Our innovative and streamlined financing scheme gets rid of unnecessary funding delays. The market is currently primed for growth. With the exponential rise of remote work and a large-scale urban exodus, there is virtually no geographical limit on real estate investment opportunities. Don’t miss out on this dynamic market environment, contact Jcap Private Lending today so you have the capital you need when you need it.