Underwriting a construction loan with hard money

Underwriting a Construction Loan with Hard Money

Underwriting a Construction Loan with Hard Money

1. Executive Summary

It’s just two or three paragraphs about the project and

about yourself and about the partners involved Loan request amount - are you requesting a million dollars? What

the purchase price of the lot or the land or the estate is. Or if you already own it and how much money you already have in the deal

loan request - how much you need for construction.

it should just be complete enough where you grab the

attention of the loan originator or the lender

2. Phone consultation

We’d gather more information.

To assess if it’s a doable deal from our

underwriting standpoint We’ll check:

Who the contractor is?What stage you’re at with the?Is it ocean front property? - you’ll need coastal

commission approval

3. Present two years of tax returns—both

personal and business

4. Soils reports on the property

5. Preliminary title report

6. Contractor - We check to see that the

contractor is licensed and bonded

• Our threshold as far as underwriting is—with our fund for

construction loans we’ll go to 65% of the future value.

• Now we can go higher, but we’d have to cross-collateral or

cross another property. Which means we’d put a lien on

another property, this way we’d have extra collateral in case

the loan went bad

• We’ll go to the future value, and that’s based on a third party

evaluation from an appraiser that is approved with our

underwriting system, our guidelines.

• We have a network of appraisers that we use and we would

like to usually use our own appraiser

Tip:

Put together a little credibility kit about

yourself, about your team, you know, the

projects you’ve done.

The more you have the better because it

showcases that you have the expertise to get

the project done

And when we’re talking hard money

construction loans, that’s basically what

we’re looking at is that you’ve got a track

record and that you’re a successful investor,

developer, builder.

Agenda