construction and development financing
“Apply For Construction And Development Financing Now Before The Start Of The Spring Building Season”
We are now heading into the last week of January which brings us that much closer to the start of the spring construction season.
Certainly there is construction year round in Ontario, but the bulk of all completed work happens in the period between snow falls.
So while many land development and building projects are in the planning stage for completion in 2013, the financing to carry the cash flow of many of the projects has not even been applied for yet.
As I have previously written, the working assumption for property owners, builders, and developers is that lining up financing will be an easy, straight forward process that can be started and completed just before the work commences.
This can even be the opinion of experienced borrowers that have difficulty in the past with the project, but still put off getting the funding in place for their next project to next to the last minute.
In my opinion, waiting to close to the time you’re going to want to start building is always asking for trouble which leads to delays and worse.
Getting construction financing or a land development loan in place and getting a good deal collectively require time to target the right sources of financing for your particular project type and geography.
By starting early, you may even find that you have time to make adjustments to the plan and budget that better meets a lender’s criteria versus force feeding the final project plan onto rigid lenders, hoping to get a financing fit.
For example, for certain types of projects relevant lenders may have approved contractors or even approved material sources that need to be used for any projects they end up financing. If the lender offer is a great fit for your needs, but you can’t meet certain requirements that could have been addressed earlier in the planning process, then a potentially optimum financing commitment will be lost when it didn’t need to be.
Lenders can also require incremental third party reports to support valuations, cost estimates, and so on. If there is not enough time to complete the requests for incremental data, you once again can lose out on otherwise acceptable and perhaps preferred financing.
And when that happens, you can’t assume that the alternative construction loan source you end up working with is going to provide as good a rates or terms.
So if you have a real estate development project or construction build of some form that will require construction financing in 2013, the two keys to getting the financing in place that you require is to 1) start early, and 2) work with an experienced mortgage broker that has placed construction loans for your type of project, in your geography.
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About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel