General Contractor looking to finance new construction

Doug Smith

Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes

1y

I know exactly what is happening with the push-back you're getting. Basically, the money used in this type of financing comes from "Wall Street". I remember when Lending Home, now Kiavi started, there really wasn't anyone other than banks and private individuals that would finance a new build...and those were hard to find. The people that run these companies usually come from an "investment banking", real estate, or construction background. Many don't come from traditional lending sources. The institutional firms that do this type of lending (we deal with them every day) have to "securitize" the loans...meaning have their hedge fund/Wall Street backer bless the deal. These people often don't understand lending and have a checklist of boxes to check. Having an experienced GC build their first deal or two of their own is, for reasons that sometimes don't make sense, get push-back. We do them, but like you we often get push-back from the capital-provider funds. It's stupid, but we have to navigate it. I'm glad you shared this.

Patrick Roberts

Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes

1y

Reach out to Vincent Demarco at I Fund Cities. They specialize in funding spec build/new construction. He's in Charleston but lends throughout the Carolinas. DM me if you want me to put you in touch with him

Scott JohnsonBusiness Member
Specialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
1y
@Patrick Roberts a buddy of mine has used iFundCities for two flips. Seemed to have a good experience with them. Not sure about the new build side.
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Jonathan KlemmBusiness Member

Moderator

Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes

1y

Hey @Account Closed - I was in a VERY similar situation here in Chicago, but I had less experience working on my own than you.

I had a piece of land that I owned free and clear, but since I didn't have any development experience, most of the banks wouldn't talk to me. My advice is to keep trying because all it took was to find the right smaller bank willing to take a chance on me. Using a smaller bank or credit union is the way to go.

Being that you have been in business for 10 years I am VERY surprised your business banker can't help you!

The other option is to find a partner with some experience and use that on the loan.

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OP

Member since 2022 · 8 posts · 4 votes

1y

Quote from @Doug Smith:

I know exactly what is happening with the push-back you're getting. Basically, the money used in this type of financing comes from "Wall Street". I remember when Lending Home, now Kiavi started, there really wasn't anyone other than banks and private individuals that would finance a new build...and those were hard to find. The people that run these companies usually come from an "investment banking", real estate, or construction background. Many don't come from traditional lending sources. The institutional firms that do this type of lending (we deal with them every day) have to "securitize" the loans...meaning have their hedge fund/Wall Street backer bless the deal. These people often don't understand lending and have a checklist of boxes to check. Having an experienced GC build their first deal or two of their own is, for reasons that sometimes don't make sense, get push-back. We do them, but like you we often get push-back from the capital-provider funds. It's stupid, but we have to navigate it. I'm glad you shared this.

This is Spot on, It was actually Kavi that I was referring to. I was referred by a rather large investor friend of mine to them. We helped him with a Couple ground up New construction Rentals and He Can use The two property's as new construction experience but not us, this is what had me perplexed.

OP

Member since 2022 · 8 posts · 4 votes

1y

Quote from @Patrick Roberts:

Reach out to Vincent Demarco at I Fund Cities. They specialize in funding spec build/new construction. He's in Charleston but lends throughout the Carolinas. DM me if you want me to put you in touch with him

Thanks for the referral i will reach out to them to see what they offer.

OP

Member since 2022 · 8 posts · 4 votes

1y

Quote from @Tim Delaney:

I’d talk to some other lenders. The fact that you have built custom homes together with your general construction experience should be enough. My partner (a GC) and I built two spec homes over the past year. We had no experience building a house from scratch but I did have a bank willing to lend to us. We ultimately went with a private lender because it was easier.

I have the option to lend through my current bank, and wanted to use private just because of the hoops and red tape that goes along with using my Business banker.

OP

Member since 2022 · 8 posts · 4 votes

1y

Quote from @Jonathan Klemm:

Hey @Account Closed - I was in a VERY similar situation here in Chicago, but I had less experience working on my own than you.

I had a piece of land that I owned free and clear, but since I didn't have any development experience, most of the banks wouldn't talk to me. My advice is to keep trying because all it took was to find the right smaller bank willing to take a chance on me. Using a smaller bank or credit union is the way to go.

Being that you have been in business for 10 years I am VERY surprised your business banker can't help you!

The other option is to find a partner with some experience and use that on the loan.

Our business banker Is more than happy to lend, however there's more red tape to jump through that i was attempting to avoid by going with a private equity lender.

Doug Smith

Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes

1y

Quote from @Account Closed:

Quote from @Doug Smith:

I know exactly what is happening with the push-back you're getting. Basically, the money used in this type of financing comes from "Wall Street". I remember when Lending Home, now Kiavi started, there really wasn't anyone other than banks and private individuals that would finance a new build...and those were hard to find. The people that run these companies usually come from an "investment banking", real estate, or construction background. Many don't come from traditional lending sources. The institutional firms that do this type of lending (we deal with them every day) have to "securitize" the loans...meaning have their hedge fund/Wall Street backer bless the deal. These people often don't understand lending and have a checklist of boxes to check. Having an experienced GC build their first deal or two of their own is, for reasons that sometimes don't make sense, get push-back. We do them, but like you we often get push-back from the capital-provider funds. It's stupid, but we have to navigate it. I'm glad you shared this.

This is Spot on, It was actually Kavi that I was referring to. I was referred by a rather large investor friend of mine to them. We helped him with a Couple ground up New construction Rentals and He Can use The two property's as new construction experience but not us, this is what had me perplexed.

Kiavi does a good job with a lot of things, but they tend to be a bit more "vanilla" and stick to their guidelines/checklists. We've not brokered anything through them in a very long time...not to say we wouldn't, but we formed closer capital partner relationships over time. By your description of the situation, I thought that might be in.

Jesse Holsapple

Lender · Fountain, CO · Member since 2022 · 124 posts · 32 votes

1y

I sent you a message, we've worked on similar scenarios previously.

Caitlin Davis

Lender · Brooklyn, NY · Member since 2023 · 23 posts · 12 votes

1y

It's all about how we structure and present the experience you do have. I'm great at putting experience packages together for underwriting, and I know exactly what they look for when there's no direct construction experience verifiable by title. I also used to work at I Fund Cities! They're cool, but let me know if you have a hard time reaching them or want another option to consider.

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Jonathan KlemmBusiness Member

Moderator

Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes

1y

So @Caitlin Davis, are you saying you help investors put together decks to share with lenders? or what details can you share about how you package everything together...that would be great information for the community!

@Account Closed - What exactly is the red tape you are trying to avoid? Any lender, private or conventional, will have some hoops, maybe just not as many for private lenders...

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Caitlin Davis

Lender · Brooklyn, NY · Member since 2023 · 23 posts · 12 votes

1y

@Jonathan Klemm I originate private loans, so I also handle the financing aspect. I'm not the underwriter who approves the loan, I just know what they need which is usually a thorough overview and proof of recently completed projects, where you were the GC.

Patrick Roberts

Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes

1y

Quote from @Scott Johnson:

@Patrick Roberts a buddy of mine has used iFundCities for two flips. Seemed to have a good experience with them. Not sure about the new build side.

Yeah they have a good reputation so far and Vincent is solid.

Jacqueline Wright

Lender · Nashville TN, USA · Member since 2024 · 142 posts · 30 votes

1y

Since your lender requires prior experience building and selling/refinancing a single-family residence (SFR) on your own property, you may need to adjust your approach. Here are a few options:

1. Alternative Lenders – Look for private lenders or debt funds that focus on asset-based lending rather than borrower experience. Some hard money lenders may finance new construction if the deal is strong.

2. Partner with an Experienced Builder – Bringing in a partner with a track record of SFR development could help meet lender requirements.

3. Bridge Loan to DSCR – Consider a short-term bridge loan to fund construction, then refinance with a DSCR loan once the property is completed and leased.

4. Portfolio Approach – If you plan to build more homes, some lenders may approve a construction line of credit based on your overall experience rather than just SFRs.

Since you already own the land outright, leveraging that as equity may help with funding. Try working with lenders that specialize in builder-friendly financing solutions.