Updated over 9 years ago on . Most recent reply
Real Estate Construction Loan
Hey guy I know a few of you are involved with multifamily real estate financing, so I thought I would ask here before contacting lenders and putting together a project.
What is the largest construction loan I could qualify for with $2m as a down payment/reserve/equity?
Also what size loan is reasonable for a 30-60 unit building? I would not want something so large that I would be pulling my hair out to lease the building.
I am just curious as to what is the average loan size for construction that I could receive based on my available assets, if someone has a scale that shows the range of potential loans by available equity, that would be helpful as well.
Thank you so much in advance and I really appreciate any feedback!
Most Popular Reply
We need tons more information to even get started here. First of all what market are you in? A 30 unit building in the heart of DC is going to cost exponentially more than a 30 unit building in the middle of Montana. Second of all, a 30 unit building vs a 60 unit building is a huge difference. Thirdly, is this a renovation of an existing shell or building or are you talking ground up. If ground up do you have the land or site, studies and surveys, permitting, all in place?
If you, for instance, already have purchased the land and building thus you have significant skin in the game then I am sure your 2 million will stretch pretty far and you could get a sizable loan to help complete your project.
It sounds to me like you are 3 steps ahead in that there is a lot more work and details that need to be ironed out before you even start shopping for loans. It will cost you a significant amount of money to even write up and see if your plan is feasible.
Lending is all about risk assessment. If you are shopping for loans and show up with vague details you're probably not going to get very far with any lender. But, if you have a site picked out, with feasibility studies, permitting information, market analysis, project details, then the lender will have more confidence in you and the information needed to move forward.