Can anyone provide information on new construction to perm financing for the purpose of renting the property. I already own the land and I am not going to live at the residence. All the lenders I have contacted just perform construction loans for the purpose of the borrower to live at the house.
Lender · Colorado Springs, CO · Member since 2018 · 241 posts · 98 votes
6y
@John DAmbrosio If you are looking for a single loan with a single closing that funds the construction of your new house and turnps into a long term amortizing loan once you have a tenant in place, the only place I'm aware of with a loan like that is a local community bank. If you have the financial statement to qualify, that is where I would go.
It is more typical to get a construction loan and once completed and occupied, that loan is paid off and replaced with a long term mortgage. We were doing a lot of construction loans prior to the pandemic. The secondary market of people buying those loans shut down and we are waiting for the market to reopen before we begin offering those loans again.
Rental Property Investor · Ottawa, ON · Member since 2019 · 68 posts · 225 votes
6y
I'm not sure if this will help but I build rental properties in Canada with a similar loan type and I've met people through Instagram who are in the US and they've found it hard to qualify for the US cons-to-perm loans, so sometimes a Private Lender is an easier option. We've built a Fourplex with a private lender last year and yes the interest was a little more expensive (9% vs. 4%), but the approval process was a breeze AND we were able to get them to give us the money in progressive draws just like our typical construction loans. We paid 9% interest on one chunk at a time (150k, + another 150k, etc.) instead of on the whole 425k during the 9 months of construction. Hope that made sense. Good luck! :)
Can anyone provide information on new construction to perm financing for the purpose of renting the property. I already own the land and I am not going to live at the residence. All the lenders I have contacted just perform construction loans for the purpose of the borrower to live at the house.
CTP is a consumer mortgage for owner occupants, yes.
Hop on google for property developer loan, real estate development loan, stuff like that.
Developer · Parkersburg, WV · Member since 2018 · 35 posts · 11 votes
6y
@John DAmbrosio In my area the smallest banks that you hardly even know exist are most likely to lend on something like this. It’s hard to get the money without a solid experience. New construction is very risky in the banks eye and they would rather lend on an existing structure. Since you won’t be living there it makes it even less appealing to them.
The approach I would take would be private or hard money to build. Get it rented out and refi into a long term lower interest loan.
Lender · Colorado Springs, CO · Member since 2018 · 241 posts · 98 votes
6y
@John DAmbrosio If you are looking for a single loan with a single closing that funds the construction of your new house and turnps into a long term amortizing loan once you have a tenant in place, the only place I'm aware of with a loan like that is a local community bank. If you have the financial statement to qualify, that is where I would go.
It is more typical to get a construction loan and once completed and occupied, that loan is paid off and replaced with a long term mortgage. We were doing a lot of construction loans prior to the pandemic. The secondary market of people buying those loans shut down and we are waiting for the market to reopen before we begin offering those loans again.