Construction to Permanent Loan

Dallas, Texas
Mortgage Brokers & Lenders
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Construction to Permanent Loan

Augusta Owens
Investor · Fort Worth, TX · Member since 2025 · 16 posts · 8 votes

I'm a 3 month real estate rookie, but I feel I have a fair amount of theoretical knowledge, and its time to take some actions. I have a duplex house hack on the horizon, but I know its not an avenue I can use in the short term to leverage growing my portfolio. So I have plan of using a construction loan on a distressed property and making it a rental as one of my learning opportunities in the game. I know its ideal to go with a local bank or credit union when looking for a construction loan, and I'll be looking specifically for a construction-to-permanent loan. My question is besides a competitive rates, what else should I be looking for or expect? 

Any and all input would be greatly appreciated. Like I said, I know I have ALOT to learn, but I'm positioning to scale as quickly as possible while still being mindful of my loan to debt, and not overleverage myself.

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Augusta Owens:

I'm a 3 month real estate rookie, but I feel I have a fair amount of theoretical knowledge, and its time to take some actions. I have a duplex house hack on the horizon, but I know its not an avenue I can use in the short term to leverage growing my portfolio. So I have plan of using a construction loan on a distressed property and making it a rental as one of my learning opportunities in the game. I know its ideal to go with a local bank or credit union when looking for a construction loan, and I'll be looking specifically for a construction-to-permanent loan. My question is besides a competitive rates, what else should I be looking for or expect? 

Any and all input would be greatly appreciated. Like I said, I know I have ALOT to learn, but I'm positioning to scale as quickly as possible while still being mindful of my loan to debt, and not overleverage myself.


I would get a bridge loan for construction and then move it into a DSCR once completed - that is what we do for a alot of people

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  • Denver McClurePro Member
    Financial Advisor · Flower Mound, TX · Member since 2018 · 661 posts · 480 votes
    1y

    Hey @Augusta Owens, feel free to reach out. I also live in Dallas and have house hacked several duplex's in the area! I have a few good tips on the construction-permanent loan situation. 

    [email protected]
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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Augusta Owens:

    I'm a 3 month real estate rookie, but I feel I have a fair amount of theoretical knowledge, and its time to take some actions. I have a duplex house hack on the horizon, but I know its not an avenue I can use in the short term to leverage growing my portfolio. So I have plan of using a construction loan on a distressed property and making it a rental as one of my learning opportunities in the game. I know its ideal to go with a local bank or credit union when looking for a construction loan, and I'll be looking specifically for a construction-to-permanent loan. My question is besides a competitive rates, what else should I be looking for or expect? 

    Any and all input would be greatly appreciated. Like I said, I know I have ALOT to learn, but I'm positioning to scale as quickly as possible while still being mindful of my loan to debt, and not overleverage myself.


    I would get a bridge loan for construction and then move it into a DSCR once completed - that is what we do for a alot of people

    7e investments53 Reviews
    WebsiteView Page
    1Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    1y
    Quote from @Augusta Owens:

    I'm a 3 month real estate rookie, but I feel I have a fair amount of theoretical knowledge, and i

     In my opinion you're not looking for a construction loan, but you have a couple of different options deping on if you just plan to flip or if you live in it for a while and perhaps how much work it needs.  

    If you won't live in it you can use hard money perhaps for six months while you rehab.  As a first time rehabber you will need some great casj reserves I expect.  Probably $30000 to $50000.  So you have reserves if you run long or run into unexpected expenses   You can either sell it and pay off that loan at closing or turn it into some kind of permanent loan after completing the rehab.

    If you want to live in it after rehab you might want to do a rennovation loan that will allow you the purchase price and the Reno money.  There are 203k .  Lots of restrictions but probably a good loan for you.   Am example of this is the Freddie Mac Choice Renovation loan.  There are others as well.   

    None of these are probably easy or simple solutions and plenty of hoops, but there are options.

    House back here in DFW is pretty tough with a duplex and probably works best with 4-5 bedroom if you can qualify for that and then rent bedrooms.  The prices and rent on duplexes is pretty tough unless you are willing to pay your fair share of the rent from what I see.

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    1d

    As others have mentioned,

    You will need to treat it as two separate transactions. I would suggest working with a lender or broker that offers both so you can get favorable terms. I would also suggest working with the same title and insurance companies so you can get lower fees on both transactions.

    Is the home down to the studs or are you demolishing the entire home?

    [email protected]818-269-7983
    LuxePrivate Investments LLC 570 Reviews
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