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Good discussion of commercial construction lending. Anyone have any experience with this? Is there anything you'd add?
http://www.propertymetrics.com/blog/...ruction-loans/
http://www.propertymetrics.com/blog/...ruction-loans/
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Re: How Commercial Construction Loans Work
As a sub-contractor I worked on many bank-financed projects but was out of the loop on the details of the loan beyond covering my ass with lien rights, draw schedule, etc.
I did design and build a personal resident and the process from the article:
was similar and worked to perfection.There are two normally two loans required to finance a real estate development project, although sometimes these two loans will also be combined into one:
- Short term financing. This stage of financing funds the construction and lease up phase of the project.
- Long term permanent financing. After a project achieves “stabilization” and leases up to the market level of occupancy, the construction loan is “taken out” by longer term financing.
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