ReProp provides commercial and industrial construction financing in several instances. When the referring bank or broker has made a firm takeout commitment, we can help. Or in instances where a mini-perm of two and a half years or more is needed to season the project, we can help. We also make a limited amount of residential subdivision infrastructure loans and residential construction loans. Please read below for important information regarding our construction financing.
Our most important concern at the beginning of a construction project is what happens at completion – the exit strategy. For example, if the project is spec residential construction, we need to satisfy ourselves that it will sell in today’s market. If the project is construction of a pre-leased office building with long-term takeout from a conventional lender, we look for a commitment letter (or use our knowledge of conventional lending standards) to ensure that the project, borrower, and tenants will meet the conventional lender’s requirements. If there is a problem with the exit strategy, we probably won’t do the deal at all – so it’s a good idea to cover that first.
If the exit strategy is reasonable, we’ll want a full loan package. Use the links to find a checklist for commercial construction
financing and associated forms. Our “BuilderPack” is completed by the licensed contractor, and it includes our cost breakdown and materials descriptions forms.
While we perform our initial due diligence on the borrower, a construction manager (selected by us) reviews the project – the approved plans, cost breakdown (budget), materials description, and the contractor. We work together to determine whether the project can be completed for the budgeted amount. We check the contractor’s references. We make sure that there are sufficient funds available – from our loan and the borrower’s equity or cash – to complete the project. We also confirm that the contractor has a history of completing projects on time and within budget.
If the exit strategy, project, and borrower all look good to us, we prepare a Loan Offer and Acceptance Agreement, which details the terms and conditions of the financing we propose, and includes your fees and any other referring broker fees. This is a joint commitment between the borrower and ReProp, and generally includes how long the contractor has to build the project and how construction advances will be made. Once the borrower signs the agreement, we order an appraisal and continue processing the loan.
Assuming the appraisal and all other due diligence is satisfactory, we document the loan. Part of the loan documentation is a construction loan agreement that details how advances are made.
The general process is:
- When the contractor is ready for an advance, they contact the construction manager.
- The construction manager inspects the property and ensures that the work billed for is actually completed.
- After the construction manager approves the request, ReProp advances the funds to the construction manager, who obtains lien releases and pays subs, material suppliers and the contractor directly.
This process protects the borrower, the contractor, and the lender, and ensures that if there are any problems during construction the manager can help identify them and we can take care of them early on.
We provide construction financing for commercial, industrial and agriculture-related projects, subdivision infrastructure and build-outs, spec construction for seasoned builders, single family homes on larger acreage, owner-builder projects, and multi-family facilities.
The fastest way to submit a loan to is to completely fill out our loan submission form. A complete Inquiry Form will get you a response within one business day, and without the need of sending us anymore information.
Commercial Real Estate Construction Loans
- Loan Amount * $287,000
- Collateral Valuation: * $445,000
- Term * 12 months, First Lien, IO
- Rate * 9.89%
- Loan Amount * $1.17M (x2)
- Collateral Valuation: * $4.63M as complete (x2)
- Term * 18 months, Construction, IO
- Rate * Call to Inquire
- Loan Amount * $350,000
- Rate * 9.50%
- Appraised Value * $1,070,000
- Term * 12 months, IO
- Lien Position * First