Hard money loans offer investors and renovators numerous perks even with the conditions of the current housing market. Right now, housing inventory is limited, propelling list prices to an unprecedented height. Homebuyers are even bidding up the price of rundown homes because of their drive to settle down leaving investors no room for profit. That could either mean an instant pause in business or the possibility for a brand new asset to add to your portfolio.
New Construction: Go Where the Profit Is
Buying land is a fantastic opportunity with far fewer shortages than the housing market is experiencing. New construction opportunities are ideal for professional builders looking to purchase a property or lot, build a dwelling on the lot, and sell or rent the property for a profit.
The economy is working in favor of new construction even with the delays on lumber. Faster than ever families and young professionals are moving out of the city into the suburbs. They’re seeking an environment more suitable for remote working and a well-balanced lifestyle. Post-Covid work environments are less likely to require full-time in-person work, which means building new homes will serve people for years to come.
Hard Money Lending Means Fast Money
While it’s true that wood and some materials have increased in price, there is still substantial room for profit in new construction than in a renovation.
You’re worried about profitability, timeline, and budget, right? A hard money lender like Builders Trust Capital has principles on the team who have built homes from the ground up. The construction team vets the budget of your project before you even procure your loan. Fewer surprises mean you’re more likely to get your build done sooner which keeps you on budget and on time.
In addition, you can avoid the cost of a bridge loan by getting the project “shovel ready”. Questions to ask to ensure your land is shovel ready:
- Do I have all the permits and plans I need to begin construction? For example:
- Is it zoned for what I want to build?
- Will the home legally fit on the plot of land I want to build?
- Are the utilities like plumbing and electricity connected already?
More good news! With new construction, you won’t find any surprises behind a wall that doesn’t exist; the inherent risks that subsist with a fix and flip like finding mold or rot don’t impact your build. Your due diligence is almost entirely upfront. Working with a lender that can suggest a well-vetted contractor with good referrals who can get you the kind of numbers you need for your project is key. Getting your project shovel ready before you take out a loan including having your plans well-reviewed and budgeted can be less risky than a flip.
Furthermore, hard money lenders have an understanding of how builders run their businesses and therefore create guidelines that support that business model and budget. That deeper understanding often translates to a quicker underwriting process with less documentation.
Do More Deals With Builders Trust Capital Lender Serving NJ, PA, VA, DC, MD, and FL
Builders Trust Capital has lent over $120M to builders and investors like you. We offer faster draws when you need money (in as little as 24 hours) – whereas some institutions could take several days or more. We don’t have you sitting with a bunch of accounts payable… let us partner with you on your next new construction project! Call us at 856-422-3232.