Is it possible to get a $2.5mm construction loan with 10% down?
Is book value or market value used to determine downpayment?  I want to develop a property I paid $250k for, 10%.  It has a market of $750k, 30%.  It would be great if market value is used.
[{"id": "ivmrv3a", "text": "It's been about 18 months since I looked.  \n\nI think they will want at least 85 percent loan to cost.  So, assuming 3 million in cost to build and acquire land, that is $450,000 that they will want of your money.  \n\nThey will also loan a max of 1.25 of debt service.   So, figure out how much tge monthy layment is for 2.5 million.  Multiply that number by 1.25 percent.  Your monthly rents will need to be at thar number to get 2.5 million.", "replies": [{"id": "ivn2sr1", "text": "Do you mean NOI?", "replies": [{"id": "ivqylau", "text": "Yes - NOI", "replies": [], "depth": 3}], "depth": 2}, {"id": "ivnc4w5", "text": "We used to get loans at 75%, now the bank wants 50", "replies": [{"id": "ivnf031", "text": "Ooff.", "replies": [], "depth": 3}], "depth": 2}, {"id": "ivqk1cs", "text": "Today no one is lending at 85 LTC on commercial construction unless they are a loan-to-own shop", "replies": [{"id": "ivqpx1v", "text": "What LTC are you seeing?\n\nI am doing my first project.  I assume cost of dirt, architecture fees, filing fees, development fees, etc. all count?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ivmy4as", "text": "It depends on when you bought the property, what you\u2019ve done to add value (entitlements, permitting, etc.) and what type of lender you\u2019re working with. Banks don\u2019t like to give a large step up in land value, but debt funds will. In today\u2019s interest environment, you will more likely be constrained by DSCR, as someone else mentioned. I\u2019m not seeing many deals pencil out above 70% LTC right now. I would use 6.50% for exit rate and 25-year am on commercial / 30-year on multifamily in determining the payments / your loan amount at a 1.25x DSCR.", "replies": [], "depth": 1}, {"id": "ivn7lal", "text": "Can I get that with \u201cno-doc\u201d or low-doc????", "replies": [{"id": "ivoqj4r", "text": "Hahaha\u2026 I was a bartender, now I own a boat. My firm offers NINJA loans\u2026 no income, no job. If I write a loan on Friday afternoon, a big bank buys it buy Monday lunch.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ivncq5q", "text": "Yes if you own the land outright. If not down payment may be higher. I can help Texas. Nothing I can do in other states.", "replies": [], "depth": 1}, {"id": "ivo93ii", "text": "Most if not all banks will want at least 15% of the As Complete value to avoid classifying it as HVCRE.", "replies": [], "depth": 1}, {"id": "ivoi0pv", "text": "I'm in a similar situation right now. My bank doesn't want to count value of the building I purchased cash towards my down payment. They say it's not enough \"skin in the game\" for development and they want cash down payment minimum 30%.", "replies": [{"id": "ivpeysb", "text": "RE equity does not equal cash. You want to pledge additional collateral which is not the same as bringing additional cash equity into the deal.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ivok7is", "text": "The construction loan is based on loan to COST (LTC), so you\u2019re going to need another equity infusion, considering construction lenders are maxing out at around 70-75% LTC these days", "replies": [], "depth": 1}, {"id": "ivounyn", "text": "The only times we have seen over 80% LTC on construction is debt fund money for single-tenant build to suit projects. Without a signed lease in tow, the max you can expect is 75 (maybe 80%) LTC", "replies": [], "depth": 1}, {"id": "ivovgrc", "text": "No offense but if you need to turn to Reddit for this I wouldn't be guaranteeing loans of that magnitude. It's just such a broad question with so much pertinent info missing, you either need to give A LOT more info to get any workable answer, or seek actual professional help.", "replies": [{"id": "ivp6grk", "text": "Everyone has to do their first deal.    I probably asked similar questions 3 years ago and I am about to pull permits on a 10 million project.  Sometimes you don't know what questions to ask and who to ask them.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ivpffay", "text": "Honestly, no. I'm not sure of any additional migrants that could get you approved at those levels.", "replies": [], "depth": 1}, {"id": "ivpq5bc", "text": "If you have additional assets then yes, I just got one done in 3rd position so it's definitely possible. Without additional collateral it's a hard no, especially in this lending climate.", "replies": [], "depth": 1}, {"id": "ivq9bcx", "text": "OP how did you acquire land at 1/3 market value?  Everyone else answered your question I think but I'd think more about that.  I am not saying it isn't true but that be rather unusual", "replies": [{"id": "ivqa65j", "text": "Possible Inheritance with other family member, entitlements/change of zoning, gouged a little old lady who didn\u2019t know what it was worth, etc.", "replies": [], "depth": 2}, {"id": "ivr52ul", "text": "The property was a candy shop in a tourist destination for 50 years and the couple who owned it was in their 70\u2019s and going through a bitter divorce.  It had been on the market for years.  Apparently when they first listed it they wanted $500k.  I became aware of it when they wanted $375k.  I said to myself when and if the ask gets to $275k I\u2019ll pursue it.  It did get that low.  I offered $130k and they said no and I came back with $175k and they took it.  I\u2019m just looking for some guidance and advice because I\u2019m new to CRE.  I\u2019m not looking to build and flip.  Another entity I own will occupy the first floor which will be retail.", "replies": [{"id": "ivv7yco", "text": "Owner-user; this is an SBA loan all day long.", "replies": [{"id": "ivva6m4", "text": "I should clarify.  It doesn\u2019t qualify because it will be three floors with the bottom being retail and the top two being a boutique hotel.  I torn down the old building.  Right now it is a vacant lot.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ivqb2pm", "text": "In Canada, we have CMHC loans up to 95% LTC for multi-residential.", "replies": [], "depth": 1}, {"id": "ivqk5r4", "text": "Short answer: no it is not. There are exceptions sure, but most likely you\u2019re going to need an LP or mezz slug (or co-gp) and that\u2019s not cheap", "replies": [], "depth": 1}, {"id": "izeg60o", "text": "With the DuckFund can provide financing for your growing business regardless of whether you\u2019ve previously taken a personal loan or not. In assessing your application, They will learn everything they can about your business rather than basing their decisions on your personal credit score.", "replies": [], "depth": 1}]