Pro Tips: Construction Lending - #260

Apr 1, 2025

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ADVICE

Conservative Construction Loan Structuring

Structure construction loans conservatively and avoid micromanaging borrowers.
Prioritize lending to experienced borrowers with cash reserves who can handle overages themselves.

ADVICE

Initial Inspections Are Crucial

Always send the borrower's scope of work to the inspector for the initial visit.
Early on, lenders should personally inspect properties to align work with budgets and protect their investment.

INSIGHT

Drawbacks of Max LTV Lending

Institutional lenders often push loans to maximum LTV, leading to tedious micromanagement of draws.
Keeping loans conservative and draw processes simple improves borrower experience and reduces headaches.

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Pro Tips: Construction Lending | Private Lenders Podcast

Construction lending is a critical part of private lending, but it comes with its own set of risks and challenges. In this episode, we break down the strategies and best practices that help us structure successful construction loans—without unnecessary micromanagement or financial headaches.

📌 What We Cover: ✔️ How we structure construction loans and rehab financing ✔️ The balance between being conservative and being a stickler ✔️ Why we prioritize lending to experienced borrowers with cash reserves ✔️ The importance of quick and efficient draw processing ✔️ The nuances of new construction lending and minimizing risk

We also discuss why institutional lenders often overcomplicate the process, how to avoid getting stuck with unfinished projects, and the importance of keeping things simple for both lenders and borrowers.

If you’re new to private lending or looking to refine your approach, this episode is packed with insights to help you make better lending decisions.

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