This morning I had breakfast at a new restaurant in Calgary called Red’s in Ramsay (Facebook page) who also happens to be a client. Earlier this year I was able to arrange construction financing for the company and this morning had the privilege of seeing how great a job they did. This is their second location to be opened and you would understand why if you have ever been to their first location on 4th Street – always busy and definitely the place to go.
A small home builder approached us to replace the financing that he used to construct two infill properties that are now listed for sale. The construction mortgages were interest only
payments and open for repayment at anytime without penalty. The properties are going to be listed for sale and given the amount of equity the builder has in both properties we arranged no income qualifying 1 year open mortgages that will allow him to sell the properties and repay the replacement mortgages with no penalty. The interest rates on the replacement mortgages are very competitive and the fees were less than 1.0%.
Construction financing has been hard to find over the past several years however recently lenders are coming forward to offer construction financing to strong borrower who can demonstrate real equity and personal net worth. Once construction is completed, mortgages can now be put in place with a growing list of lenders who are comfortable lending to a certain percentage of value and loan size.
If you have a construction mortgage that you would like us to review, please email email@example.com or visit www.bridgecap.ca/dylan
For a second time this month we provided some guidance for construction projects that are multi-phased and require creativity. Most lenders today do not want to provide construction financing for projects that are not completely pre-sold. Lenders want to know that the money they put out is covered off by sales that can repay the loan. The challenge for borrowers is that in order to pre-sell a project prior to construction the sale price ends up being less than what they want and is not as profitable as selling after the project is completed (or started). Borrower’s today believe that if they build first and sell later that they will maximize their profit. Lender’s today want them to sell first and build later resulting in potentially less profit. The creativity is required to find a point in a project where a borrower is satisfied that they can move forward without compromising profit and and lender is satisfied that they are not going to be short on equity once the project is built.
If you have questions about your construction financing or construction mortgage need, please email firstname.lastname@example.org or visit www.bridgecap.ca/dylan