$425K ground-up build in Baltimore, MD — 85% LTC, 13-day close

Situation

An investor-builder bought a vacant Baltimore lot in a neighbourhood where new construction is scarce and renovated-rowhouse buyers are looking for new homes.

Structure

The land funded early while permits were finalised. The loan funded 85% of the $500,000 total cost at 9.00% with two points on a 24-month term, closing in 13 days.

In numbers: a $425,000 loan against $500,000 of total cost left $75,000 of borrower equity in the deal. The value test — 75% of the $670,000 as-complete value ($502,500) — sat above the loan, so cost, not value, set the size. Fully drawn, interest-only carry at 9.00% works out to about $3,188 a month, and 2 points of origination came to $8,500 at closing.

Draws

Foundation, framing, rough-in and final draws were released on photos and invoices.

The file

What was in the file: the land documents, the plans and specifications, the itemised hard- and soft-cost budget and build schedule, the as-complete value estimate with comparable new-construction sales, the GC agreement with license and insurance, builder’s risk insurance, and bank statements showing the cash to close and six months of reserves. Funding the land first meant the lot was secured while the permit set was reviewed. The appraisal valued the home as complete against recent new-construction sales nearby. Every checklist item came back inside 48 hours, which kept the close at the fast end of the range. Title was opened on the day of application and insurance was bound before the appraisal came back. The term sheet set the final leverage and pricing against the published maximums.

Exit

The finished home sold to an owner-occupant, repaying the loan inside the term.

• Land funded before final permits
• Scarce new construction supported value
• Licensed GC with city experience
• Straightforward sale exit

Ground-up construction program terms →

Ground-up construction loans in Maryland →