HOME / GROUND-UP / RECENT LOANS / LITTLE ROCK, AR

$349K ground-up build in Little Rock, AR — 85% LTC, 12-day close

Illustrative case study modelled on typical files for this program; figures are examples, not a funded loan.

Land: $90,000
Construction budget: $320,000
As-complete value: $560,000
Loan: $348,500
Loan-to-cost: 85%
Rate: 9.00%
Points: 2
Term: 24 months, interest-only
Days to close: 12
Units: Single-family
Exit: Sale

Rendering — the finished build, Little Rock, AR

THE STORY

Situation

A small builder bought an infill lot in an established Little Rock neighbourhood where new homes sit between older houses and sell steadily.

Structure

The land was funded early while the permit set was finalised; full construction approval followed once plans, budget and permits were in progress. The loan funded 85% of the $410,000 total cost at 9.00% with two points on a 24-month term, closing in 12 days.

In numbers: a $348,500 loan against $410,000 of total cost left $61,500 of borrower equity in the deal. The value test — 75% of the $560,000 as-complete value ($420,000) — sat above the loan, so cost, not value, set the size. Fully drawn, interest-only carry at 9.00% works out to about $2,614 a month, and 2 points of origination came to $6,970 at closing.

Draws

Foundation, framing, rough-in and final draws were released against photos and invoices from the GC.

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.