$340K ground-up build in Morgantown, WV — 85% LTC, 12-day close

Situation

A small builder bought a lot outside Morgantown to build a custom single-family home for sale in a market with little new construction.

Structure

The loan funded 85% of the $400,000 total cost at 9.00% with two points on a 24-month term, inside the 75% cap on the $530,000 as-complete value. It closed in 12 days.

In numbers: a $340,000 loan against $400,000 of total cost left $60,000 of borrower equity in the deal. The value test — 75% of the $530,000 as-complete value ($397,500) — sat above the loan, so cost, not value, set the size. Fully drawn, interest-only carry at 9.00% works out to about $2,550 a month, and 2 points of origination came to $6,800 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. 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.

• Little competing new construction
• Experienced local builder
• Phased draw plan
• Straightforward sale exit

Ground-up construction program terms →

Ground-up construction loans in West Virginia →