$553K ground-up build in Raleigh, NC — 85% LTC, 12-day close

Situation

A builder took down a lot in a growing Raleigh suburb to build a single-family spec home for the move-up market.

Structure

The loan funded 85% of the $650,000 total cost at 9.00% with two points on a 24-month term, inside the 75% cap on the $860,000 as-complete value. It closed in 12 days.

In numbers: a $552,500 loan against $650,000 of total cost left $97,500 of borrower equity in the deal. The value test — 75% of the $860,000 as-complete value ($645,000) — sat above the loan, so cost, not value, set the size. Fully drawn, interest-only carry at 9.00% works out to about $4,144 a month, and 2 points of origination came to $11,050 at closing.

Draws

Foundation, framing, rough-in and final draws were released against 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 home sold at completion, repaying the loan with no prepayment penalty.

• Growing suburb with strong absorption
• Repeat builder experience
• Phased draws matched the build
• Clear spec-sale exit

Ground-up construction program terms →

Ground-up construction loans in North Carolina →