HOME / GROUND-UP / RECENT LOANS / RICHMOND, VA

$400K ground-up build in Richmond, VA — 80% LTC, 12-day close

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

Land: $120,000
Construction budget: $380,000
As-complete value: $660,000
Loan: $400,000
Loan-to-cost: 80%
Rate: 9.50%
Points: 2
Term: 24 months, interest-only
Days to close: 12
Units: Single-family
Exit: Sale

Rendering — the finished build, Richmond, VA

THE STORY

Situation

A first-time builder owned a residential lot in a Richmond suburb and wanted to build a new single-family home for sale, with no completed projects of their own.

Structure

They hired a licensed GC with many completed homes in the county; the GC’s projects counted as the borrower’s experience. As a Tier 1 file the loan priced a step below the maximum — 80% of the $500,000 total cost at 9.50% with two points — and closed in 12 days.

In numbers: a $400,000 loan against $500,000 of total cost left $100,000 of borrower equity in the deal. The value test — 75% of the $660,000 as-complete value ($495,000) — sat above the loan, so cost, not value, set the size. Fully drawn, interest-only carry at 9.50% works out to about $3,167 a month, and 2 points of origination came to $8,000 at closing.

Draws

Foundation, framing, rough-in and final draws were requested by the GC with 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. Because the borrower had no completed projects of their own, the GC’s license, insurance and list of completed projects carried the experience review. 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.