$2.98M ground-up build in Scottsdale, AZ — 85% LTC, 14-day close

Situation

A custom-home builder owned a view lot and wanted to build a high-end spec home without a buyer under contract, relying on recent luxury sales nearby to support the as-complete value.

Structure

The loan funded 85% of the $3.5M total cost — land plus hard and soft costs — inside the 75% cap on a $4.9M as-complete value. A 24-month interest-only term at 9.00% with two points covered the build and the sale period, with an extension available. It closed in 14 days.

In numbers: a $2,975,000 loan against $3,500,000 of total cost left $525,000 of borrower equity in the deal. The value test — 75% of the $4,900,000 as-complete value ($3,675,000) — sat above the loan, so cost, not value, set the size. Fully drawn, interest-only carry at 9.00% works out to about $22,313 a month, and 2 points of origination came to $59,500 at closing.

Draws

Phased draws followed the build: foundation, framing, rough-in, then final. Finish-level specifications were part of the approved budget so high-end line items drew like any other.

The file

What the file contained: the land deed, full architectural plans and finish specifications, an itemised hard- and soft-cost budget, the GC agreement with license and insurance, the permit status, and a list of the builder’s completed luxury homes. The appraisal valued the home as complete against recent high-end sales with similar lot, view and finish level. Because there was no buyer under contract, the desk paid close attention to how the budget matched the specifications — a larger budget alone does not establish value; the plans and comparable sales do.

Exit

The home was listed at completion and sold, retiring the loan inside the term with no prepayment penalty.

• Specifications and comps supported the value
• Builder with luxury track record
• Phased draws matched the build
• 24 months covered build and sale

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