California private money construction loans are generally the way to go when your new business venture is one of construction or remodeling. It is the way to go because, as anyone in the commercial real estate business will tell you traditional financing avenues are less likely to approve loans for construction purpose. This somewhat reason change in lending doesn’t mean that California private money construction loans are instantly approved but rather that non-bank lenders are willing to fund these kinds of loans if they meet the necessary requirements.
Typically, these requirements allow non-bank lenders to feel more confident in their assumed risk. Therefore, when dealing with these lenders, it is important to keep in mind several key factors that have the ability to make or break your new construction or remodeling funding. One key factor, in particular, that you should make note is your desired location for your project or if you are remodeling an existing commercial property make note of the actual benefit of the upgrades to your business. Remember, your lender has to be comfortable with what you are using, in essence, their money for.
Another important key factor here is the overall process of the construction i.e. the actual draw process of your builder, if applicable to your situation. In other words, if your lender is insisting that the builder is paid via the title company—you need to understand how that process works. You also need to understand California state lien laws. Similarly, it is important to know where your lender stands in regard to the lot cost/lien when dealing with new construction.
Unsurprisingly, other things you should be considering are your potential lender’s down payment requirements. As you are more likely already aware of, there are state regulations that affect your lender’s requirements, rates and fees. But, with that being said, there is a wealth of non-bank lenders, especially in California. Consequently, as long as non-bank lenders abide by the set state regulations, there is still some wiggle room i.e. lenders rates can still vary as long as they do not exceed a certain percent amount. So be clear on what you need as well as how much of a deposit you are able to come up with and do not forget to do your research so you are clear on general terms/fees.
Ultimately, if you are prepared and keep in mind the above-mentioned important key factors, getting approved for non-bank funded construction loan should not be extremely difficult. Lastly, if your project calls for more than one construction loan as in the case of real estate development projects do not be discouraged many non-bank lenders are willing to work with you and allow you to have more than one active loan at a time.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.
Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.