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Construction loan options for California developers

On Behalf of | Apr 23, 2020 | Development |

Funding a project is a primary concern for property owners and those they work with. Like many other places, construction costs here in California are not cheap, and finding the money for a development may require some searching and creativity, depending on the situation. In some cases, the land will need to be purchased before lenders will work with developers on funding the construction of the project in order to guarantee some collateral for a loan.

Lenders look at a variety of factors before deciding to extend credit to developers, not the least of which is the cost of the project. The closer lenders will look at the factors involved. It may be necessary to look at one or more sources for loans in order to get the funding needed for a project.

Land development loans, interim construction loans, and acquisition and development loans are all options, depending on the circumstances. It may also help to enlist additional investors to help with financing as well. A group of investors could engage in crowdfunding, which pools their resources for a particular construction project. Developers may also look at a short-term versus long-term loan as well. The bottom line is that there are quite a few options available for funding.

Once developers find sources of funding for a project, they will then need to negotiate the terms of their loans and/or agreements depending on the type of financing. It is not necessarily a good idea to just sign the documents provided by the lender. Instead, developers can sit down with a California commercial real estate attorney to review, negotiate and finalize the documents to help make sure their rights are protected and they are receiving the best deal possible.