Build Right! Top 5 Benefits of Construction Loans in the DC Real Estate Market
Let’s face it, perhaps the biggest issue that many real estate owners and investors face is locating financing when their credit scores and financial statements are less than stellar.
Consecutively, it’s no wonder why private construction loans have gained such popularity among many real estate investors. Besides, you can find a plethora of companies offering construction loans in Virginia, Maryland and Washington, DC at affordable interest rates. Moreover, many builders and individuals generally prefer to take a private construction loan rather than conventional loans due to the flexibility, speed, and easier process of getting funded.
Construction loans offer a quicker and easier way to obtain funding for real estate deals. However, choosing the right private money lender can be a daunting task, considering the fact that there are so many lenders in the market and it may be hard to decide which lender to partner with.
To help cut through the masses and pinpoint the best lender for your real estate investment needs, you should consider the following:
1. Less Paperwork and Documentation- Considering the fact that a private lender doesn’t have to conform to the same stringent rules and regulations of a bank, getting a construction loan from a private lender entails a fraction of the paperwork and less rigid legal formalities.
2. Quick approval and closing- Without a doubt, one of the major benefits of this type of loan is the fact that the investors can secure the pre-approval within one or two days, given they have submitted the handful of documents that the lender has requested. Add to that, the real estate investor can close the loan sometimes in as short as a week, which can help win the bid in a competitive real estate market. When you compare the quick closing of a construction loan to the 30-45 days it can take to be approved by a bank, the benefits of speed are very obvious.
3. Property flexibility- In addition to offering flexible rates and terms, these loans also provide flexibility in terms of the types of property that are funded. Borrowers use construction loans to finance a broad range of real estate investment opportunities, such as duplexes, multi-unit buildings, condos, townhouses, and of course, single family homes.
4. Easy to qualify- Another major benefit of the private construction loan is that these loans are easier to qualify for than traditional banks. Private lenders are primarily concerned about the value of underlying real estate security and the borrower’s ability to repay the loan versus credit score or financial history.
5. Repair funds- Another major advantage with a construction loan is that it provides an opportunity for the borrower to repair all of the issues that need to be addressed in order maximize the profit potential of the real estate investment. This would not be possible if all construction costs had to be covered solely using the borrower’s own money.
An added bonus of the ease of obtaining construction loans via a hard money lender is that as more properties are renovated in the community, property values go up and the quality of the neighborhood improves.
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