Ground Up Construction

Ground Up Construction Hard Money Loans

Are you an experienced builder or borrower? For clients looking to build a new home or multi-unit property from scratch, Socotra Capital offers Ground Up Construction loans.

Due to the complexity of the ground up construction process, construction loans are for those with extensive rehab and/or new home building experience, not first timers. Particular attention is given to the project budget and plans as well as the general contractor’s qualifications and experience when qualifying for a ground up construction loan.

Typical ground up construction loan agreements require the following:

  • That the plans and specification delivered to Socotra Capital constitute a complete and final set of all plans and specifications required for the construction project.
  • That those true and correct copies of the construction contract, architect’s contract, and engineer’s contract have been delivered to Socotra Capital.
  • That the contractors, architects, and engineers will provide continued service to Socotra Capital, as requested and/or necessary, to complete the ground up construction project on time and within budget.
  • That the ground up construction plans and specifications and the use of the project contemplated thereby comply with all applicable laws, ordinances, and regulations.
  • That all utilities and rights of way necessary for the construction, use, operation, and maintenance of the project are available through public rights of way or through private easements.
  • That all permits, certificates, and authorizations required for the ground up construction project have been obtained.
  • That the borrower has not caused any labor to be furnished in connection with the construction of the project, or entered into any contract that could give rise to a lien against the project, except for parties who have been paid in full or have delivered lien subordinations or waivers.

Through experience and knowledge of industry-best construction practices and financing techniques, Socotra Capital designed the Ground Up Construction loan program to facilitate construction commencement and progress without interruption.

With no limits on the number of properties, you can leverage one building or your entire commercial portfolio.

Our customized programs allow you to get a loan that best suits your business needs.

Download and complete the Socotra Capital Form to get started.

Ground Up Construction Loan Parameters

  • 30% cash into the transaction (if there is a seller carry on the land, the borrower will still need to come in with 20% cash)
  • 60% LTV for 12 month note
  • Extensive rehab experience and/or new home building. No first timers.
  • Cash reserves of 10% on the cost of construction
  • Cost based on the following formula = land cost + soft costs (architect, permits) + hard construction costs (must include 10% contingency) + 9 months pre-paid interest (see sample spreadsheet on server: Business Dev: Forms Templates: Construction: New Construction Sales Info)
  • Must have an executed contract with a contractor reflecting the hard cost prior to close
  • Buildzig or Granite Construction to do all

Contractor Due Diligence

  • Contractor Financials – 2 years; can be prepared internally
  • Proof of Insurance/Bonding
  • Contractor’s License
  • Contractors Statement of Qualifications/Resume
  • Cost Review Analysis – Buildzig or other third party verify that the numbers are within reason
  • Borrower previous experience and contractor due diligence are vital
  • Must have architectural plans and cost breakdown for appraisal

Get started on your loan today!

Download and complete the Socotra Capital Form to get started.

Call (916) 617.2220 or email us any time.