The construction industry is coming out of the doldrums of the last few years and starting to show signs of getting back to normal or more close to normal in 2010.
While the overall economic out look is picking up, the same can’t be said for the capital markets and as a result, construction financing is harder to secure right now that just a short time ago.
That being said, there is still a lot of construction lending going on. Its just that lenders are tightening up on the application of their lending criteria, making those seeking financing dot their i’s and cross their t’s to a larger extent than what they may be used to.
With the collapse of the sub prime market space and the higher degree of selectivity of the traditional institutional lenders, more construction loan applications are making their way to private money sources which in a way is not unusual, as private lenders provide the majority of the construction mortgages issued every year.
What is different is that the privates are getting more requests and in some cases demand is outstripping supply, causing private lenders to also be able to be more selective with the deals they decide to take on.
The key take away from all this is that if you’re seeking construction financing for land acquisition, site development, or building, you are going to be expected to have all the project details flushed out and properly supported before any application for mortgage financing will be seriously considered.
There will always be exceptions to this as privates are individuals that follow their own rules, but for the most part construction funds are going to be flowing to the borrowers that provide superior, verifiable details than those who operate more fast and loose.
This trend is likely going to continue for some time, so its an adjustment that applicants need to make or they could be spending a lot of time searching for money that just isn’t there.
If you have a construction project that your planning or in the middle of that requires construction financing, please give me a call so that I can quickly assess your situation and outline relevant options for your to consider.