For this type of building project, lenders are interested in the location and design of the building as well as the post construction list of committed tenants and the marketing plan that will secure the vacant space by the time construction is completed.
Professional building construction mortgages can basically come from three different financing sources.
The first and lowest rate, lowest risk form of construction loans comes from banks and institutional lenders. Because of the lower risk financing position, considerably more time is going to need to be invested in the application and qualifying process as compared to the other categories of financing. Even after qualify for a bank construction loan for the a professional building project, the builder, developer, or property owner should be well versed in draw advance procedures of the lender which can be hard to satisfy at times and can require incremental sources of capital be brought into the project on short notice to keep the project on track.
The second category of professional building construction mortgages comes from quasi institutional sources such as investment funds, investment banks, hedge funds, and so on. This group of debt lenders are basically targeting construction projects that either do not quite satisfy the requirements of conventional lenders, or do not have the time available to complete a bank or institutional lender’s application process.
The rate will be slightly higher, but the process for qualifying for funding as well as the draw advance process will also likely be more straightforward. So with higher cost comes incremental benefits to this category of lending for professional building projects.
The third form of professional building construction loans is from private mortgage lenders. Projects under $3,000,000 can potentially be financed by one private lender or a small group of privates while the larger deals will typically be considered by mortgage investment funds or larger syndicates of private lenders.
Once again the cost of financing is going to be higher than what you would pay at a bank, but when time is short to get construction financing is place, this could very well be your best option. And, similar to the quasi institutional lending category mentioned above, the draw advance schedule tends to much more predictable with private mortgage construction financing.
If you are in need of construction financing for a professional building project you are are planning or are in the middle of, I suggest that you give me a call so we can do through your requirements together and discuss different professional building construction financing options available to you.