Retirement home construction financing is available through our broad network of construction lending sources.

Construction loans for retirement homes can be for both new builds as well as renovations and additions.

Sources of financing for retirement home loans basically fall into three different categories.

We refer to the lower risk, lower rate category as banks and other name brand institutional lenders. The cost of financing will be the lowest from this group, but in turn the time to arrange financing can be considerable, depending on the project, and the lending/funding criteria is also harder to meet.

The second group is what we describe as quasi institutional where the source of money may be from an investment banking group, a hedge fund, or some other form of organized capital that does not have a branded presence. The funds from these sources tend to be slightly higher than banks and institutional lenders, but the higher rates tend to provide for higher risk as well which can make these sources a great alternative to the banks. This group of lenders also tends to move a lot faster in terms of the application process, but still will require full disclosure before committing to any funding opportunity.

The third group consists of private mortgage lenders that have a focus in construction financing. The private lenders that fund construction are in the very small minority of private mortgage providers in general. But even as a small number of lenders, they can still provide a considerable amount of capital for retirement home projects. And while private lenders will lend to be more expensive, there also tend to be much more streamlined in their lending/funding process and draw advance process. In addition, private lenders can be an excellent source of construction bridge financing if incremental capital is required before the project is completed.

The key in arranging retirement home construction financing is to align the financing requirement up with the right lending source so that their is no time or money wasted arranging funding, and so that all relevant timelines can be met.

The best approach to getting the right retirement home construction loan arranged is to work with an experienced construction mortgage broker who has access to these different groups of lenders and who can properly advise you as to where your needs will be best met.

If you are currently planning a retirement home project that will require construction financing, or if you are in the middle of a retirement home build that needs more capital, I suggest that you give me a call so we can quickly go over your requirements and provide discuss retirement home construction financing solutions that can meet your needs in the time you have to work with.

Click Here To Speak With Construction Mortgage Broker Joe Walsh For A Free Assessment Of Your Retirement Home Construction Financing Options

The post Retirement Home Construction Financing first appeared on Ontario Construction Loans And Mortgage Financing.

“Keys To Retirement Home Construction Loan Financing”

Even though retirement home construction loan financing is quite common these days, especially with the growing demand for this type of housing, construction financing can be difficult to arrange.

While higher ratio institutionally insured mortgages backed by CMHC are possible to obtain, many projects struggle to qualify for the level of funding that’s required.

The main reason for this is the challenges the project faces with satisfying the repayment assessment and post construction valuation of the construction mortgage lender and/or the mortgage insurance provider.

Retirement homes are valued for financing based on the estimated market value at the point of completion. Because the market valuation is dependent on the revenue producing ability of these types of assets, it becomes more difficult to establish value with no historical financial performance available.

In many situations, a newly constructed retirement home will not fill up the available occupancy for one or two or more years, potentially providing a cash flow shortage for debt servicing a large mortgage that was used to build the facility in the first place.

The key to getting the largest potential retirement home construction loan is by having a large percentage of units presold or committed (depending on the business model) at the beginning of construction so that the revenue projections can reflect stronger year one cash flows that are supported by solid commitments to occupy or own.

This is not an easy task to accomplish but one that is becoming more and more of an issue with retirement home construction projects. Unless you have an alternative source of revenue that you can pledge towards the debt servicing of the project, it may be difficult to qualify for the retirement home construction financing required unless the unit or occupany marketing is mostly completed prior to the project commencing.

There are private mortgage construction financing options for these projects as well, but they are going to also rely on the repayment strategy of the construction loan and will be more focused on the geography of the project, favoring those projects in more densely populated areas.

If you require a retirement home construction loan I suggest that you give me a call so I can quickly assess your requirements and provide relevant construction financing options for your consideration.

Click Here To Speak With Construction Mortgage Broker Joe Walsh

The post Retirement Home Construction Loan first appeared on Ontario Construction Loans And Mortgage Financing.