Securing Construction Loans for Luxury SFR Specs in Washington
Building a luxury home requires a specialized financing approach, especially for speculative (spec) projects. Our team recently demonstrated our expertise in this area by closing a $1.47 million construction loan for two luxury single-family homes in Bonney Lake, WA. This successful transaction highlights our ability to secure competitive financing in a dynamic market like Washington.
Navigating Key Metrics: LTV and LTC
When evaluating construction loans for luxury SFR specs in Washington, lenders focus on specific metrics to assess a project’s viability. Our recent loan showcased strong performance in two key areas:
- Loan-to-Value (LTV): At a 70% LTV, the financing covers a significant portion of the projected value of the completed homes. A lower LTV indicates a reduced risk for the lender, which can result in more favorable loan terms.
- Loan-to-Cost (LTC): The 85% LTC on this deal provided the developer with competitive leverage, meaning the loan covered 85% of the total project costs. This is a crucial factor for developers as it minimizes the amount of personal capital needed for the build.
Working Through the Secondary Market
Securing financing for luxury spec homes can be challenging, but our team was able to navigate a secondary market to provide our client with a flexible and efficient solution. This approach allowed us to offer competitive pricing and leverage, ensuring the project could move forward with the necessary capital and a favorable structure.
For developers seeking construction loans for luxury SFR specs in Washington, our team has the experience and network to help. Contact us at 801-845-0092 or lo***@***********ng.com to discuss your next project and get the financing you need.
About Us:
Nelson Funding is a nationwide commercial loan broker and direct lender helping borrowers get the best possible financing for their respective projects. Nelson Funding has provided financing for over 80 projects and placed more than $600mm of capital. Nelson Funding has the experience to get almost any project funded: from new construction to cash-out refinances, land development, and more. Nelson Funding specializes in construction funding, bridge funding, and conventional term financing products.
Nelson Funding remains committed to helping our clients secure the best financing for their respective commercial real estate projects despite a rising interest rate environment and tightening lending standards. With Nelson Funding’s capital market relationships and highly experienced team we are still placing high leverage debt for all deal types including land development, single family construction, multifamily construction, industrial, office, retail, hospitality, special-use, cannabis and more.
