How much of my own money do I need to put into the deal?
Capital outlays from builders typically apply in only two areas:
- Cash to buy land
- Any financing shortfalls in the vertical construction budget. Our goal is to cover 100% of the vertical construction costs, but when our loan-to-value (LTV) maximums are not enough to cover all of the vertical construction costs, the builder would be required to pay the remainder of those costs out of pocket.
Our program is very cash-flow friendly for our builders. Our builders typically do not bring cash to the closing table – we do not require builder capital contributions or down payments. Additionally, all fees (settlement, origination, etc) are wrapped into the financing, so builders typically will not be contributing cash at the close of your construction loan. We also include 12 months of interest payments in the financing as well, so you won’t be making monthly debt-service payments over the course of the 12-month term.
What are your capital lending limits for loan-to-value (LTV) and loan-to-cost (LTC)?
We lend up to a LTV of 75 percent and an LTC of 95 percent of appraised value.
Can I finance land as well?
The ability to finance land depends on the deal. We are potentially able to include money for land acquisition as long as it fits into the 75 percent LTV, and are generally able to offer up to 50 percent of the cost of the land. The land must be entitled and shovel-ready. We do not offer financing for land that needs to be developed, but we have relationships with lenders that do and can help.
How quickly can I get approved and funded?
At Snap.Build, we have a two-step approval process for builders loans. The first step is a one-time approval where we consider the credit-worthiness of the builder. Once we have received a complete builder application form, we can typically make a final determination within a few weeks. After the builder has been approved, we then approve each project individually for land and spec funding and new construction funding. This process usually takes about one month to complete, as we are typically waiting for third-party reports such as appraisals and surveys. Once we have the necessary reports, we can underwrite and fund within three weeks.
Do I have to use your back-office management tool?
Yes, we require that all builders use our back-office technology as a part of our lending services. This technology is what allows us to offer builders more access to capital, have more starts, do more specs, and grow their business.