Great Developers Deserve Better Financing.
PartnerBuilt organizes $4.65M in construction financing for this beautiful 13 unit Townhouse development in the East Bay.
San Francisco’s East Bay has experienced some of the highest home price appreciation since 1999. The historic tight housing supply and lack of new infill development have led to an average 317% increase in home values since 1999. That’s a 3.17X unlevered multiple on your investment!
Alameda and Contra Costa County, which make up the East Bay rank 5th and 6th in Area Median income of California’s 58 Counties with household incomes now averaging more than $120K per year.
The East Bay’s incredible industry including Tech and Finance, weather, geography, and infrastructure including easy access to 3 international airports make it an incredible place to call home.
PartnerBuilt’s Client, a family office that has built more than 31 homes including duplexes and townhouses in the East Bay, had completed initial site development and framing prior to closing a new construction loan last week. Within PartnerBuilt’s Rolodex, we have about 20-25 solid Construction Lenders for this project -both Banks, private debt funds, and construction specific lenders, so we helped our Client narrowed this list down to 3-5 Lenders based on specific-needs from the Borrower.
Not all Lenders are created equal. With more than 4,200 licensed lenders and banks in California, it is very important to narrow down options and understand what will & will not work for specific lenders in our experience. Otherwise, Developers get bogged down in underwriting, or have last minute surprises that may kill a deal.
Within 10 days of signing an Agreement with PartnerBuilt, we organized LOI’s from three separate debt funds. For many of our Clients, using a Private Debt Fund provides Common Sense benefits over traditional bank when it come to selecting a Construction Lender. The interest rate and origination fees are slightly higher than a traditional bank, but generally RE Developers can turn to private construction lenders for 3 major reasons:
1) Private debt funds move much faster than Banks on closing a Construction Loan.
2) Private debt funds provide more loan proceeds and can often incorporate land lift -or soft equity. If structure right, these will reduce the equity needed for any Development project and increase IRR’s.
3) Private debt funds turn draws around faster and are more flexible at reallocating draws.
On a $10M Construction Loan, a private lender may cost a borrower an additional $150K-$300K over the life of the project. But as many great Developers understand that moving quickly and reducing equity, are well worth the increased costs. If you are interested in reviewing an IRR comparison on a Bank Construction Loan offer, don’t hesitate to reach out to us for examples…
Important Note: There are certain projects and Sponsors that Bank Financing works perfectly well for…By no way is this an endorsement that any construction projects should avoid using a Bank or Credit Union as a construction lender.
“I Like you. You Work Very Hard” - Nice Words from PartnerBuilt’s Clients!
From signing the LOI to closing the Construction Loan took us exactly 8 weeks. During this period, PartnerBuilt helped our Client organize and create documents needed for the Lender’s review, worked with the Lender’s Attorneys on the appropriate Loan Structure, found the right guarantor structure for the borrower and worked with Title to organize the waivers and material needed for Title Insurance and Mechanic’s Lien Coverage...
We also used our rolodex to help the Client to find a new insurance company that was much more affordable to the initial estimate they received.
PartnerBuilt’s work as an intermediary not only helps Clients identify and select the right Lender, but also helps compress the time to Close on project financing.
