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Land acquisition is the basis from which all promising real estate profit begins. It’s just a matter of realizing what kind of potential you have once a plot has been acquired. But the acquisition of the land itself can be an expensive process that drains you of your financial resources, and that’s a precarious situation to be in. You’ve got land, and that’s an obvious foundation on which to start growing your investment, but how do you start building if your financial resources were tied up in just getting the land?

That’s where a construction loan comes in.

Getting Off The Ground

A construction loan is a form of higher risk, higher points, higher interest hard money loan that steps in where more conservative, cautious banks and other lenders are reluctant to go. This is because with the lower interest rates a typical bank serves, they want to ensure the lowest possible risk for a project they lend money to.

If you’ve got land, but lack the finances to go vertical and start actually building on that property, a hard money construction loan is what you need. It’s a shorter term loan, with higher rates, but it’s also given on the basis of the same potential that you see in a project. A hard money loan is not as concerned with what your current financial outlook is, so much as what your future can be.

If you have the land already, you know that time is of the essence. You want to start building on that property as quickly as possible so that you can watch the investment grow. The approval speed of a hard money loan is much faster than what you’d get from a bank, but you have to ensure that you’ve done your due diligence and can make your risk work for you. Once you’ve worked out your numbers and you know exactly what you need to make your opportunity start growing, it’s time for a construction loan.