“Dealers telling me that they didn’t have this problem were almost non-existent,” reports SBMA’s Cindy Hartley, who compiled the responses from across the country. “Loans for speculative jobs are nowhere to be found. But construction loans of one sort or another CAN be hunted down, although it takes some work.”
It’s a common problem nationwide; a December survey of contractors nationwide by Builder, a sister publication to ProSales, found that 26% of the builders who tried to get construction and development (C&D) loans in 2010 were turned down, another 20% had trouble getting the loan, and 39% never tried. Only 14% said their loan request was granted without trouble.
Among dealers’ recommendations:
- Don’t stop with one bank–talk to as many as it takes to get a positive answer. “I’ve seen situations where literally the 10th or 15th bank said yes,” one dealer reports.
- Use two-party draws for larger subcontractors and suppliers.
- Ask the home’s proposed owner to apply for the construction loan in his name.
- Network with bankers and find one that has funds to lend for end mortgages. Offer to send new home mortgage prospects to the bank on the understanding that the bank will first make a construction loan as part of a “package” 15- or 30-year mortgage.
Got a tip of your own to add to this list? E-mail cwebb@hanleywood.com.
