Financing designed specifically for ground-up building or significant renovations of properties intended for income generation, such as rental units or commercial spaces, typically involves a more complex process than traditional mortgages. These loans often disburse funds in stages, tied to project milestones. For example, a lender might release a portion of the funds upon completion of the foundation, another upon framing completion, and so on.
This type of financing is a vital tool for real estate developers and investors. It enables the creation of new housing units and commercial spaces, contributing to economic growth and community development. Historically, access to this type of capital has fluctuated with market conditions, influencing the pace of real estate development. Securing this funding requires a robust project plan, detailed cost estimations, and a strong investor profile.
