Investing In construction Loans

There are several kinds of construction loans for an investor and we will lay them out for you here.

The Improvement And Renovation Construction Loan pertains to making upgrades or improving the property in some way in order to raise the value.

A Grounds Up construction Loan is granted based on the assumption that the borrower has already secured the necessary permits and has drawn up plans that have been approved. The only thing left presumably, is the funding. The loan money can be drawn out over time if the lender approves.

Infrastructure Construction Loans are help the borrower to complete projects that need to be done before the actual building can begin. For example, the installation of utilities and water and sewer pipes, streets and so forth.

Construction loans have special requirements that must be met in order for everything to go according to plan. We will now consider these aspects.

The lender’s investment needs to be protected. therefore it is very important that inspections take place often during building. Plans are looked over again and again and kept consistently so that it can be ascertained the funding is sufficient for the project to be completed.

The construction company can maintain control and account for all funds spent from the beginning to the end with this kind of documentation. An in-house inspector prepares inspection reports of his findings from visiting the building site. The report indicates which projects are finished and which are still being constructed.

A preliminary lien notice is a requirement of most states where a construction loan is involved. The subcontractor sends a copy of this notice to the owner, lender and general contractor so that he can now lien a project. All parties involved are asked to send copies of their notices to the construction control company. In this way all subcontractors and those who supply products and services can be kept track of as the project progresses.

Control of construction is vital to a construction loan. Before a control company is acquired its disbursement policies should be carefully considered. Not all companies function in the same manner.Some companies consider themselves control companies when in reality they don’t actually function as such so it’s imperative that you ask up front whether a control company is being used and find out how it operates.