Brokers should understand a project’s
built-in risks to transform the vision into reality
The economic purpose of developing a property is to create value above the project’s
cost. A construction loan is specialized lending that requires a comprehensive understanding of the intrinsic risks associated with funding a project from the ground up.
Commercial mortgage brokers should realize that construction lenders gamble in ways
not generally seen in term financing of tangible real estate.
When brokers handle a construction loan, they should grasp why project evaluation,
contractor review, underwriting standards and administrative controls are necessary
steps for a prudent construction lender. >>
Director, PW Partners Consultancy
Illustration by Dennis Wunsch
By Garry Barnes
Photo by Twin Design / Shutterstock.com
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Focus: Construction and Development
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Articles and News
“Walk the Construction-Loan Tightrope,”
Garry Barnes, June 2017
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