Ground-up construction is one of the most profitable real estate strategies available. It is also one of the most misunderstood from a financing perspective.
Here is how Silverton Capital, LLC construction loan program actually works and how experienced builders use it.
Unlike a traditional mortgage that funds at closing, a construction loan releases funds in stages tied to verified project milestones.
Typical milestones include:
You pay interest only on funds that have been drawn, not on the full loan commitment. This structure keeps carrying costs manageable during a build that may run 6 to 18 months.
Slow draws are the most common operational complaint about construction lenders.
If your GC needs materials paid and the lender takes two weeks to fund a draw, your project stalls. Your GC gets frustrated. Your timeline extends. Your carrying costs increase.
Silverton Capital, LLC in-house draw process moves within 24 to 48 hours of inspection. That speed is a meaningful operational advantage for builders who work at volume.
Construction loans are primarily underwritten on the appraised value of the finished property, not the current value of the land.
This is called the subject-to or as-complete appraisal. It requires a full appraisal from a licensed appraiser who reviews your construction plans, specs, and budget.
The resulting value drives your maximum loan amount. Well-designed specs and accurate budgets lead to better appraisals.
First-time builders can qualify for ground-up construction loans, but lender requirements vary.
Experienced builders with a track record of completed projects and verifiable costs will qualify more easily and at better terms.
For new builders, partnering with an experienced general contractor with a strong track record is often the path to approval.
Construction lenders want to know how the loan is being paid off before they fund it.
The two most common exits are:
Defining this clearly at origination and building it into the financial projections makes for a cleaner underwriting process.
The builders who use construction financing most effectively are the ones who treat it as a business tool.
They know their cost per square foot. They have contractor relationships that allow them to manage budget and timeline. They do not over-scope their specs for the market they are building in.
The loan enables the project. The discipline makes it profitable.
Ground-up construction is not passive investing. It is an active business.
The financing works when the business works.
Investing in residential development in Texas and need funding?
Apply with Silverton Capital
With Silverton Capital, LLC, you can get:
So when the right opportunity shows up, you’re ready to act.