Construction Loans Georgia

What You Need To Know About Building In Georgia

There are plenty of reputable construction lenders in Georgia, but for your application to get approved, you need to have building plans. In addition, it is worth noting that:

• Most Construction Loans in Georgia offer interest only payments
• You are required to pay back 100% of the loan amount when the loan terms end

To pay back the loan in full, you need to have a clearly defined exit strategy. Either you need to sell the development for a healthy profit, or you need to refinance the property based on the revised value of the building once it is completed. 

In addition, there other important factors that a lender will consider when assessing a loan application, including: 

FICO Score: Typically, there will be a minimum FICO score that the borrower needs to meet in order for the loan to be granted. At the current moment in time, the minimum FICO is 650.

Cost of Project: A reputable lender should be willing to cover a substantial portion of the project cost. This ratio is called Loan To Cost, and it is a quick way to assess how much capital you can access to complete the building project. At this moment in time, New Silver offers up to 90% Loan To Cost (LTC).

 

Requirements For A Construction Loan In Georgia

• Interest Rate: The interest rate for this financing option falls in the range of 10 to 13.25%.
• Origination Fee: An origination fee is applicable, starting from 1.375% of the loan amount.
• Loan To Cost (LTC): You can secure a loan for up to 90% of the total project cost.
• Construction Financing: This option offers financing of up to 100% of your construction expenses.
• Loan To ARV: You can borrow up to 75% of the property’s estimated value after repairs (ARV).
• Term: The loan term for this option is set at 24 months.
• Minimum Loan Amount: The minimum loan amount you can request is $100,000.
• Maximum Loan Amount: The maximum loan amount available is $5,000,000.
• Minimum FICO: To qualify, you must have a minimum FICO credit score of 650.
• Type of Property: This financing is suitable for various property types, including residential properties with 1-4 units, condos, and townhomes.

How To Complete A Building Project In Georgia

Step 1 – Identify A Piece Of Land That Can Deliver A Positive ROI

First and foremost, you need to identify a piece of land in Georgia that is suitable for ground up construction. 

To ensure that the building project will be profitable, you need to be able to accurately estimate how much the building will be worth once the project is completed. 

Step 2 – Complete Building Plans & Apply For Building Permit

For your construction loan to be approved, most lenders will require building plans to be submitted during the application.  In addition to building plans, you will also need to submit a building permit. Without an official permit, the loan application cannot proceed to closing. This is a key item to attend to. 

Step 3 – Select A Construction Loan Lender

After finding the land and sorting out the plans and the permits, the next task is to select a Construction loan lender that can meet your needs as a developer. 

If you are a residential developer looking for a simple online approval process together with lightning-fast closing, New Silver Lending could be the right fit. 

With that being said, there are numerous lenders to choose from. This article highlights the best Construction loan lenders. 

Step 4 – Apply For Your Georgia Construction Loan

The final step is to apply for the loan. If you have followed all the steps outlined above and you meet the minimum credit score requirements, there is a strong likelihood your loan will be approved.

 

GA Real Estate Market Analysis

Over the last 12 months, home prices in Georgia have increased by 1.3%, with an average home value of $320,082. This is $29,000 less than the average home value in the US, which is currently $349,770.

The Median sale to list ratio is 1.00. This suggests that the Georgia real estate market is relatively neutral right now.

• The percent of sales over list price is 34.1%.
• The percent of sales under list price is 43.2%

In Georgia, urban areas like Atlanta, Savannah, and Athens tend to have higher property prices due to the demand for jobs, amenities, and proximity to educational institutions. Coastal areas like Savannah also tend to have higher property values.

Georgia has a diverse economy, with many strong industries like manufacturing, technology, and healthcare. A thriving job market increases demand for housing and drivers property prices upward.

Property Prices Have Increased Rapidly Over The Last 6 Years:

At the beginning of 2018, the average home value in Georgia was only $179,968. Since then, the GA property market has experienced immense growth, partially driven by low interest rates and low inventory during the covid-19 pandemic. As of September 2023, the average home value in Georgia is $320,082, which is an increase of $140,000 over a span of 5 years.

With that being said, 2023 has been relatively neutral for the GA real estate market. There was small price drop at the beginning of the year, but prices are trending upward again.

Tech Companies Are Setting Up Shop In Georgia:

An increasing number of tech companies, entrepreneurs, and startups have chosen Georgia as their base of operations due to its competitive tax structure and business-friendly environment. This has created a demand for housing in the area, driving up property values in some parts of the state.

Additionally, Georgia’s location—in close proximity to some major cities like Atlanta, Savannah, and Augusta—makes it an attractive option for potential homeowners who want easy access to urban amenities without having to bear the burden of skyrocketing real estate prices in other big cities in America.

 

Data Sourced From – Zillow.com