Construction Loans Washington

What You Need To Know About Building In Washington

There are plenty of reputable construction loan lenders in Washington, but for your application to get approved, you need to have building plans.

• Most Construction Loans in Washington offer interest only payments.
• Importantly, 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).

Best Construction Loan Lenders In Washington

 

Washington Real Estate Market Analysis

Over the last 12 months, home prices in Washington have decreased by 2.2%, with an average home value of $571,248. This is 220,000 more than the average home value in the US, which is currently $349,770.

• The Median sale to list ratio is 1.000.
• The percent of sales over list price is 42.3%.
• The percent of sales under list price is 33.9%

High Profit Potential: With some of the highest average property values in the US, there is money to be made developing properties in Washington. Provided you can find land that is suitable for construction in a desirable area, the post construction value will be much higher than most other states.

It all comes down to average market value and comparable properties (comps). If the value of the comps is high, it should be relatively easy to sell each completed unit for a good price. The challenge really boils down to finding the right piece of land. If you can do this, there are many compelling reasons to proceed with the development, with high profit potential being top of the list.

Washington Has A Strong Job Market: Washington State is home to major technology companies, including Microsoft and Amazon. The presence of these industry giants contributes to a robust job market, attracting professionals and supporting a strong demand for housing.

Limited State Income Tax: Washington does not have a state income tax, which can be an attractive feature for residents. This financial benefit may contribute to the state’s appeal for individuals and families considering a move.

Residential Sales Have Slowed Down: In 2022, there were 121,764 residential sales in WA. As of November 2023, there have only been 70,721 residential sales. This represents a steep drop in the number of homes sold in the last year. A challenging economic environment combined with historically high interest rates have ultimately led to decreased home buying activity in the Evergreen State.

 

Data Sourced From – Zillow.com | Attom Data