Commercial construction loan

[Tony F.]

Looking to finance a commercial industrial NNN lease single tenant ground up purchase and build project in california. Have tenant secured. Cap rate will be very high, tenant will put down significant deposit before acquisition of property.

Question-

How can I find financing that will cover the land acquisition and construction with lowest money out of pocket? Will any lender finance based on expected cap rate, instead of the cost of land an build?

[Kevin Sellers]

There are lenders that specialize in providing construction financing for single tenant "build to suit" projects. They have maximum LTC and LTV guidelines but will typically fund a higher percent of the cost as long as you don't exceed the maximum LTV. These lenders will analyze the demographics of the location but the most important variables are the tenant and terms of the lease. If the tenant and lease terms are acceptable, then financing 60% of appraised value should be achievable, even if that loan amount represents a higher percentage of your cost.