What to consider before you get a construction loan.
We used a construction loan to assist us through the construction of our 2nd lumber yard in Fort Lupton.
Here’s a few construction loan tips we learned from the process:
- Get bills from contractors and suppliers as soon as possible, even partials and use this information to help stay on budget.
- Track these expenses compared to your planned numbers so you know if/when you can splurge on anything extra – or cut back.
- Putting off the inevitable won’t change the outcome – make decisions as soon as possible. Do it right the first time and plan ahead for exactly how you are going to live/work in the building.
- Carefully consider change orders or add-ons until you are sure of all your expenditures. Don’t be tempted by “it’s only $159”, because those $159’s add up!
- Don’t underestimate the time and effort needed to fulfill everyone else’s paperwork needs: the city or county, engineers and architects, your bank, the fire department and so on.
- Virtually all construction type loans will hold a retainer until the job is complete – remember this in your financial planning.
- Pay attention to hidden costs. Even small things like using extra paper as referred to above and the inevitable flat tires from nails dropped on the ground will add to the project’s ultimate total cost.
- Don’t count on incredibly fast processing of each draw request you make – your bank will need to take all the steps they need to meet THEIR requirements.
- Unrealistic budgeting and time drag in processing by all involved.
Our 2nd lumber yard in Fort Lupton is now open!
Stop in and see our new Colorado lumber yard. We have everything that our Lakewood location has, and more. We are ready to meet the lumber, building materials and hardware needs of the northern Denver region. We Deliver!