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🏗️ What Is a Construction Loan for Investment Property?

A construction loan for investment property is a short-term, specialized financing solution used to fund the ground-up construction or major renovation of a real estate project that will generate income—such as a rental property, multifamily building, or commercial development.

Unlike traditional mortgages that are based on a completed asset, construction loans are based on the projected value of the property once it’s built (ARV – After Repair Value) and are usually disbursed in stages (draws) as construction milestones are completed.

🔑 Key Features of Construction Loans for Investors

  • Short-Term: Typically 6–24 months
  • Interest-Only Payments during construction phase
  • Disbursed in Draws as work progresses
  • Based on ARV or Total Project Cost
  • Exit Strategy Required (sell, refinance, or rent)

🧱 What Can It Be Used For?

  • Ground-up construction of a single-family rental or multifamily unit
  • Building townhomes, duplexes, or apartment complexes
  • Commercial property development
  • Converting raw land into income-producing real estate
  • Adding accessory dwelling units (ADUs) to existing properties

🧠 Why Investors Use Construction Loans

✅ Leverage Capital

Use a small amount of cash to build a high-value property that generates income or sells for profit.

✅ Fund Projects in Phases

Only pay interest on what’s drawn—freeing up cash flow during construction.

✅ Increase Property Value

Build a property from the ground up or improve a lot’s use to maximize ROI.

✅ Flexible Exit

Sell, refinance, or rent the finished property based on your investment strategy.

💰 Typical Terms (May Vary by Lender)

FeatureTypical RangeLoan Term6–24 monthsInterest Rate8% – 12% (interest-only)Down Payment10% – 25% (based on project)Draw ScheduleBased on phases (site prep, framing, etc.)Exit StrategyRequired (refi, sale, etc.)Loan-to-Cost (LTC)Up to 85%Loan-to-Value (ARV)Up to 70% – 75%


🔍 Who Should Consider a Construction Loan?

  • Investors building new rental properties or spec homes
  • Developers starting multifamily or commercial projects
  • Flippers taking on tear-down and rebuild deals
  • Experienced builders or investors with a reliable contractor team

At FundNow Capital, we offer fast, flexible construction financing to help real estate investors break ground without red tape. Whether you're building your first rental or developing your tenth apartment complex, we’re here to fund your vision—on time and on budget.

CALL TODAY FOR YOUR FREE CONSULTATION!

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866-201-5370



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