Spec Home Construction Loan

Transaction Description:  GSP successfully placed a non-recourse acquisition and construction loan for an investor to acquire a tear-down single family residence and build a new ground-up spec home to be sold upon certificate of occupancy.

Challenge: The borrower was in escrow to purchase a small 1950’s bungalow on a large lot in a desirable Los Angeles residential market. The borrower needed funds to close quickly in addition to funding construction costs going forward.

Solution: GSP demonstrated the excellent location, construction concept, borrower’s track record, and strength in the local market to a private lender who funded 100% of the purchase price and provided additional development dollars for construction. GSP established the lender’s low risk position using current for-sale information and the exit sale probability of the borrowers’ completed project. Because of the ample market information presented by GSP, the lender did not require an appraisal and was comfortable funding the 75% loan-to-cost transaction.