Commercial Real Estate Dictionary

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Construction lender

Definitions of Construction lender
  • A construction lender is a person or entity who provides loans designed for the construction phase of a real estate development or improvement project.
    The commercial real estate developer saw the construction lender to obtain financing to build the office complex. Upon completion of the development project, permanent financing will take out the construction loan.


What Is A Construction Lender?

A construction lender loans money to build construction projects, real estate developments, or improvement projects.

Due to the unique character of the construction process, financing must be structured to accommodate the progress, risks, and short term nature of construction projects. Construction lenders specialize in this type of financing.

Construction lenders make loans to developers, builders, and property owners for the construction phase of the project. When construction is complete, construction loans may be paid off and replaced by other types of financing that corresponds to the character of the completed project.

To mitigate their risks, construction lenders may require a takeout commitment. A takeout commitment is a loan commitment from a bank or other financial institution that will issue a longer term loan that will pay off or complement the construction financing.


        

Real Estate Terms

1. How much cash will be required to make your mortgage payments? Debt Service >>


2. Who can you go to to finance your construction or development project? Construction Lender >>


3. What professional can assist you in maximizing the value of your investment property? Asset Manager >>


4. How can we assess future commitment to infrastructure to support our communities and future development? Capital Improvements Projects >>


5. What measurement indicates if a property's financial performance can cover its debt? DSCR >>


6. What part of a city is the center of urban economic development? CBD >>


7. What allows property owners and professionals to estimate the market value of a commercial property? Comparable Property >>


8. What can landords do to entice prospective tenants? Concession >>


9. What critical factor do stores depend on to drive traffic? Anchor Tenant >>


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