The current real estate market in Denver, Colorado, is strong. Demand for housing is high, so new builds and rehabs are on the rise in order to meet that demand. On this project, our developer used his own funds to purchase the land and complete the entitlement process for the construction of a seven unit townhouse development.
|PROJECT AT A GLANCE:|
About the Project
Once construction plans were approved by the city, Iron Bridge provided a full construction loan, with interest reserve, for the duration of the project, and allowed the borrower to pull some of his own money out of the land. As our borrower tells us, having your finances in order in this market can be the difference between a highly successful project, and a complete disaster.
The real estate market in Denver is exceptionally strong, which makes selling real estate easy but keeping tradesmen difficult. The shortage of tradesmen results in an increase in construction costs, which can be managed. However, a much bigger risk is the possibility that one group of tradesmen leave your job to work for another developer because you couldn’t pay them on time.
Because the trades are scheduled sequentially and the tradesmen are booked solid for several months out, if one group doesn’t do their work, the entire project can fall off the rails. Iron Bridge understood this problem and was willing and able to process our draw requests quickly, which meant that our tradesmen were happy and our project was on schedule.
Our company has been developing single family and multifamily projects in Colorado for over 30 years, and I can say that the Iron Bridge team is one of the best private lenders we have ever worked with. We have several projects with them now and plan to do more.”Borrower
Because Iron Bridge rolled the interest payments into the loan, our company’s total out of pocket was the down payment of $334,000. Net proceeds from the sale after discounting realtor commissions and closings costs was approximately $315,000, or a 94% return on our investment in approximately 15 months.
- Completed new construction project in just under 11 months.
- Construction cost was on budget.
- All seven units sold in less than 4 months after completion.
Thanks to his financial partnership with Iron Bridge, our client was able to complete a successful project according to plan; building the seven townhouse units and selling them individually, taking advantage of the strong real estate market in Denver and maximizing the return on his investment.