Okay, this has little to nothing to do with residential resale real estate but I find it fascinating to see what homebuilders are paying to borrow money.
From the incredible John Burns of John Burns Real Estate Consulting;
Construction Debt: Recourse and non-recourse debt is available, and priced according to risk. Bank of America has been very active and is looking at funding a large number of construction loans right now, in a wide variety of formats, and Presidio Residential committed $125 million last year and plans to commit another $45 million this month. Pricing varies on the situation, but is generally from:
- A 1% fee and below 5.5% interest rates for the most conservative recourse loans to companies with a minimum net worth of $10 million, to
- A 3% fee, 12.5% interest rate and 3% of the home sale for the riskiest loans (75% loan-to-cost on a non-recourse loan to someone with little net worth in a tough market).