Ground Up Construction Benefits

Ground Up Construction Benefits

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America is undergoing a massive housing boom at the moment thanks in large part to mortgage rates hitting near-historic lows, median personal incomes outpacing spending, and the widespread demand for more square footage as the aging millennial generation populous transitions from renters to aspiring homebuyers.

Benefits Of Ground Up Construction

Increase in Ground Up Construction

Recent market data indicates that the rate of sales for previously owned properties has been steadily increasing over the past several years at levels equivalent to the prior housing boom in 2007. This uptick in transactional activity resulted in depleted available housing inventory levels across the country, which prompted builders to significantly ramp up construction in an effort to rebalance the market. In September 2021, developers broke ground on over 712,000 single-family residences, the most in more than 15 years.

There is a similar trend occurring in the multi-family sector as well. With a significant percentage of families priced out of the currently ultra-competitive homebuying marketplace and still more individuals seeking flexible living accommodations, rental units are also in high demand. Builders appear to be in tune with this dynamic, as the number of under-construction multi-family and apartment buildings spiked this year at well over 700,000—the highest number since 1974.

Although the increased demand from homebuyers is undoubtedly one major factor fueling the number of homes being concurrently built, ongoing delays attributable to supply chain interruptions and labor shortfalls means construction projects were taking longer to complete during the pandemic. This resulted in subsequent increases in the cost of building materials, which was passed on to the consumer in the form of elevated housing prices.

The good news is that the supply chain and labor issues that have been plaguing the construction industry over the past two years are slowly but surely being ironed out—making it the perfect time for real estate investors to take advantage of the growing demand for newly-constructed housing. COVID-19 led many families to reconsider their living situations due to increased remote working and education accommodations that made living in cluttered, expensive urban areas simply unnecessary. The result has been a mass migration to the suburbs, where brand new homes with all the amenities are all the rage.

Popularity Amongst Real Estate Investors

Ground up construction projects are growing in popularity amongst real estate investors as they are a tried-and-true approach to netting even higher profit margins than fix-and-flip or single-family rental investments. What’s more, instead of renovating or retrofitting a preexisting property, investors who choose to pursue a new build are in total control of both the overall design and layout of the new structure—allowing them to tailor the property to their target customer base and budget. While ground up construction projects tend to be more of an involved process, Gauntlet Funding has the requisite experience and resources to help you successfully navigate the new build process. And with our efficient and innovative ground up construction loan options, you can rest assured knowing that financing will not be an issue.

Ground Up Construction Loans Are Different

Ground-up construction loans are specifically tailored for real estate investors and differ from other types of mortgages. These are short-term loans intended to cover the expenses involved with the acquisition and construction phases of the investment project. If the investor opts to hold the property and rent it out after construction is complete, they can then transition to a longer-term permanent funding option.

Get Started Today

Gauntlet Funding specializes in flexible private hard money lending programs suited to fit today’s investor today’s investors needs. For over two decades, the industry experts at Gauntlet have been financing REOs, short shales, construction projects and all types of residential and commercial properties. Contact us today to learn more about how we can provide you with flexible and efficient access to the capital you need to accomplish your real estate investment goals.

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