Ground-up construction is where big visions come to life, but if you’re not careful, it’s also where budgets go to die. Financing a construction project isn’t like securing a loan for a rental property or fix-and-flip. There are layers of complexity that can catch even the most experienced real estate investors off guard.
The good news? At Futures Financial, we know how to spot these hidden financing challenges before they derail your project, and we’ve got the solutions to keep your build on track.
Here’s what you need to know to avoid the pitfalls and set your project up for success.
Cash Flow Timing Can Make or Break Your Build
One of the biggest issues in ground-up construction is the timing of your cash flow. You don’t just need financing to close on the land or materials—you need it at every stage of the project. Construction loans typically work on a draw schedule, where funds are released as you hit milestones. Sounds good, right? Not always.
If there’s a delay in hitting those milestones (hello, permitting issues), or if your lender is slow to release funds, your project could grind to a halt. Contractors need to be paid on time, materials need to be purchased, and any delay on your end could push back the entire timeline.
At Futures, we offer flexible draw schedules and work to ensure there’s no unnecessary waiting for funds when you need them. Our process is fast, simple, and designed to keep your project moving, not bog it down. We know how crucial timing is, and we make sure you’re never left holding the bag because of a cash flow hiccup.
Cost Overruns Are the Norm, Not the Exception
If you’ve ever been involved in a ground-up construction project, you know that cost overruns happen. In fact, they should be expected. Material prices fluctuate, labor shortages can drive up wages, and unexpected problems — like finding poor soil conditions — can pop up out of nowhere.
The challenge? Many lenders don’t build this reality into their financing structures, and that leaves investors in a bind when costs spiral beyond the original budget. At Futures, we approach construction lending with a more realistic view. We understand that things don’t always go as planned, which is why we work with you to set up contingency funds and provide options for quick adjustments if the unexpected happens.
By having those extra funds available, you’re not left scrambling to find additional financing or dipping into your own reserves when costs go up. We plan for flexibility from day one, so your project stays on track even when things go sideways.
Permit Delays and Red Tape Can Stall Your Loan Disbursement
Ah, the joys of bureaucracy. Permits are an unavoidable part of any ground-up construction project, but they can also create significant delays. The problem for investors is that these delays can impact not only the project timeline but also the release of loan funds.
Most lenders tie draw releases to construction progress, but what happens when you can’t make progress because you’re stuck in a permitting quagmire? You guessed it—your funds are delayed. Meanwhile, interest is accumulating, your contractors are waiting, and your timeline is getting longer by the day.
Futures Financial understands the reality of construction delays, and we don’t punish you for them. We work with you to ensure that funding remains flexible, even when bureaucratic red tape gets in the way. Our team moves quickly to adjust disbursement schedules and keep your project moving forward.
Appraisal Gaps Can Throw a Wrench in Your Financing
Here’s a hidden challenge that catches a lot of real estate investors off guard: appraisal gaps. In ground-up construction, the property’s value is typically based on the “as-completed” value, meaning what it will be worth once the project is finished. But there’s a lot of guesswork in that valuation, especially in a volatile market. Sometimes, the appraisal comes in lower than expected, and suddenly your financing structure is at risk.
When this happens, many lenders panic and pull back, leaving you to figure out how to fill the gap on your own. Not us. At Futures, we’ve seen this before, and we’re ready for it. We offer flexible underwriting that can adapt to changing valuations and market conditions, so you’re not left scrambling to close the deal. Our goal is to keep your financing intact and your project moving forward—no unnecessary surprises.
Your Exit Strategy Needs to Be as Solid as Your Foundation
Before you even break ground, you need to have your exit strategy locked down. Are you planning to sell the property once it’s finished, or will you hold and rent it out? The answer to this question will directly impact how your financing is structured—and how you repay it. A lot of investors focus on the here and now (just getting the project financed) but forget to think long term about how they’ll exit.
At Futures, we help you think beyond just the construction phase. We work with you to understand your endgame and structure your loan accordingly. Whether you need a short-term bridge loan with a quick refinance option or long-term financing for a build-to-rent project, we’ve got the tools and expertise to help you transition smoothly from construction to cash flow.
Build Smart, Finance Smarter
Ground-up construction is an exciting venture, but it’s also full of hidden financing challenges that can throw your project off course if you’re not prepared. At Futures Financial, we know what to look out for—and more importantly, we know how to solve the problems before they arise. From flexible draw schedules to smart contingency planning, we make sure your financing works for you, not against you.
If you’re ready to take on your next construction project, let us help you build smart and finance smarter. We’re here to make sure your vision comes to life, without the financing headaches that can slow you down.
Contact us today and let’s get to work.