If you have chosen to finance construction or renovation costs, the amount of the construction budget will be deducted from the funds disbursed to you at closing. For example, if your total loan amount is $200,000 and the construction budget is $75,000, only $125,000 will be disbursed at closing, with the balance held for future construction draws.

For new construction, yes. For renovation projects, it depends on the scope of work. If the renovations are minor, no building permits are needed, and you have documented experience with prior projects, the use of a licensed general contractor may not be required.

During underwriting, you or your contractor will be required to submit a scope of work and draw schedule that identifies the cost of each task to be performed, and groups these tasks into draw requests. When the work in each draw request is complete, the specified cost of the completed work will be disbursed to you.

Most loans are structured with between two and four draw requests, though some more complex projects may have up to six (six is generally the maximum). Your loan fees at closing will be based on the number of anticipated draw requests and, if you exceed this amount, a fee will be charged for each additional draw.

Several factors determine the time needed to process a construction draw (such as access to the property, the accuracy of the draw request, etc.); however, provided that there are no issues, most draws are paid within three to five business days.

If the inspector notes any issues with the draw request, such as work not fully completed or work not completed in a satisfactory manner, the amount of the draw request will be reduced to match the amount of work that has been complete. In such event, the uncompleted work may be included in a future draw request upon completion.

No – construction draws may be submitted for completed work only, and you may not draw from your construction or rehab loan to pay upfront deposits to contractors. As the property owner, you are responsible for the payment of any deposits required by contractors prior to the completion of work.

As the property owner, cost increases (whether due to overruns or changes in the scope of work) are solely your responsibility. While we strive to give you flexibility in the management of your project, Capital Property Group, LLC is only responsible for disbursing the amounts budgeted for each item in the Draw Schedule. If specific items end up costing more, you are responsible for any difference between the actual and budgeted costs. Additionally, at each draw request, we will validate that the remaining, undisbursed construction budget is sufficient to complete the project in accordance with the original scope of work. If the remaining budget is deemed to be insufficient due to cost overruns or other reasons, you may be required to pay a portion of the construction costs in order to bring the project back into balance with the construction loan.

In general, construction draws are paid to you as the borrower, though in some cases we may approve payments directly to contractors. In all cases, prior to releasing subsequent draws, evidence must be obtained (in the form of lien releases, etc.) that all amounts from prior draws have been appropriately paid to all contractors and vendors.

If construction or rehab funds are still available after the project has been fully completed, we will disburse those funds to you, provided that the loan is not in default.