North Dakota New Construction Loans

Alfredo is a real estate investor in Fargo, ND. He decides to acquire a vacant lot and build a new single family home. The land is available for $330,000 and Alfredo thinks that the construction costs for the new house will be approximately $300,000. To fund the deal, he applies for a new construction loan from East Shore Lending Corporation. They contract to make a note with a 11% interest rate for 6 months and two origination points to be paid at the closing. They also agree to loan 65% of the aggregate expenses (the loan-to-value / "LTV"). Alfredo will receive the construction expenses in draws and there won't be a pre-payment penalty if he repays the note early. According to this deal scenario, the lender will fund $409,500 of the lot and construction expenses. The borrower will pay $220,500 down, a $8,190 origination fee, and $3,754 monthly in loan payments. If Alfredo sells the project for $810,000 he will make a total profit of $149,288 after returning the principle amount and deducting the origination points and total interest.

Jaime wants to acquire a land lot in West Fargo, ND and build a single family home to sell it. Because he does not have the money to pay for the total purchase, he takes out a new construction hard money loan from East End Investments with the following terms:

Jaime plans to sell the project when the note expires for $750,000. If he achievs this goal, the deal numbers will be as follows:

$750,000 sales price
- $464,000 principle (80% LTV)
- $116,000 down payment (20% on 80% LTV)
- $23,200 origination points (5% of the $464,000 principle amount)
- $64,960 interest payments (12 months x 14% interest)
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= $81,840 net profit