If you deal with real estate investors, you are aware that new build opportunities are a profitable prospect—but only if done well. Most investors rush into new builds believing the experience is easy: purchase ground, construct, and resell for profit. But without proper methods, expenses run out of control, holdups erode margins, and the end sale price may not bring the return anticipated.
As a mortgage broker, private lender, or referral partner, your contribution plays a vital part in directing investors towards profitable and successful construction deals. Whether structuring the finance, offering market analysis, or linking investors to reputable professionals, your input can be the determining factor in whether a deal comes together or fails.
The following are four key tips that will enable your clients to attain maximum profitability for their new buildings. These facts will also ensure that you take on the status of an authoritative partner, win trust, and bring more business your way.
One of the biggest pitfalls that investors fall into with new development is over-personalizing a project. As tempting as it may be to create a home according to distinct design tastes, doing so risks alienating potential buyers and limiting resale potential. Investors would be better served by concentrating on elements with broad appeal in the marketplace.
As a wholesale lending partner, you can provide valuable insights by guiding investors toward high-demand property features. Here are a few key elements to consider:
By providing guidance on design choices and features, you position yourself as an essential advisor to investors, helping them build homes that sell quickly and at a strong price point.
Real estate success is always about location. Even the most well-designed house won't sell if it's in the wrong place. As a private lender or broker, your familiarity with the market can be the key to unlocking success for your clients.
When helping investors select a location for new construction, consider the following factors:
Further, investors should not be constrained to their immediate markets. Should the area be flooded with new developments or demand start to falter, urge them to consider other high-growth areas. In this role as a lending partner, you have the opportunity to offer sound financing options that enable them to achieve greater reach and more potential for success.
The right team is needed to complete a well-managed construction project. Flawed-contracted builders, contractors, and real estate experts can throw a project off track, leading to missed deadlines, runaway budgets, and irate investors.
As a third-party originator or referral partner, you have a unique opportunity to introduce investors to vetted professionals who can help them succeed. Consider building a network of:
By matching investors with top-notch professionals, you're not merely offering capital—you're delivering a full-service solution that fosters trust and creates repeat business.
Negotiation is responsible for the utmost profitability. Those investors who have the skills of negotiating with the builders, suppliers, and customers will receive considerably greater returns.
As a wholesale lender or broker, you can educate investors on key negotiation tactics, such as:
Negotiating skills are also important when the time for sale arrives. Investors must learn to assess bids and negotiate for the best price possible without frightening buyers away. With these tactics provided to your customers, you empower them to gain the highest possible bottom line.
One of the biggest challenges of new construction investment is finding the proper financing. Most investors struggle with conventional banks, which have lengthy approval procedures and rigid lending standards.
This is where you, as a mortgage broker or private lender, can step in and provide a strategic advantage. Offer financing solutions that align with investors’ needs, such as:
By offering tailored financing solutions, you not only help investors execute projects efficiently but also solidify your role as a go-to resource for their investment needs.
New construction investments can be very lucrative, but only if you go about it with the correct strategy. As a third-party originator, private lender, or wholesale partner, you have an important responsibility to help investors make informed, fact-based decisions.
By guiding them toward high-demand features, helping them select strong locations, connecting them with trusted professionals, and ensuring they secure the right financing, you position yourself as an invaluable partner in their success.
At RCN Capital, we specialize in providing financing solutions for new construction projects. If you work with investors looking to capitalize on new construction investing, we offer flexible, competitive loan options designed to maximize profitability. Connect with us today to discuss how we can support your business and help your investors achieve greater returns.