.png?width=234&height=80&name=logo-white-1%20(2).png "RCN Capital"){kind=logo}
New construction is a rapidly growing asset class both investors and lending partners have taken advantage of to combat the ongoing housing shortage. Savvy investors are finding underserved markets which helps them achieve great returns with these projects. The lending partners who can provide investors with fast and creative financing solutions for these deals are also winning big. Offering new construction loan programs helps you stand out from the competition and strengthen your deal pipeline by expanding your lending opportunities.
Continue reading to learn more about new construction loan products and how they can help you grow your lending business.
Understanding the New Construction Landscape
Higher interest rates have driven many of the trends affecting the real estate market today. With rates still hovering at an elevated 6.74%, rental property investments are becoming less viable, forcing investors to turn to more creative strategies. Newly constructed homes are still very desirable, with newer features and lower maintenance costs offsetting higher purchase prices. They help meet the demand for housing in emerging markets and can be very profitable if one takes the time to conduct due diligence and make a smart investment.
Why Brokers Should Embrace New Construction
From a lending perspective, new construction allows brokers to expand their product offerings and fund deals in a less competitive asset class. Less competition means you can spend less time and money acquiring new clients, and you’re able to capture a higher share of the market. Additionally, newly constructed properties often come with higher loan amounts, which means solid commissions and attractive fee structures. They even present a great opportunity to build long-term relationships with developers and repeat investors, opening the door to future business.
Financing Strategies for New Construction Deals
Securing financing for a new construction project can be somewhat difficult when working with a traditional lending institution. Bank loans typically come with a long and stringent application process that demands near-perfect credit from the borrower. Working with private lenders is often preferable, since they offer a simple approval process and can deliver funding much faster, which is a key advantage in competitive scenarios. Look for lenders with experience in the space, and that offer both construction-to-permanent and construction-only loans to support any investor’s exit strategy. Many of these lenders also offer bridge financing for the situations where a stalled project needs a quick cash injection to continue moving forward.
Master Risk Management and Due Diligence
As mentioned, due diligence can be the key difference between a very successful deal and just an okay one. Investors often tend to overlook the crucial step of planning and using real time data to support their projects. Be sure to support their strategy by referencing up-to-date statistics from data aggregators, such as ATTOM Data and REI DealMaster. Budgeting can also be difficult for beginner investors, so it’s worth taking a second look to confirm numbers and maybe even create a contingency fund for unexpected costs. Finally, be sure that your clients fully understand zoning and permitting requirements in the property’s jurisdiction; failing to comply can lead to delays or even massive missteps that derail a project’s timeline and profitability.
Forge Strategic Partnerships with Investment Professionals
You can provide additional value to your clients by leveraging your personal network to connect them with real estate professionals that can facilitate their projects. This includes people like trusted builders or contractors you know or have worked with in the past. On the other end of the deal, a good accountant or tax professional can help your clients maximize their investment’s return. This can also be an opportunity to set up partnerships or referral agreements to give your business another source of income.
Market New Construction Projects Like a Pro
The final step of a construction project is marketing and actually selling the property, and you can recommend some key strategies to increase your client’s chances of success. For example, many sellers are utilizing virtual staging and walkthroughs in place of traditional methods. This allows sellers to give browsing buyers a more hands-on experience at a much lower cost, and can be used to stand out from other home listings. Utilizing digital marketing techniques is also a must in 2025, and for that you should recommend a multi-pronged approach. Don’t just limit the listing to the MLS, post it in as many places as possible. Local real estate groups on social media can be great for increasing visibility, and you can send email blasts to your personal contact list to get the property in front of more potential buyers.
Action Plan: Fuel Your Pipeline Now
We’ve covered a diverse range of topics throughout this piece, but let’s take a quick moment to bring it all together in an actionable plan:
- Empower your business by getting in touch with a trusted new construction lender and add these programs to your loan offerings.
- Familiarize yourself with the benefits of new construction investments so you can better market yourself to borrowers.
- Perform due diligence with each deal and use real-time data to make informed decisions and guide your clients’ strategies more effectively.
- Leverage your personal network to help clients find trusted professionals that can help them win.
- Utilize modern marketing techniques to increase visibility for your property and maximize each project’s ROI.
RCN Capital
To help your clients maximize the returns on their next investment, partner with a lender that can provide you with the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors and lending partners. If you are looking to offer new construction financing to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.