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IMPROVED PROFITS
By Joel S. Pate
Last week we covered the benefits to the builder regarding the no personal guarantees that are associated with the use of one time close construction perm loans. This week, continuing with our list, we will cover the improved profits benefit that will have the builder so excited that it will cause him to immediately start sending business to the originator that can:
1. Demonstrate the benefits
2. Follow up sufficiently to motivate him to do business
3. Originate and close the loans for his customers
You can become that originator, and here is why you will want to:
Most builders have a reasonably steady flow of business. Thus, when you start working with several local builders, not only will you find that you are making more money on the individual loans, but, that your loan volume will become steady as well.
So, how does a one time close construction perm loan improve a builder's profit? The answer is complex, but to the builder, very understandable.
1. The builder does not pay closing costs on the construction loan thus saving at least 1.5%
2. The builder does not pay interest from his own funds, but, from the interest reserve established for the borrower.
3. The builder pays less interest on other loans because of the improved cash flow from the use of these loan programs.
4. Since the builder will need the local bank less, the local bank will begin to negotiate with the builder to lower their borrowing cost on spec homes and lot loans.
5. By freeing up the cash needed to finance the construction of homes, the builder will be able to purchase more lots and thus build more homes.
6. With the increase in marketing that will come from the builder and your advertisement to the real estate community that commissions will be paid up front, the builder will be able to sell more homes with less marketing dollars and the real estate agents will be bringing in the business left and right.
Like I said, the answer is complex. So, don't get caught up in trying to explain the details to the builder before you prepare yourself fully by learning all that you can about one time close construction perm loans first.
As I have said many times, "days of preparation are never wasted." Since the opportunity available to you through this dynamic program will increase your business by four to 10 loans per month, you should consider investing the time necessary to educate and prepare yourself. It's worth it, I guarantee it!
In the next article, we will discuss item No. 3, how utilizing one time close construction perm loans will improve a builder's cash flow.
If you would like to receive additional information regarding one time close construction permanent lending or join one of my conference calls on this topic, send me a request by visiting www.vadiumgroup.com/cpexpert.php. Remember: It's not enough to know the benefits of the OTC-CP Loans. In order to make money, you've got to have a lender that understands this complex loan and a mentor to help you jump start your business with the builders.
Dedicated to coaching YOU to CP Loan Success!
Joel S. Pate
Joel S. Pate, a dedicated entrepreneur, has spent more than two decades in the building, mortgage, and real estate industries and has been involved in over $100 million in construction loans and over $1.3 billion of residential lending. As the CP LOAN EXPERT columnist, Pate provides straightforward, unbiased advice about every aspect of construction permanent lending. If you ever wanted to unravel the mystery surrounding new construction lending, then you should tune in.
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