Arizona Ground-Up Construction Loans

Building from scratch? That takes guts – and the right financing partner who won’t bail on you when things get complicated. The LM2 Investment Group in Scottsdale, Arizona, has been funding ground-up construction projects for years, as we believe that sometimes the best investment is the one you build yourself.

Look, building from the ground up is tough. There’s no sugarcoating it. But man, when you nail it, the profits can be insane. We’ve helped people build everything from simple single-family homes to small apartment complexes. There’s something satisfying about taking a dirt lot and turning it into something that’s going to make money for years.

LM2 Investment Group offers 24-hour loan approvals with competitive rates tailored specifically for construction projects throughout Maricopa County. We understand that construction timelines are unpredictable, costs can fluctuate, and you need a lender who won’t panic when your project encounters the inevitable bumps in the road.

Why We Love Construction Projects (When Others Run Away)

Most lenders see a construction project and immediately start sweating. Too many variables, they say. Too risky. What if this, what if that? Meanwhile, you’re sitting there with approved plans, a solid contractor, and a killer location, but nobody wants to fund your deal.

We’re different. We’ve been through enough construction projects to know what can go wrong – and more importantly, what usually goes right. Yeah, construction has risks, but so does every real estate investment. The key is working with people who understand the process and know how to structure deals that work.

We provide construction financing across Maricopa County, including Scottsdale, Phoenix, Chandler, Mesa, Gilbert, and Tempe. Our local expertise means we know which contractors deliver and which ones you should avoid. We also understand local building codes, permit timelines, and the actual costs of building quality projects in Arizona.

We offer funding from $100,000 to $5 million for ground-up construction projects, with loan-to-cost ratios up to 75%.

How Ground-Up Construction Loans Work

Construction loans are two loans rolled into one. First, you get a short-term construction loan that covers the building costs. Then, once construction is complete, you either sell the property or convert to permanent financing. Simple concept, but the devil’s in the details.

During Construction: We fund your project in stages based on completion milestones. You don’t receive all the money upfront (sorry, but that’s how construction loans work). As you reach certain completion milestones – such as foundation, framing, and roof – we release the next installment of funding. This protects everyone and keeps the project moving forward.

Interest-Only Payments: During construction, you’re only paying interest on the money that’s been drawn. So, if you’ve only used $ 300,000 of your $ 800,000 loan, you’re only paying interest on the $ 300,000. That makes sense.

The Exit Strategy: Once construction is complete, you’ve options. Sell it and cash out, or refinance into a long-term rental property loan if you plan to keep it as an investment. We can help with either route.

Why Banks Hate Construction Loans (But We Don’t)

Traditional banks treat construction loans like they’re lending money to build a rocket ship. The paperwork is insane, the approval process takes forever, and they want to control every nail and screw. By the time they approve your loan, construction costs have gone up 20% and your contractor has moved on to other projects.

We keep it simple. Please show us your plans, introduce us to your contractor, and demonstrate that you’ve some experience (or a strong team). Let’s get started building.

What makes a significant construction project?

• Realistic budgets with contingency funds
• Experienced, licensed contractors
• Clear timelines and milestones
• Strong exit strategy (sale or rental)
• Locations with proven demand

Getting Your Construction Loan Approved

Yeah, construction loans need more paperwork than a quick flip. That’s just reality. But we’re not going to bury you in red tape just because we can. All we want to see is that you’ve done your homework and aren’t just winging it.

What We Need From You:

• Detailed construction plans and permits
• Contractor agreements and references
• Realistic construction budget and timeline
• Proof of your construction/development experience
• Market analysis showing demand for your project
• Down payment (typically 25-30% of total project cost)

What We’re Evaluating:

• Does your budget make sense? (We’ve seen enough projects to spot unrealistic numbers.)
• Is your contractor legit and experienced?
• Will there be demand for this property when it’s done?
• Do you have sufficient cash reserves to cover cost overruns?
• What’s your backup plan if things go sideways?

Most construction loans get initial approval within 24-48 hours. The entire underwriting process takes a bit longer because we need to review plans and budgets carefully; however, we’re still significantly faster than traditional lenders.

The Reality of Ground-Up Construction

Here’s what nobody tells you about construction: everything takes longer and costs more than you think. Always. The city is slow to issue permits. It rains for three weeks straight. You start digging and find out the previous owner buried a bunch of junk in the backyard. That’s not you screwing up – that’s just Tuesday in the construction world.

Keys to Construction Success:

• Budget 15-20% extra for overruns and delays
• Work with contractors who communicate well
• Get permits locked in before you start
• Have realistic timelines (then add 30%)
• Stay involved, but don’t micromanage

The investors who succeed in construction are those who plan for problems and have sufficient reserves to handle surprises. Those who fail are usually undercapitalized or working with unscrupulous contractors.

Common Construction Mistakes We See:

• Underestimating costs and timelines
• Choosing the cheapest contractor instead of the best one
• Not having enough cash reserves
• Starting construction before permits are finalized

Trying to save money on important stuff like foundations

Frequently Asked Questions

How much can I borrow for a ground-up construction project? 

We typically lend up to 75% of the total project cost, including land acquisition if needed. Total funding ranges from $100,000 to $5 million, depending on the project scope.

How long do construction loans last?.

Most of our construction loans have terms of 12-18 months, which provides you with ample time to complete most residential projects. We can extend if needed, but the goal is to keep projects moving.

What happens if construction goes over budget?

This is why we require contingency funds and realistic budgets upfront. If you need additional funding, we can sometimes increase the loan amount, but it’s better to plan correctly from the start.

Can I act as my general contractor?

If you have significant construction experience and the proper licensing, you may be eligible. However, most successful projects utilize experienced general contractors who are familiar with the local market and building codes.

Do you finance land acquisition too?

Yes, we can include land costs in the total project financing, or provide separate land acquisition loans if you’re buying the lot separately from the construction loan.