Tag Archives: Commercial Bridge Loans

Soft Costs in Construction and Their Importance in Completing Projects

soft cost

 

Soft costs in construction are those costs in the early stages of development of construction projects that are normally not easily noticeable. However, these costs are not negligible as they comprise a significant part of the construction cost. The other important thing to note is that without soft costs, no construction project would be possible. They are an integral part of the total cost of a construction project which includes the hard cost and land cost in addition to the soft cost. Soft costs make up around one-third of the total cost of a construction project. Here’s a look at the different soft costs that get added to a construction project.

 

Cost of land

 

This includes the cost of real estate research, survey of plots, assessment of lots, as well as transaction costs for easement and ROWs. It also includes cost of land acquisition legal processes, appraisal, assessment and improvement of land among others in addition to the cost of land for temporary staging areas.

 

Cost of credit

 

The cost of interest on loan taken from banks including bank transaction costs as well as construction loan commitment fee, mortgage broker fee and permanent commitment fee all come under soft costs. Commercial bridge loans from Park West Capital are available at competitive rates that allow construction companies to control the cost of credit.

 

Construction equipment costs

 

Construction equipment is usually hired or leased in most projects and the cost of rentals in this case is a soft cost. Items like construction office equipment, office trailers, cellphone, radio communication systems, staging area equipment are also included in soft costs.

 

Cost of architecture and design

 

These costs normally cover feasibility studies, master planning and design costs among others are a vital part of soft costs. These costs are lesser when the projects are large in size.

 

Cost incurred by payment of local and state taxes

 

In any construction project, taxes become applicable for various transactions e.g. material and labor costs as well as fees paid to local and state agencies.

 

Cost of fees paid for inspections

 

Without permissions and authorizations from different government agencies, no construction project can even start. The fees charged by these different government agencies are substantial when added up and they are another major soft cost.

 

There are many other miscellaneous costs that are incurred in construction projects that also get added to the soft cost.

 

This update has been brought to you by Park West Capital specializing in the debt and equity markets for land acquisitions, horizontal construction, vertical construction, and permanent financing in the commercial real estate sector. Please feel free to contact us to further discuss your development financing needs at info@parkwestcapital.com and/or you may visit us for more information at parkwestcapital.com. Our services are provided globally for projects exceeding $5MM+.

EB-5 Financing is a Viable Option but Commercial Bridge Loans from Established Mortgage Lenders are Better

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About three decades ago in 1990, the United States Congress launched the EB-5 Program which allows foreigners to invest their capital in the US and help in stimulating the economy of the country by creating jobs and wealth. A couple of years later in 1992, Congress consolidated the initiative by creating the Immigrant Investor Program (IIP), which is also known as the Regional Center Program (RCP). Under this program, the government issues EB-5 visas to investors who commit their money in commercial enterprises based on proposals for promoting economic growth. Such commercial enterprises should be associated with regional centers approved by United States Citizenship and Immigration Services (USCIS).

 

The EB-5 Program requires the foreign investor to commit a minimum of $500,000 in a commercial enterprise associated with regional centers approved by USCIS and this investment should create at least 10 jobs. The benefit of investing via a USCIS approved regional center is that it enables computation of indirect and induced jobs toward the job creation requirement mandated by the EB-5 Program. Today, EB-5 financing has grown as a viable funding option along with the well-known options mortgage lenders offered by Park West Capital.

 

Developers across several industries in the US have made very good use of EB financing which has strict compliance norms especially with regard to the number of jobs that a particular investment creates. That’s not the case with other more conventional sources of credit like commercial bridge loans from Park West Capital. It is true that there is a huge rush of migrants from different parts of the world to put their investment capital in projects approved USCIS but it normally takes up to nine months for a deal to close. Commercial bridge loans from reputable Park West Capital are way ahead in terms of speed and efficiency in closing deals.