It will always take twice as long and cost twice as much

The saying about renovations is true – take your budget and timeline and double it, because that is exactly how much it will cost and how long it will take.  It’s not that someone might not plan properly or not know what they are doing (although both can be a problem) but has more to do with the unknown.  Renovating a property as opposed to building a brand new one may seem like a cheaper option upfront but as you get into it you realize two things:  1) there are problems you will encounter that you could not have foreseen and 2) those unforeseen problems will cost you more money than you budgeted for and will mean you need more time to finish the work.

Understanding construction mortgages (cost vs value)

Given the numerous construction deals that our office has seen over the past half year, I thought I would provide some details on how construction mortgages work with particular focus on the concept of “cost to complete”.  Banks and lenders use two primary ways to determine their exposure on a construction deal.  One method is referred to as Loan to Value and the other method is referred to as Loan to Cost.  They may sound the same but they are significantly different and can change the entire risk profile of a deal in the eyes of a bank or lender.