Florida attracts foreign developers building spec homes, 2-4 unit buildings and small build-to-rent projects. Passy Capital finances these builds for foreign-owned US LLCs on the same terms as for US builders. The loan is underwritten on the project, not on a US credit file you do not have.
Terms
Land with entitlements can be financed at reduced leverage when it is part of the build. Raw land held on its own is outside the box.
| Term | Published figure |
|---|---|
| Loan size | $1M to $5M |
| Leverage | Up to 85% of total cost (land plus construction), LTC |
| Rate | Typically 8% to 12% |
| Structure | Interest-only on the drawn balance, 12 to 24 months |
| Draws | Released against milestones, after inspection |
| Fee | 1% to 2% of the loan, at closing, no upfront fees |
| Term sheet | 24 to 48 hours |
What the lender underwrites
- The builder: a licensed Florida general contractor with completed projects of similar size. If you are new to building in the US, the contractor's record carries much of the weight
- The budget: line by line, with a contingency, matching the plans and the contract
- Permits and plans: approved, or a credible timeline to approval
- The site: flood zone, elevation requirements and soil, which can change the cost of a build
- The exit: a sale at a value an appraiser supports, or a refinance into a DSCR loan once let
- Your equity and liquidity: the 15% of cost and enough cash to carry overruns
Florida specifics
- Notice of commencement: under s. 713.13, F.S., the owner records a notice of commencement before work starts, and it must be recorded and posted on the site before the first inspection. Lenders want it in order because it governs lien rights
- Taxes on the loan: documentary stamp tax of 35 cents per $100 on the note (s. 201.08, F.S.) and a one-time intangible tax of 2 mills on obligations secured by Florida real property (s. 199.133, F.S.)
- Flood and wind: coastal and low-lying sites can require elevated construction and specific insurance, both of which belong in the budget from the first draft
- Builder's risk insurance during construction, naming the lender
How draws work for an owner abroad
Construction funds are not paid out at closing. The contractor completes a stage, an inspector confirms it, and the lender releases that stage's funds. You approve draws remotely, but you need someone local you trust: the contractor, a project manager, or both. Interest is charged only on what has been drawn. The draw schedule entry explains the mechanics.
For the Texas equivalent, see construction loans in Texas for foreign nationals. For the product itself, see construction loans.
When you sell
A sale by a foreign-owned LLC can trigger FIRPTA withholding, which takes cash out of the closing proceeds until you file. Plan for it in your exit numbers; see FIRPTA for a foreign-owned LLC.
Carrying the project
Interest on a construction loan is charged on the drawn balance, so the monthly cost rises as the building goes up and peaks near completion. Budget that carry for the full build plus the time to sell or lease, and add a margin for weather and inspection delays. Some lenders agree to set aside part of the loan as an interest reserve; otherwise the interest is paid from your own funds each month.
Overruns are paid by the owner, not the lender. That is the reason lenders ask for liquidity beyond the 15% of cost: a project that stops for lack of cash is the outcome every party wants to avoid.