Ben Miller, CEO Of Fundrise Says New Construction Will Be The 2015 Trend
Globest.com recently invited Ben Miller, the Co-Founder and CEO of the much talked about crowdfunding website for real estate called Fundrise, to discuss his predictions for the real estate market in 2015. In summation Miller states, “we expect to see a lot of new construction in the coming year-in new markets. The lending environment has led to the rise of a builder’s economy, where the rational economic actor is compelled to build”.
Miller goes on to explain that because of the influx of capital in the United States real estate market, and not just from foreign investors either, the costs to borrow for construction have “been cut in half”. Where a developer use to expect to get 65%-75% of a total project cost from a bank loan, today they are looking at 75%-85% of total project costs being covered by a loan, at an interest rate that is one or two thirds of the rates seen in 2012 and 2013.
Specific to the commercial market, Miller referenced the hesitancy that banks had two and three years ago to finance large commercial construction projects, and how today “banks are handing out term sheets for more than 80 percent of total costs-including in secondary and tertiary markets.” All of these factors add up to what Miller predicts will be a year when “real estate developers around the country are seeing green (lights).” Here’s to seeing his predictions come true!
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