How Will I Pay for this Place?
“You’re a property developer now.”
That’s the first thing I say to every HUTS client and prospective client, and it’s not just a line.
The moment you decide to build, you’ve stepped into a role that comes with a different set of responsibilities than buying an existing home. As a property developer, you’re not just thinking about a house, you’re thinking about how a piece of land gets transformed into a finished, livable asset. That means understanding how costs stack, how money flows through the project, and how financing decisions shape what’s possible from day one.
Throughout our engagements, HUTS spends a significant amount of time providing project financing education, because clarity here is often the difference between a smooth project and a stressful one.
At a high level, there are four categories of costs every property developer needs to care about.
First, land acquisition, which is most often handled with cash or short-term financing that gets taken out later.
Second, land improvement: the unglamorous but essential work like driveway access, clearing, well, septic, and power. These costs are sometimes paid in cash and sometimes rolled into construction financing, depending on timing and lender rules.
Third, soft costs, which include everything HUTS does before a shovel hits the ground: site evaluation, design, documentation, permitting, and entitlement.
Fourth, hard costs, which cover the physical construction of the home itself. For revenue-generating properties, there’s an additional layer to consider as well: ongoing management costs and realistic rental projections that lenders and owners alike will scrutinize.
In many single-family home projects, those hard costs are financed through a single-close construction-to-permanent loan. This type of loan covers construction and then converts to a long-term mortgage once the house is complete, simplifying the process and reducing risk. But that’s far from the only path. On commercial or income-producing projects, a wider range of tools opens up, including USDA programs and other commercial lending options. For ADUs, we often see clients use HELOCs or cash-out refinances, effectively collateralizing an existing home to fund the new build. First-time builders may qualify for FHA construction loans, and in some cases clients layer in more creative strategies depending on their assets, timelines, and goals
