Case Study: $13M Purchase Plus Construction Loan with a Credit Union in Bel Air

The Deal That Walked in the Door

We are Commercial Lending Solutions, a commercial mortgage brokerage based in Los Angeles, California, and this financing brought us a development group under contract to purchase a Bel Air property for a ground-up luxury spec home. Rather than needing two separate loans, one to close the purchase and a second for construction, the group needed a single credit union lender comfortable funding both phases as one facility with a clean handoff from acquisition to build. Commercial Lending Solutions specializes in construction financing and bridge loans for developers across California and nationwide.

Bel Air's ultra-luxury spec home market in Los Angeles, CA runs on tight construction timelines and demanding buyer expectations, and a lender willing to size a facility against the property's projected completed value, rather than just its as-is purchase price, is what makes a project like this pencil for a developer.

What Made It Hard

• Structuring a two-phase disbursement inside one facility. The credit union needed comfort funding an initial purchase tranche immediately, followed by a separate construction line released only against verified progress, rather than treating the deal as a standard one-time funding.
• Coordinating third-party construction oversight from day one. Every draw required an independent monitoring firm's inspection and sign-off against the budget and timeline before funds moved, adding a verification layer the borrower had to build into its own project schedule.
• Sizing to a projected, not current, property value. With the loan-to-value and loan-to-cost caps both measured against the $25,000,000 "as proposed" completed value rather than the raw purchase price, getting the appraisal methodology right upfront was central to confirming how much proceeds the deal could actually support.

"Combining the purchase and the construction line into one facility is what let the developer move on the seller's timeline instead of waiting on two separate closings."

How We Ran the Process

Trevor Damyan, a California-licensed real estate broker (DRE #02244836), placed the purchase-and-construction facility with a Ventura County-based credit union, with the signed letter of intent dated November 1-2, 2023:

• $13,000,000 total facility, with an initial $7,500,000 disbursed to complete the property purchase and the remaining $5,500,000 released per a construction draw schedule
• A 24-month non-revolving construction line with interest-only monthly payments calculated on the outstanding balance, secured by a first lien position on the property
• A fixed 9.50% rate for the full 24-month term, with balance due at maturity
• A 70% maximum loan-to-value and loan-to-cost, based on the appraisal's "as proposed" projected completed value of $25,000,000
• A minimum 1.25x global debt service coverage ratio covenant
• A required $1,600,000 interest reserve, established as a separate line item within the facility to cover monthly payments during construction
• Third-party construction monitoring by an approved firm, with updated site inspections required to verify each construction phase against budget and timeline before any disbursement, plus plan review, funds control, and per-visit inspection fees
• 0.75% origination fee plus a 0.25% 45-day rate lock fee, both calculated on the total loan amount, with no prepayment penalty for the life of the facility
• A $10,000 non-refundable good faith deposit due with the signed LOI, applied toward closing fees, plus membership requirements including a business checking account, a $10 one-time member fee, and a $25 donation to one of the credit union's designated non-profit partners

The facility closed with the purchase tranche funding the acquisition and the construction line staged to release against the third-party monitor's verified progress reports through the balance of the 24-month build.

Why We Won This One

Structuring this as one combined purchase-and-construction facility, rather than two separate loans with two separate closings, is what kept this project moving on the developer's timeline. Splitting the disbursement cleanly, immediate purchase funding followed by a construction line tied to verified draws, let the credit union commit to the full $13,000,000 upfront while still protecting itself against construction risk through the third-party monitoring requirement.

Getting the appraisal's as-proposed valuation methodology aligned with the credit union's underwriting early also mattered. Sizing a construction loan to a projected completed value rather than the raw purchase price is a different appraisal exercise entirely, and confirming that methodology matched the lender's requirements before the loan-to-cost math was finalized kept the deal from stalling over a valuation dispute mid-underwriting.

Is This Structure Right for Your Deal?

If you're acquiring a property specifically to build a luxury spec home, a combined purchase-and-construction facility from a lender comfortable underwriting to your projected completed value can be more efficient than stacking separate acquisition and construction loans. We arrange bridge loans and construction financing from a network of more than 1,000 capital sources.

Apply for financing or call us at 310.708.0690 to talk through your project.

Trevor Damyan

Commercial Mortgage Broker, Commercial Lending Solutions | CA DRE 02244836

Trevor Damyan is a commercial mortgage broker at Commercial Lending Solutions with a background in structured finance at CBRE and Marcus and Millichap Capital Corporation. He specializes in bridge loans, construction financing, SBA programs, DSCR loans, and complex capital structures for investors and developers across all 50 states.

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