Some partners and I have capitol and resources. Im a general contractor with all the connections, and a ton of equity in my house. And my partners have no debt and good capitol also. We want to build some new construction duplexes and rent them out, whats the most,common, or best way of financing them

"…. whats the most,common, or best way of financing them….." This type of construction is handled in two stages. First, you buy the land using a land loan, which is usually limited to no more than two years. Because it is land, you are looking at a very low loan-to-value on this portion {think a maximum of 50%} It is true that established developers can negotiate better deals, but then again it is all about negotiating power here. There are a lot of developers that fund the land 100% and only request the funds needed for construction.

The second stage, which is the actual construction financing gets more complicated. Primarily because several factors are introduced. Off the top of my head, you will need to consider the following:

1- Loan to cost: A construction loan has to look out for this additional ratio, which means that in the case that you have a land loan already, additional equity will be required. You will probably be limited to something around 80% loan-to-cost.

2- The project's budget will determine funding, and it will be reviewed to see that it is not understated or overstated.

3- Absorption: In the case of multiple units, an estimation of how long it will take to market the units is needed to sell or lease up the project.

4- Interest reserve: {this can also be a part of the land loan} would be money set aside in the loan used to pay interest until the closings or the construction loan is paid off with permanent financing.

5- Permanent financing: If you are going to lease the project then the construction loan will be paid-off with a term-loan which includes amortization.

6- An appraisal of the project needs to be performed in a way that it provides an "as completed" estimate of value. Commercial appraisals are more complicated than residential appraisals, and this type of appraisal is even more complicated than your regular commercial appraisal.

7- The lender will control the disbursement of the funds with the help of a construction inspector that will make sure that the different portions of the project are completed.

Those are just some factors that affect the loan, there are many others that can affect the process. By the way, the construction loan stage is usually around 18 months. Unless the project is very complex, construction loans are not for longer than 2 years.

the land will be paid for, the down payment will be sufficient, my main concern is he permanent finacing

That will be the easiest part to get. It will only happen when the leases are in place. Therefore, the debt repayment will be there. The one problem that I see is that if you are thinking of taking equity out at that moment.

I can get permanent financing anywhere with downpayment and rental income enough to support the debt. I might not qualify in the eyes of some lenders for construction financing due to the lack of experience as a developer.

How many duplex units were you contemplating? It may be possible to place a residential CP loan on each unit with a limitaton placed on the total number of mortgages for any one person. For example, no more than 4 at my bank. Some CP programs allow self-builds for multi-family properties (up to 4 units). You could borrow up to 95% of the aquisition cost (lot +cost to construct) with one set of closing costs for the contruction and perm loans and no occupancy requirements.

what is the standard policy for drawing equity out of a commercial property, or isnt there one. The cp loan with 95% loan capabilites sounds attractive, whats the catch?

This would be a residential loan not commercial. I mention this as an alternative should you not qualify for the commercial loan and provided that your project is small enough. You can do CP loans for investment property but there is a seperate mortgage for each duplex. If you are planning on a lot of units, this may not work. You would not be able to draw equity out prior to completion because the funds extended to you are limited to the cost to contruct plus the lot. You can get 95% of the appraised value up to a maximum of this aquisiton cost. You could possibly do a cash out refinance after the construction loan rolls to the permanent loan.