It doesn’t matter if you’re going to build your next investment property to keep as a rental or you think you can turn a tidy profit on a sale, you still need to account for the costs associated with financing the project. And the lower the costs the better. What are some of the things you can do to keepkeep financing costs low financing costs low?

When building, you will first need a construction loan. This type of a loan is lasts only for the duration of the construction and interest accrues as each round of builder funds is released. Obviously the lower the rate the lower your finance charges. But you don’t want to lower the rate by paying additional fees to the lender. You won’t have the construction loan long enough to recover the additional charges, points or otherwise, needed to lower the rate.

Ask the construction lender directly which fees are negotiable. The initial response will likely be, “None of the fees are negotiable” but when you mention that you’ve yet decided where to send your construction loan your loan officer might suddenly find a few places to shave off a few dollars. But you have to ask. Bank loan officers can earn a commission on construction loans they place and when negotiating fees many times you’re really negotiating the loan officer’s commission. The loan officer will have a choice of a reduced commission or no commission at all.

If you intend to keep the property and rent it out you’ll need permanent financing. This means another loan to replace the construction note. This is a brand new loan with brand new costs but there are some things you may negotiate lower. If you intend to hold both closings with the same settlement agent, ask about a reduced fee. Ask your bank the very same question, “What kind of deal can I get on both loans if I get my construction and permanent mortgage with you?” Again, you’re working with the loan officer’s commission in most instances but you have greater leverage with two different loans compared to just one. Still, you have to ask.