If you can’t quite find the right real estate investment you might as well build your own, right? In many parts of the country, that concept is not as far-fetched as it might sound at first. Yet in reality it can be hands down the best approach in the right market. In short, building a new rental from the lower financing costsground up makes sense with lower land and material costs in conjunction with a rather robust existing property market.

That said, if you decide to finance the construction you will encounter closing cost and down payment requirements as with a typical mortgage. How can you lower your financing costs?

There are two sets of costs with regard to construction financing. Your closing fees and interest charges. To obtain the most competitive loan, you must also inspect the associated fees. One bank may have a rate that is .125 percent better than a competitor but the closing costs are $1,000 higher. On a $150,000 note at 6.00 percent vs. 6.125, the difference in payment when fully funded is only about $15, hardly worth the savings considering the costs involved, right?

The bank may also offer an option to lower your rate in exchange for an additional fee, called a discount point. To find out if a point works in your favor, compare the difference in payment with the cost of the fee. You’ll likely find out that paying points is more expensive than the advantage of the lower rate.

Finally, simply ask that the bank waive or otherwise reduce their fees for you. If you’re a long standing customer of the bank and have other accounts, you’ll find that the bank may be a bit more accommodating than you first thought. But you do have to ask.