Newbie Looking To Build Affordable Low Income Housing
I live in a town where the homes are selling for outrageous prices and they are either a hundred years old or junk and they still sell for 80K to 100k for anything liveable. I want to get into building affordable new houses, nothing extravagent but new nonetheless. I am aiming at a finished price of around 120k. I think in my area this would be a great buy. Has anyone done new construction ? And how do I get financing for a new home that I won't be living in but sellling right after completion?
I would first find a reliable contractor and architect to see if it is feasible to build a house that will sell for that price and still make a profit. The type of loan you are looking for is called a spec construction loan, and not a lot of lenders are willing to do them. I have some lenders that will do this type of loan, you can contact me if you are having trouble finding one. Good luck.
The first thing i would recommend is to put together a strong business plan, talk to a couple local banks to see what the guidelines for them to fund a development. Secondly talk to local and state government to find out if there are any programs to subsidize such a project, see if the have special plots of land set aside for such developments. Find a credible and reliable builder. Talk to the banks in the community that may have special ltake out loans for lower income family, the maybe your pool of buyers for the houses, making the funding by a bank easier, because you already have an approved buyer. Also check some the no profit groups, they may have such buyer grant programs, that will pay the downpayment, and provide credible buyers.
This is exactly what I do.
It is possible to build condos close to that price , but land costs will be critical.
See www.brixtondevelopment.com for the floor plans I used. I aimed for $120,000, but opted for tile roofs and some extras and wound up at an average, life of project, selling price of $132,500.
Land costs were $5500/unit. We pre-sold 34 of 56 before breaking ground. We break ground in two weeks.
Good luck.
Gregg
[addsig]
Something you may consider, it is a bit out of the ordinary, but it really gives you an edge. The financing is pretty simple and god knows it has been done time and time again.
Select your site to build on. I assume you are going to do a tract of single families, or a condo development, or a string of town houses.
Dont buy the land lease it.
You work the price down as far as you can, then you offer a 50 year lease on the land and base the payments on a rather low interest rate if any. If the purpose of the sale was to merely invest the money you can arrange a better return then what banks pay depositors. You can achieve an A+ by adding on an additional sum to the price of the land and that is for you and your heirs if you are past the age of having a 50 year life span. Each buyer of a house, or condo has a lease fee and pays a proportionate share. Now here comes the kicker, at the end of 50 years the property reverts back to the owner of the lease and I hope a portion of that is you, or your heirs.
Holds down your original investment. My great Grandfather built one of the first skyscrapers this way on a 99 year lease. All he put down was his good looks and a desire for enrichment. The Fisher Building down in the Loop area of Chicago. He was not alone.
Just a thought. Lucius
Thank you for the information. I really needed that. I'm currently working with someone who wants to build houses on lots just like the other person does. Now that I have another profitable route to take, I'll let the client know so she can make the decision. Land leasing is a better way to go here. Thanks.
t