Novice Wants To Buy Land & Build: Financing Question
I want to get started investing in RE by buying land and building homes, then, selling them. Can I finance the whole thing, basically with $0 out of my pocket, and sell the places before the payments even begin? I think there is a way, using lot purchase and construction loans combined. Does this sound feasible?
And would this be a full-time endeavor, or would I need to quit my day job? Thank you all for any input. :-?
I'm working on building a Spec house, which is what you sound like you're thinking about. I had to buy prints, and put a small amount of earnest money on a lot, and that's all of my out of pocket so far. My financing will pay 80% of appraised value of my prints, paying for the lot, and construction costs. They even roll the appraisal fee into the loan, and it's a 1 year balloon, interest only. The day I break ground, I put up a for sale sign, and in the area I'm building, I'm pretty sure it'll sale by the time it's finished. Have a realtor look at Days on Market for the area for you, that'll tell y ou how long it MIGHT take to sell your house. Good luck with whatever you decide to do...
I am doing (if they accept my offer) a very similar thing. The construction lender is settling the lot loan and the constuction loan on one day. I believe the terms are similar as above. Selling before completion is very common around here. FYI, w/construction loans, the lender pays only the subs in regular draws (intertst accruing only on what you have used thus far; and you make interst only payments), then when complete your builder will want some fee.
Has anyone put up a property as blanket type loan for lot/construction projects?
I am currently doing the same thing here in Sarasota Florida but we do not pay the interest since the bank sets up an account IN the loan to pay it.[ Edited by NancyChadwick on Date 04/15/2004 ]