What Is The Best Way To Finiance SFH New Construction?
Hi
I recently purchased (2) Gulf access lots
80 x 125 and signed paperwork with a builder to put up 2400SF homes on each lot. This area is really hot and prices are going up around 27% a year.
By the time everything is all said and done in 7 to 9 months I expect to profit around 175000 to 200000 on each one.
I had enough money to put 10% down
at the closing table and just went with conventional construction loans. Between the land and building I put down around $55000.00 on each lot and home. I would like to build as many homes as possible in the next year, possibly 10. Gulf access lots in this area are going up 7% a month and I know that every month I wait to buy I am looking at more and more money. What is the best source to use to get the kind of money I need to achieve my goal. I heard some smaller banks are more creative then larger banks, revolving lines of credit maybe? Any feedback would be appreciated.
Thanks Billster
Thanks for your reply I went to the Mercedes home model thought is was rather expensive for what you are getting per square foot. Still would not do me any good because I do plan on flipping them probably before construction is complete would not even consider renting when I am looking at 175000+ profit per home. Thanks for the imput
anyway.
Billster
Yes, they are higher because they are financing I think! If you build with them and then use your own mortgage broker to close, I don't see how you could not double close it (of course the contract is probably not assignable with Mercedes). I think that the "must rent part" is if you do the mortgage with them?? and you are NOT obligated to do the mortgage with them. I think it is a good way to get into a house with low $ down and then NO more money until 12-15 months when the houses are completed. Of course, double closings are expensive, but I think you could still make money with Mercedes.
I sold my cape coral lots last year and bought up in Charlotte and now live in Charlotte. Nice weather today huh?!?!
Adams by far has the best deal as far as out of pocket goes $1,000 down 0 to close. I have a spec going up in Port Charlotte it is being built by holiday builders they had lots at the time and I was able to buy with $1,000 to start 10% down at closing. Holiday is not investor frinedly I told them it would be a second home to avoid putting 20% down.
salesperson from mercedes called me today, said they have a new investor program. if you own your own lot, you deed over the lot and it is $1000 down. Not sure on any other particulars. I told her i would visit sometime next week to get more info. The good thing is that by the time the house is finished, your lot value is your down payment and you can most likely get that 80% LTV or better.
Adams builds such a cheapie house. I know that it would not be a contender for a gulf access spot. But they do have a great plan since it is $1000 down and you use THEIR lot too. I will check out Holiday for a future project maybe.
Allstate and Walker homes in Port Charlotte do $0 down too.[ Edited by thechangingtable on Date 11/06/2004 ]
I agree about Adams building such a cheap house. Alot of "investors" build them for specs. To be honest when I built my spec in Port Charlotte I didn't do to much checking about I use to work for Holdiay so I know how they are on a local and corporate level. Mercedes has a good name here in Port Saint Lucie.
Do you guys have to undergo any licensing or regristration requirements to be able to build (even if a third party is doing it) in Florida? Up here in canada you can't hire a builder to build your house without first undergoing a rigorous regristration process. Just curious. Thanks
In florida the contractors have to be licensed - although lots of owner/builders pull the permits themselves and hire non-licensed contractors
Can someone give me the exact rundown on how you guys are profiting from new construction be built by general contractor's? From what i have read, it seems like you are doing LTV refi's?....Please elaborate.
I am looking to go from rehabs to new construction, but I don't have the credit in order to obtain construction financing.
God Bless
hi, I am speculating that the price of the home will have increased in value from the time contract is signed to the time the closing occurs.
In my case, my builder will build ON MY LOT with $3000 down (the builder finances the construction period loan). Some builders will build on THEIR lot with only a $1000 down (adams homes comes to mind). Problem is that you will most likely have to close on the loan because the builders do not let you assign the contract. BUT maybe by the time the house is READY, you will have private money or a good enough credit score to purchase THEN flip???
I purchased my lot for $10K, contracted to buy the house for $195K. Now my lot is worth $35K, house is now selling at the model home office for $230K and it has only been since Aug 30th. I hope to be up $100K by the time closing occurs. I will rent by the week (typical around here for vacation rentals) and then take out the equity and then 1031 into something else (that is my game plan for the next 1-2 years). In the meantime, I look for deals on the lots to build my next house on. Builders around here charge ridiculous PREMIUMS for their lots!! Best to have my own lot if possible.
There are ways to make it happen! good luck!
thechangingtable,
Could you let us know in what area you bought your lots.......thanks for the info........
Where can more information on the Mercedes program be found.
Personally I have used small construction banks and private funds raised from doing presentations with investors to finance my real estate deals and a 14 unit construction project that I am doing here in Houston.
For those of you in Florida, it would seem to me that you could get approved for a loan by partnering with 1-2 other investors via an LLP and getting a spec home loan from a small bank or private lender. Because the market is so hot there, it is not a huge risk for the lender as you as find a reputable builder to manage the construction.
Karen,
I will be buidling a home over in Port Charlotte in the coming months and have looked at both Adams and Holiday Builders. I think Adams homes are way over priced (especially in PSL) and they are poorly built, in my opinion from going to the model. Anyway, I wanted to find out what your experience was with Holiday Builders because that is who I am planning to work with. If you have any insight, would you let me know.
I told them it was a 2nd home also, so I suppose that is the best thing to do.
Thanks for any input!
Martha
Quote:
On 2004-11-06 11:44, karensilver wrote:
Adams by far has the best deal as far as out of pocket goes $1,000 down 0 to close. I have a spec going up in Port Charlotte it is being built by holiday builders they had lots at the time and I was able to buy with $1,000 to start 10% down at closing. Holiday is not investor frinedly I told them it would be a second home to avoid putting 20% down.