Line Of Credit For Spec House?

ruskent

I'd like to build a spec house this winter, to give me something to do during my off season.

I know i will not get conventional financing for this. Would it be possible to fund a spec house with a line of credit? It seems like every bank wants to give me a line of credit. It seems like the interest would be less than a hard money lender?


Or another idea. Would be be easier to get a construction loan from a bank if i said i was building the house for myself? Than once the house is finished put it on the market?

I am only talking about needed 70-80k here.

Matt

thom

Don't lie about who or what the house is for. That will get you into trouble in the long run.

I have used a line of credit, secured by my own house, to build specs. This makes closing on the spec easier also. There are no encumbrances on the spec house.

joasis

Typically, lenders will loan up to 80% of the cost to build a spec, if you have a lot paid for. Some banks will go 90%.....and this is based on cost of construction, never "speculated" selling cost. I have my own guys, so I am paying labor by the hour, and I can easily build within the 80% margin. I do not like to eat up capital or tie it up in a spec...since you will be in and out in 4 months, the interest on the loan is not a big deal, and my banker likes to turn a construction loan into a mortgage, so the bank places a sign next to mine, "financing by *** bank".

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