Spec Home Investment

haskl33

I'm in the process of getting funding to build a spec home. I am looking into getting a loan from a lender and also looking for an investor so i don't have to worry about the loan burden.

I was wondering what you guys (guys who have experience in this) think would be better or easier to deal with. I know if i deal with an investor hes going to want to split profit with me and I'm not totally sure how it works with a lender. I don't mind splitting profits, i'm not greedy at all.

I've got all the plans and estimates in so I know all the up front costs. I just need to know what types of terms and conditions i should look for when dealing with the investor or lender. If anyone has any advice for me that would be greatly appreciated. And please no smart alik comments.

Glasshousebltr

If your really not greedy, ya better be damn smart, because the layout your spilling will tear you apart if your neither.

Bob

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Bob

bmartin

Where I'm at there is a mortgage co. that will loan you 100% of the project if you are licensed. They do charge about 6% over a 30 year mortgage rate but 12% interest is better than splitting profits.

joasis

Seems like you just answered your own question. 12% is pretty high for a construction loan, unless I guess you have the lot rolled in with it. Hard money like an investor wil certainly want a chunk of the profit, or most of it since you potentially profit from the construction.

I buy my lots using my own money, and then use the lot to secure 75% of the needed funds to build on 6 months, and pay currently 8%. I have a cushion if I need it, and I also have a CD on deposit for the house, released upon sale.

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bmartin

With that 12% you can get 100% of all costs including land. Seems better than using your own money if your short on cash. If you have the money for the land most banks can get you financing for pretty close to 30 year rates.