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I'm going to give this a try either later this year or next, probably next but I'll see how this year plays out.
Anyway here is the trick, first you need to get the dirt cheap which I do. I'll use my 2nd deal for an example, we paid $58k for the lot. The bank will give you either 70%, or 80% of the lots appraised value, I forget, but lets say 70%. This lot is worth $100k on the market, so thats $70k. Now you tell them its going to cost you a buck fifty to build the house, in reality its only about a buck twenty. See where I'm going?
I guess if you work it right you can actualy get some money back at the closing, and there is a bank around here still doing this. I was standing in a house Friday that was financed this way.
The catch is you need some good credit and some assets. For my first one I plan on going in with my usual partner who has a very strong business, and I'll have some cash on hand from the first few. I need to pump my balance sheet up so I can do this.
Has anyone used construction loans like this before? I don't really know if I even want to consider using bank money in this market, I'll have to see how the economy is doing.
Anyway here is the trick, first you need to get the dirt cheap which I do. I'll use my 2nd deal for an example, we paid $58k for the lot. The bank will give you either 70%, or 80% of the lots appraised value, I forget, but lets say 70%. This lot is worth $100k on the market, so thats $70k. Now you tell them its going to cost you a buck fifty to build the house, in reality its only about a buck twenty. See where I'm going?
I guess if you work it right you can actualy get some money back at the closing, and there is a bank around here still doing this. I was standing in a house Friday that was financed this way.
The catch is you need some good credit and some assets. For my first one I plan on going in with my usual partner who has a very strong business, and I'll have some cash on hand from the first few. I need to pump my balance sheet up so I can do this.
Has anyone used construction loans like this before? I don't really know if I even want to consider using bank money in this market, I'll have to see how the economy is doing.
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