New to New Construction--looking for advice!

Charlotte, North Carolina
Land & New Construction
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New to New Construction--looking for advice!

Madison Boyer
Real Estate Broker · Charlotte, NC · Member since 2020 · 5 posts · 5 votes

Hello BP! 

I am a broker and investor in Charlotte NC. I have flipped several houses and have an STR here in the city, and my newest project is out on the coast in Ocean Isle Beach, NC. I purchased two lots side by side with cash and found a builder to build on them. My two biggest questions would be:

1) What's the best way to find financing for the builds themselves? Most lenders I've talked to are weary about lending because these are my first builds. I'm definitely open to private money if the numbers still work to make a decent profit. Does anyone have experience with this?

2) What's the best way to save on taxes when I sell the properties? My first thought is to 1031 the properties individually but I'm sure there are other strategies out there as well. Ideally I just recycle the profits into more builds in the same area, but expect that taxes will eat away at a lot of the profit that I'll be making if I go that route. 


I would love anyone's advice/expertise if you have done this, or know someone who has! New builds are a whole different ballgame and I am excited to learn as we go. Thanks!

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Grace Walser
Real Estate Agent · Charlotte, NC / Lake Norman · Member since 2022 · 35 posts · 35 votes
3y

Hi Madison! I know a great lender in Charlotte, NC who may be able to help you. His company is built specifically for helping investors even with little experience. They offer new construction loans and they have much more flexibility than a traditional lender. Might be worth getting in touch with him to see if he can help. I'm happy to share his info with you. 

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  • Jonathan Orr
    Developer · Boise ID · Member since 2016 · 287 posts · 110 votes
    3y

    For the financing, I would recommend a broker.  Someone who does more than just traditional family purchase lending.  Find a commercial broker, helpful if they are local to you but not necessary.  For the first time, they are going to be in your corner to make sure you have the correct financials, documents and be able to share the "story" of your builds with lenders.  Instead of going at it alone, I find it worth paying the point or 2 when the loan closes to make sure you are getting a good deal.

    As for the second question, that all depends on your strategy and many other questions.  How long are you going to hold them, are you going to live in one, are you going to refinance, etc...When you are ready to sell, then I would recommend worrying about the tax implications and talk with your CPA.   without more detail, I would think a 1031 is your best route, or hold them and max the refinance and maybe pull cash out of them that way.  

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    3y

    @Madison Boyer, To complicate matters you also won't be able to 1031 unless you first use the property for investment purposes for some time (1 year or so).  Builders and fix n flippers whose intent it not to hold but to build and resell cannot do a 1031 exchange.

    So maybe you put on into service as a STR or LTR. And sell the other and pay tax on it. The post tax cash can get you into your next project. And in a year you can then sell and 1031 the other property. Or just do a cash out refi and keep them. Use the cash however you want - tax free.

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    2Reply
  • Grace Walser
    Real Estate Agent · Charlotte, NC / Lake Norman · Member since 2022 · 35 posts · 35 votes
    3y

    Hi Madison! I know a great lender in Charlotte, NC who may be able to help you. His company is built specifically for helping investors even with little experience. They offer new construction loans and they have much more flexibility than a traditional lender. Might be worth getting in touch with him to see if he can help. I'm happy to share his info with you. 

    4Reply
  • Madison Boyer
    OP
    Real Estate Broker · Charlotte, NC · Member since 2020 · 5 posts · 5 votes
    3y
    Quote from @Grace Walser:

    Hi Madison! I know a great lender in Charlotte, NC who may be able to help you. His company is built specifically for helping investors even with little experience. They offer new construction loans and they have much more flexibility than a traditional lender. Might be worth getting in touch with him to see if he can help. I'm happy to share his info with you. 


     Hey Grace, I would love their info! That sounds like exactly what I need! Thank you!

    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Selling owner finance will give you the best tax benefits. 

    0Reply
  • Princess Small
    Charlotte, NC · Member since 2022 · 22 posts · 12 votes
    3y
    Have you spoken to Carolina Farm Credit?
    1Reply
  • Aaron AguilarPro Member
    Cornelius, NC · Member since 2022 · 1 post · 1 vote
    3y
    Quote from @Grace Walser:

    Hi Madison! I know a great lender in Charlotte, NC who may be able to help you. His company is built specifically for helping investors even with little experience. They offer new construction loans and they have much more flexibility than a traditional lender. Might be worth getting in touch with him to see if he can help. I'm happy to share his info with you. 

    Hi Grace, I am in the Charlotte and am looking to build single family homes in the area. If you don't, mind please forward me the lender information. Greatly appreciated!
    1Reply
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