Spec Build - How to finance?

Question

How to finance your first spec build? Looking for guidance on options.

Robert Ellis · Answer

new builds aren't hard to finance and I would argue they are preferred to existing fix and flip loans, especially if you have experience. banks look at your experience, your builder's experience, loan structure, permits, etc you need to get an experienced builder familiar with advanced underwriting and negotiations with local, regional, and national lenders. in columbus we do ground up construction for clients at a 20% discount so they can BRRRR out of the new build with equity and we have pages and pages of data on what we build and why and it's all supported by market statistics.

Robert Ellis · Answer

from talking to hard money funds especially those who operate in more than 10 states, and 5 years of experience with underwriting teams, I'd actually disagree and say new construction is preferred to rehab due to experience level to enter the market. there's BP lenders that will do 15% LTC with 1-2 new build experience. We are closing one in 60 days once permits push through in columbus ohio for a new build triplex

Alecia Loveless · Answer

@Robert Jackson I believe you will find it very hard to finance a spec build. I am under the impression it is very difficult to get lenders to finance new builds especially spec builds.

Jacob Sherman · Answer

can do a no income no doc ground up construction loan . Its 50% of the land providing 100% of the construction . welcomes first time investors

Mike Klarman · Answer

So, the Ground Up Programs are the hardest to get into.  They usually require experience and they are lots of docs needed from architect drawings to a lot of permitting.  Hopefully as the rates and the housing market loosens so will some of these guidelines in the HML programs.

Spec Build - How to finance?

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