Taking over a Stalled New Construction Project
Hi BP community, I’m looking at a deal just a few blocks from my house, and I wanted to get some help on the financing side of things.
The situation: A local builder unfortunately passed away mid-project, leaving behind a finished concrete block foundation (full/tall basement) and a lot that’s already been graded. Even better, most of the framing lumber is already on-site, though I’ll still need to source the roof trusses. The widow is looking for a clean exit, so I'm looking at taking over the permits and finishing the build as a 4-5 bedroom spec home.
My strategy: I'm planning to offer the seller $10k down via seller financing to take the deed, with a short-term note for the balance of the land/materials value. My projected ARV is in the $420k range, based on some solid 2025/2026 comps from my REA. The budget to finish the project is roughly $200k.
The bank roadblock: I’ve started talking to local lenders about a construction loan, but I’m hitting a wall. One bank told me they need 20% down on the entire project cost (not just the purchase). Since I’m only putting $10k cash into the purchase, they’re claiming I don't have enough "skin in the game," even though the land and foundation are worth way more than what I’m paying out of pocket.
So my question is, will any lenders actually lend based on the projected ARV or the appraised land equity rather than just my initial $10k cash outlay?