Updated 3 months ago on . Most recent reply
Leveling up my business
I am a (former) fix and flip investor who just recently finished my first SFR spec build. I will make a decent(but not great) profit, mostly because I did a lot of the work myself. I am a licensed contractor and really just want to take the next step. I currently have an Airbnb, which is a fix/flip I did. It was great for years but the increase in competition/taxes/regs in my area has really cut profits.
I really just want to take the next step...im tired of constantly having to finish houses with credit cards/personal loans. I currently have a lot in a desirable STR area but it was rezoned from residential to mixed use by city. I want to build a small boutique hotel and then after that start building houses to sell and some to rent. Ive never had good experiences working with banks and every bank says they dont lend on spec houses. FWIW I genuinely love building. I love architecture. If I have to choose between quality and making extra quick $, I always choose quality.
What I need some advice for:
-Financing this boutique hotel. Its currently on a lot that I paid 85k for more. I have had offers for more than that so its at least a 100k lot. This was before it was rezoned to mixed use. I think the build will be $650k+. Between me and my dad, we can get to 400-500k...but well need help. How should I go about finding financing for this build?
-Scaling my homebuilding after this. Id love to get to 2-3 houses at a time....that is completely within my capabilities. I keep getting told by banks that they dont lend on spec homes anymore. Any advice on scaling up homebuilding?
Most Popular Reply
Financing: I'd recommend doing tons of networking wherever you are at to find an individual/family with some capital to deploy. Hang out at the local country club, sit at the counter at the local coffee shop for breakfast where the old timers like to go, or whatever it takes, since every town/city has those types of folks to find. The thing that makes you really stand out from so many others is that you have a track record...you can drive the investor by what you've built, tell them what you learned, what you stubbed your toes on, what you'll do different next time, etc. So the goal would be to find a money partner who can stroke a check for both the land and the construction since it sounds like you're in a market that isn't that expensive and that the total capital outlay wouldn't be huge...or maybe if they really trust you, people with deep pockets have significant deposits at at a bank and thus a great relationship with their banker who would provide a loan, even a line of credit, to build homes.