SPEC homes line of credit

[Cody Maxwell]

I currently am building spec homes in a rural area in Colorado and have been self funding the spec builds. I am looking into getting a SPEC line of credit for 1MM or 1.5MM. Each project cost is around the 400k market without land cost. Would this be better to try and go through a local bank or is there good options for private money or other banks that specialize in this?

[Jay Hinrichs]

Quote from @Dominic Mazzarella:

Quote from @Cody Maxwell:

I currently am building spec homes in a rural area in Colorado and have been self funding the spec builds. I am looking into getting a SPEC line of credit for 1MM or 1.5MM. Each project cost is around the 400k market without land cost. Would this be better to try and go through a local bank or is there good options for private money or other banks that specialize in this?

If you’re building spec homes and looking for a line of credit, both options, local banks and private lenders can work, depending on your situation. Local banks typically offer lower interest rates but might require a solid track record and detailed financials. Private money lenders or construction loan specialists, on the other hand, are faster and more flexible, though their rates and terms will likely be less favorable

For a more rural area, local banks will almost certainly understand the market better, but connecting with private lenders who specialize in spec homes could provide more agility. You could also look into regional banks or credit unions with experience in real estate development for middle-ground options.

If I were you, I’d spend some time shopping around for the best rate/terms. Starting with local banks first and private lenders last. Reaching out to a loan broker or two could be pretty beneficial too. Good luck!

WE get our spec loans from local community banks that specialize in lending to business's in the community.. they are not retail banks they are not looking to amass huge small time checking deposits.. IE you walk into a branch and its rare there is any customers in it.. And also you sit down with your lender in person etc.. But as Dominic mentioned this will be full doc Move your liquidity to that bank as deposits are critical to these types of lenders.. And then Character and capacity and experince you need them all and that will get you the best rates.. currently I am at 1/2 point No other fee's other than title and escrow and the bank even paid for my MAI appraisal as I had them do 6 floor plans at once so we dont need to have new ones done when i pull each loan.. rate is 7% with an interest reserve If I want one.. No charge for inspections my Banker does the inspections then we have lunch LOL.. We are on our 80th loan with them in this project.. And over 500 for the last 7 years..  We keep significant cash in the bank with this project and my other JV deals I do all over the US.. Like right now funding land flippers in rural CO.. and that is a spectacular  market for us.. have not gone vertical.

then you can go to private money like Builders Capital  Peers of mine in the industry dont care for them. But they do fund.. you will pay almost double for their money by the time you pay rate points junk fee's penalties when you go long etc.. If I go long with my bank they dont charge me anything. Thankfully market has been so robust that I have only gone long on 3 out of 80.