Looking for a lender for new development

[Stan J.]

I'm trying to build 2-4 units and live in one of them. Here are some questions. If you think you're able to assist with these concerns, feel free to message me.

- Is it possible to use projected rents when planning to owner occupancy?
- Is it possible to get financing for 100% of construction costs? I can pay for the land, but can't do much on the remaining
- Are we able to get more leverage when building a multi-unit vs a SFH? For example, I could be approved for $300k to build a SFH, but the approval amount would be higher for building 3 units?

[Doug Smith]

You lose a lot of people when you say "live in one of them". That takes it from a commercial deal where private lenders can legally help to a consumer deal that requires licensing. Now, to answer your actual questions: 1) we'll use projected rents, but we use what the appraiser tells us in a "Fannie Mae Form 1007" that is added to the appraisal. We want to make sure the takeout cash flow is sufficient, but here again, you living in one them is an issue for most lenders that would finance the construction. 2) We count the amount you paid for the land and "soft costs" towards the total down payment (we'll use the market value after you've owned it for 6 months), so yes, you can get financing for 100% of the construction provided that, when you figure in the cost of the land, the ratios are still in line. 3) One to Four Units doesn't matter that much to us. Just remember, you living in a unit makes it a consumer loan that is subject to heavier regulation on the lender. It will take some of the folks that usually finance investor construction out of the mix.