Austin, TX - Need funds for a brand new house building project

12 Replies

To my very knowledgeable peers out there... My  just got accepted on an empty lot and now I need to find some financing. I have checked out a private money lending company like Stallion Funding.  They will fund the project 100%, no issues.  The owner even suggested that I try conventional loans first, as it has a lower interest rate. 

The land cost is $100K and I was told that the building cost will be from $150 - $200K, depending on the size and materials used.  This means I do need to borrow at least $300K and then some?  Please advise which is the best route to partake, using hard money as a last resort.  Or, could it be a combination of both?  The option period ends 3/30th and I need to fund by 4/9th.  Thanks in advance for your help!!

Stallion told you they would finance the whole project?  Are you sure?

HI Bryan:

Yes, I also am one of their investors lending money to them for their borrowers, so they do have their "collateral" already.

So how much of that collateral do you have to pledge for the loan they're proposing?  What terms are they offering?

We're starting a new fund for projects like this, but we probably can't help you on this project yet.  Streamline Funding and Pride of Austin are other local hard money lenders.  Manana Funding is worth talking to as well.  

Conventional financing is going to cost you a lot less, but you'll need collateral for that.  Do you have cash to fund part of the purchase?  If so, these lenders are all loaning on specs:

-RBank (my favorite)

-SouthStar Bank

-CNB

-Affiliated Bank

-Trust Texas Bank

-Grand Bank of Texas

Others like:

-Prosperity Bank

-Plains Capital

-Southside Bank

and about 5-10 others are doing specs too.  The typical hard money loan is likely to be around 13/3 for construction projects.  Seattle Funding Group is as low as 10-12/2 from what I am told.  Other national hard money lenders are less expensive still, but they may require more experience than you have.  

Posters really need more detail to help you more,  What experience do you have?  Are you liquid enough to service the loan?  Do you have good credit?  What experience does your builder have?  What are you planning on putting up as collateral in the project?  

Hi Bryan

Thanks for your in-depth answers.  I believe it is 14/3.  But here is the deal... the owner is helping me out with my very first home building deal, like locating the builders, etc.  This kind of "hand holding" is very beneficial to someone like me.  It is somewhat a partnership and win-win for all.

I will also look into a home equity loan.  I probably will end up doing a combo of hard money and the equity loan, to maximize profits.

I would probably find a builder.   They might have a relationship with somebody to help you out.   What part of town is it in?

Hello Brian:

I heard that builders have a lot of projects these days.  So, if you know of anyone who can build in east Austin, go ahead and share please.

Any good builders are stretched VERY thin.  My recommendation would be to try to locate builders from nearby towns with experience.  I heard a recent transplant from Florida is using an experienced builder in San Marcos for his new projects.  You may want to look there for others since it is close enough to travel.  

Audrey,

Give me a call. I work in East Austin.  Here is my Facebook page as a reference.  https://www.facebook.com/Houses2HomesLlc

Also, consider contacting AJ Shield for an alternative hard money. I can get you his info.

Keith Frank, Operating Manager

Austin Houses 2 Homes, LLC

Small world.  AJ is building a spec house right next to ours on Ventus.  Bay Mountain Capital is who he works for.  I haven't heard of any experiences with them yet.   

AJ is sending me a portfolio of properties to cherry pick from an Investor Underground ad he put out.  If you end up using him for the loan please report back how your experience was.  

Thanks Bryan and Keith.  I will try the contacts you mentioned.  Keith, are you a hard money lender?

@Keith, you are a contractor/developer.  OK, I will call you on Monday?  I see your pictures/work posted on FB.  Great!

@Audrey C. ,

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