Finance options to build SFR.

2 Replies

Hi All,

I'm looking for finance options relating to building new SFR for resale (i.e.: spec) and to hold and rent.

I own GC and RE brokerage. These little houses I'm building are entry level (first time buyer profile) but have excellent margins.

Thus far, I've self funded everything but I'm looking to really scale and would love some advice on what makes sense.

I have (3) in permitting in Deltona, FL and another in Debary. I own the lots and have paid all fees (no financing).

What's avail..? Any thoughts...? It's me and a partner. Both have excellent credit.

Thanks in advance and sorry if this is the wrong forum.

Hi David,

Small local banks are usually the best source for a small construction loans. I would first talk to a bank’s loan officer and find out what they would require in the “Loan Request Package”. By knowing exactly what the bank requires to consider the loan you would assure that the bank will at least look at you loan request. I would also talk to at least 3 or 4 banks to determine which bank offers the best terms that suit your needs. I have not build in many years so I can speak only in generalities. Some banks will require that you own the land free and clear (which you do!) and pay for all the soft cost out of your pocket. (Preparing and getting plans approved plus paying to pull building permits would be considered a soft cost.) Additionally banks might require you to cover 30% of hard cost. All this depends on local economical environment and the Bank’s response might vary from: “We do not land on a new construction” to “we will lend you enough money to cover all of your cost”.

Good luck,

George Krajacic

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