hard money

6 Replies

is the risk worth it to get hard money to buy lots and build? I'm considering it since I have the ability and resources to build new vs buy. Obviously I don't have enough cash to buy lots since they are usually cash only and would tie cash and defeat purpose.

If it is a fantastic deal then yes it is worth the risk.

If it is a lousy deal then no it is not worth the risk.

You need to supply some numbers for anyone to give you a useful answer. It is going to be on a case by case and deal by deal basis. Also your own resources and skills will paly in the decision.

california property, 3600 sq ft lot, neighboring houses valued at $250k to $300. I have $20k readily available, lot price $50k, I'm considering buying lot building and refi to keep and rent or sell to family, they are approved and looking for house. Construction and permits would vary from $50k - $100( (I'm just getting numbers together and will have together with a business plan if I apply for loan). Initial raw land loan would be six months max considering I can refi when construction is completed. What do you suggest?

How much is your construction cost per square foot? where is it located? (So Cal is my market, actually very close to you in Rancho Cucamonga) Do you have all the money to fund construction? A hard money loan can be a very beneficial as long as it is being used right. Message me with any questions! I'm a hard money lender!

Here in IA I've seen ready to build lots for $40k-$50k in subdivisions with new houses going for between $200k-$300k. So $50k for a lot is retail price around here. And that is for graded lots with utility hookups ready to go.

Offer him $20k cash take it or leave it! Just my .02

Improved lots that cost 10%-15% of the complete home sales price is acceptable to me. I start walking once we're talking 20% +. You need to know what your risks are and evaluate carefully. Otherwise your going to lose a few hairs!

Good luck!

I agree. We finance many build outs. Usually, the borrower owns the land outright, but it can go both ways. Lending is becoming more competitive, so rates are dropping and LTVs are rising. However, the majority of private/hard lenders will want you to have "some skin in the game". Feel free to message me with any questions!

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